Received: 6 May 2019 Revised: 16 December 2019 Accepted: 9 January 2020

DOI: 10.1002/bse.2466

RESEARCH ARTICLE

Designing business models in circular economy: A systematic

literature review and research agenda

Piera Centobelli1 | Roberto Cerchione2 | Davide Chiaroni3 |

Pasquale Del Vecchio4 | Andrea Urbinati5

1
Department of Industrial Engineering,
University of Naples Federico II, Naples, Italy Abstract
2
Department of Engineering, University of The concept of circular economy is increasingly receiving attention in different
Naples Parthenope, Naples, Italy
domains, including strategic management, operations management, and technology
3
Department of Management, Economics and
Industrial Engineering, Politecnico di Milano, management. It requires companies to design their business model (i.e., the value net-
Milan, Italy work, the relationships with the supply chain partners, and the value propositions
4
Department of Engineering for Innovation,
towards customers) around a new concept of sustainable development that reduces
University of Salento, Lecce, Italy
5
School of Industrial Engineering, LIUC
consumption of natural resources and preserves the environment. However, extant
Università Cattaneo, Castellanza, VA, Italy research falls short in terms of explaining how companies design their business model

Correspondence
according to the circular economy principles. Starting from this premise, the present
Andrea Urbinati, School of Industrial paper provides a systematic review of the literature on the design of business models
Engineering, LIUC Università Cattaneo, Corso
G. Matteotti, 22, 21053, Castellanza, VA, Italy.
in the context of circular economy, aiming to offer an overview of the state of
Email: aurbinati@liuc.it research and outline a promising research agenda.

KEYWORDS

business models, circular economy, environmental sustainability, sustainable development,

systematic literature review

1 | I N T RO DU CT I O N In particular, the competitiveness of firms in such a continuously

The debate on circular economy has flourished in recent years and
attracted the interest of a growing number of researchers and practi-
tioners. The scientific literature on the circular economy was devel-
oped through research conducted outside the managerial and
organizational theories (Lathi et al., 2018); however, in recent years
the topic has received growing attention in different domains, includ-
ing strategic management, operations management, and technology
management (Urbinati, Chiaroni, & Chiesa, 2017). Most of the litera-
ture, especially in managerial journals, has recently focused on circular
economy in firms' business models and on the definition of taxon-
omies aimed at understanding the dynamics of value creation and cap-
ture in circular business models (Antikainen & Valkokari, 2016;
Bocken, de Pauw, Bakker, & van der Grinten, 2016; Lewandowski,
2016). Circular economy claims to have made profound changes in
firms' business models for new value propositions and competitive
advantage (Linder & Williander, 2017; Urbinati et al., 2017;
Zucchella & Previtali, 2019).
evolving scenario focuses on business models inspired by the princi-
ples of sustainability, as well as by social and environmental responsi-
bility (Evans et al., 2017; Geissdoerfer, Savaget, Bocken, & Hultink,
2017). Thus, firms are required to adapt their value network, the orga-
nizational structure, the relationship with the supply chain partners,
and the value proposition towards customers to design a business
model that puts the principles of circular economy into practice (Plan-
ing, 2015; Lüdeke-Freund, Gold, & Bocken, 2019).
However, the existing literature has not explained, in depth, how
companies design their business model according to circular economy
principles. There is fertile ground for additional and systematic
research at the intersection between circular economy and the strate-
gic management field, which calls for scholars to deepen the role of
circular economy for companies' business model design (Fraccascia,
Giannoccaro, Agarwal, & Hansen, 2019; Lüdeke-Freund et al., 2018;
Perey, Benn, Agarwal, & Edwards, 2018).
Starting from this premise, the present paper provides a system-
atic review of the literature (Centobelli, Cerchione, & Esposito, 2017;

