Drivers and barriers for circular business model innovation

Abstract

The circular economy concept is gaining traction in academia, industry and policymaking as a strategy to reduce resource depletion, waste and emissions. Many authors see business model innovation as a critical lever for the concept's implementation on the organisational level. Despite the importance of the topic, the drivers and barriers to different types of circular business model innovation remain unclear. We address this gap by comparing drivers and barriers for four generic circular business model innovation types: start-up, diversification, transformation and acquisition. Relying on a structured comparative literature review using cross-reference searches, we develop a theoretical framework of drivers and barriers that we apply to a multi-case study of 21 organisations covering three of the four types, with some additional insights on the fourth. We identify 25 barriers and 10 drivers, clustered into seven categories, and outline how they distinctively affect the innovation types. Start-ups and diversifications are more commonly driven by market and financial factors, while transformations are led by market and organisational factors. These three types are highly affected by legal and financial barriers; however, while start-ups are more prone to face value chain challenges, incumbents are more susceptible to market and organisational barriers. Our study provides novel empirical data that validate and complement previous research and offers an additional analysis perspective in the transition towards a more sustainable and circular economy.