Defining criteria for business model circularity assessment

Abstract

Existing resource consumption practices have been risking society’s sustainable development. Linear business models can no longer be sustained. Therefore, circular business models should gain prominence and change the way society does business. The transition to a circular economy can be made by conceiving entirely new business models or adapting existing ones. Hence, determining the circularity of a business model is of unquestionable assistance to implement new or adapt/manage existing business models. Therefore, this thesis aimed to identify relevant criteria to measure business model circularity. To this end, a systematic literature review and background was conducted to map potential influencing factors of circular economy on business models. An initial list of influencing factors underwent a process of debugging, after which 33 influencing factors remained for validation. The importance of these 33 influencing factors for circular strategies within each of the 9 business model building blocks, identified in the business model Canvas, were validated using a Fuzzy approach, by means of a questionnaire, using a continuous scale of 7 points from UNIMPORTANT to EXTREMELY IMPORTANT, applied to specialists on circular business models. In total, 120 specialists were identified as potential respondents. It was registered 6 complete responses to the questionnaire, which were used to conduct the analysis for validation. For Customer Segments 28 influencing factors were considered at least FAIRLY IMPORTANT for measuring business model circularity, 26 for Value Proposition, 26 for Channels, 19 for Customer Relationships, 23 for Revenue Streams, 28 for Key Resources, 30 for Key Activities, 27 for Key Partnerships and 26 for Cost Structure. After validation, the validated influencing factors became criteria for business model circularity assessment. Throughout the 9 business model building blocks the criteria relate mostly to product-service systems and resource-saving strategies. These criteria indicate where companies should focus their efforts towards more circular practices. They also follow a generic approach, thus not being directed to any particular type of business model. The results in this thesis may be of interest to researchers, regarding the understanding of the usefulness and applicability of the criteria dealt with, to practitioners, regarding strategies to make businesses thrive on the circular business model perspective, and to governments, regarding the development of public policies and incentives for private companies to engage in circular practises.