Bus Strat Env. 2020;1–16. wileyonlinelibrary.com/journal/bse © 2020 John Wiley & Sons, Ltd and ERP Environment 1
2 CENTOBELLI ET AL.
Seuring & Müller, 2008) on the design of business models for a circu-
lar economy transition. We aim to provide an overview of the state of
research and outline a promising research agenda.
The preliminary results of our study provide a theoretical frame-
work for strategic management scholars, highlighting the relevance of
business models' issues for a circular economy transition. This also
makes it possible to understand emerging trends, identify unexplored
dimensions and topic areas, and offer elements to inspire future aca-
demic studies, the actions of managers, and the policymakers'
activities.
The remainder of the paper is organized as follows. After the
introduction, Section 2 provides a detailed description of the meth-
odological steps that we have followed to conceive and develop
the systematic literature review. In Section 3, we advance the theo-
retical framework that clusters the key themes emerging from cur-
rent research. Section 4 advances an agenda of promising
directions for further research, and Section 5 provides some con-
cluding remarks.
2 | M E TH O DO LO GY
In this paper, we used a systematic literature review approach (Cen-
tobelli et al., 2017; Pittaway, Robertson, Munir, Denyer, & Neely,
2004; Thorpe, Holt, Macpherson, & Pittaway, 2005; Tranfield,
Denyer, & Smart, 2003) to analyze the state of the art on business
model design for a circular economy transition. Following Tranfield
et al. (2003), our systematic review approach is based on manual fil-
tering, rather than other survey or review approaches, for its replica-
ble and transparent process that allows authors to minimize bias in
the results of literature review. This approach allows reviewers to
identify, appraise, and synthesize all relevant studies using a transpar-
ent and replicable process. This approach is also suitable for gaining
more insights and providing an in-depth understanding of both quan-
titative and qualitative issues rather than automatic filtering. Follow-
ing Centobelli et al. (2017), we have adopted a mixed inductive and
deductive approach to identify the research areas in which to con-
duct theoretical and content analysis. In the first step, based on
experiences with the context- and theory-based definition of main
literature categories in the field of circular economy, two researchers
classified and categorized studies into different literature categories
in parallel, with help from a third researcher in case of uncertainty.
This analysis has been based on the entire paper and not merely on
the evaluation of the abstract or specific paragraphs. First, we
derived from Urbinati et al. (2017) an initial set of dimensions
included in our framework considering a theoretically based defini-
tion of the main literature categories (i.e., contextual factors and cir-
cular business model dimensions). Based on Mayring (2000) and
Krippendorff (2018), after reading and categorizing 25% of the
papers and applying the inductive category development procedure,
the researchers evaluated whether the literature categories identified
were exhaustive to fully capture the nature of the scientific literature
and, eventually, include additional categories. Therefore, based on
the principles of thematic coding from qualitative research, we induc-
tively derived a list of subject areas from the articles (Thorpe et al.,
2005). The same process was repeated once 50%, 75%, and 100% of
the papers selected had been analyzed. In addition, after analyzing
50% of the papers and applying procedures of inductive category
development, we revised the initial set of topic areas derived from
Urbinati et al. (2017) and included two additional topic areas con-
cerning the role of managerial practices for value creation and value
capture, as well as the role of cross-dimensional practices. With
these premises, the content analysis of selected papers makes it pos-
sible to identify the four different topic areas included in our study.
This is an iterative process based on identifying and checking for
consistency and validity of the literature categories identified. With
these methodological premises, the review was conducted defining a
review protocol based on the following main phases:
• Paper selection. This phase includes the identification of the key-
words and database to be used, the filters used to collect the mate-
rial, and the definition of inclusion and exclusion criteria.
• Descriptive analysis. In this phase, the descriptive statistics of the
papers selected are reported.
• Content analysis. In this phase, the papers are analyzed in depth
and the research gaps to be addressed by future researchers are
identified.
2.1 | Paper selection
The first step of this systematic literature review was to identify the
relevant and eligible literature of the topic under investigation. We
used the Scopus database to retrieve all the relevant material. Previ-
ous studies have shown that the overall Scopus database coverage of
academic journals is higher than other databases and only a small per-
centage of relevant journals are not indexed in Scopus (Mishra,
Gunasekaran, Papadopoulos, & Hazen, 2017; Waltman, 2016).
The material search phase was conducted in November 2018 and,
using as keywords “circular economy” OR “bioeconom*” in combination
with “business model*” OR “model of business”, 230 articles were ini-
tially extracted from Scopus. The keywords selection has been con-
ducted through a focus group composed of five researchers operating
in the field of circular economy. Furthermore, the search string was vali-
dated by comparing our keywords with additional keywords used by
the individual papers identified in the initial list. The keywords fre-
quency analysis revealed the importance of the keyword “bioeconomy”
OR “bioeconomics,” which appeared in more than 10% of the papers.
Therefore, the search string was refined and the final one also includes
“bioeconom*”. The asterisks after the keywords “bioeconom*” and
“business model*” were used to also retrieve papers including, for exam-
ple, “bioeconomy,” “bioeconomics,” “business models,” and “business
modeling.” In addition, the inclusion of the terms “bioeconomy” and
“bioeconomics” allowed us to retrieve six additional papers dealing with
circular economy issues, but not directly reporting the term “circular
economy” (e.g., circular bioeconomy). Only articles published in peer-
CENTOBELLI ET AL. 3

reviewed journals have been included in the review process (excluding

conference proceedings and book chapters; Gunasekaran et al., 2015).
Ultimately, 150 papers were subjected to the following phases.
In order to select the final sample and focus on research papers that
are close to the topic under investigation, we defined two exclusion
criteria and one inclusion criterion to generate an unbiased and compre-
hensive review of the literature. Following Pittaway et al. (2004) and
Centobelli et al. (2017), the first exclusion criterion was that the titles
and abstract of the papers identified were read in parallel by two
researchers, plus a third one in case of uncertainty, to remove papers
that did not focus on business models design for a circular economy
transition. This resulted in 11 papers not being focused on this topic but
retrieved due to the combination of keywords used. The second exclu- FIGURE 1 Distribution of papers over time
sion criterion—related to the focus of the full text of the papers—was
applied to the remaining 139 papers. Two researchers, plus a third one
in case of uncertainty, read the full text of the papers and excluded
three papers. The third inclusion criterion is a validation criterion that circular economy and business models (57 different journals). This
allows us to identify and retrieve any papers dealing with business result indicates that this is a crossroads research topic that involves a
model development aligned to circular economy principles that was variety of journals.
cited in the literature, but not selected through the use of the databases
and search terms chosen. We adopted a validation criterion for the final
sample of papers selected. Even if data were collected in November 2.2.3 | Papers by subject area
2018, the publication year of the three papers retrieved was 2019, so
they were removed from the descriptive analysis. At the end of this pro- Regarding the distribution of papers by subject area of the journal,
cess, 133 papers were subjected to the descriptive analysis phase. the papers selected were grouped into 18 areas (Figure 2). Figure 2
shows the number of papers belonging to each subject area. The
allocation of each paper to the subject area is not univocal; in other
2.2 | Descriptive analysis words, one paper could be assigned to more than one subject area.
Therefore, the sum of the values is higher than the total number of
This subsection provides a descriptive overview of the selected papers considered in the descriptive analysis (133 papers). The
papers. The 133 papers were analyzed considering the following results of this analysis highlight that the vast majority of papers
perspectives: belong to five main areas: (a) environmental science (83 papers);
(b) energy (54 papers); (c) business, management, and accounting
• Papers over time (52 papers); (d) social sciences (46 papers); and (e) engineering
• Papers and citations across journals (43 papers). The categorization of papers by the specific subject
• Papers by subject area area of the journal shows that the topic of circular economy and
• Keywords analysis business models involves not only journals focusing on environmen-
tal science and management, but also crosses different research
areas.
2.2.1 | Papers over time

According to the distribution over time (Figure 1), a significant propor- 2.2.4 | Keywords analysis
tion of papers belong to the years 2018 (79 papers) and 2017
(39 papers). Therefore, the trend of articles on this topic has increased Regarding the analysis of the keywords, the measurement of the
in recent years and 59% of articles were published in 2018. This demon- occurrences has made it possible to derive the following
strates that increasing attention has been devoted in recent years to the evidences synthetized into the Table 2 and graphically described in
topic of business models design for a circular economy transition. Figure 3.

2.2.2 | Papers and citations across journals 2.3 | Content analysis

The distribution of papers across journals (Table 1) highlights the large This subsection provides a detailed overview of the issues covered by
variety of journals publishing articles at the intersection between the literature on business model design and circular economy.
4 CENTOBELLI ET AL.

TABLE 1 Distribution of papers and citations across journals

Journal Number of papers Total citationsa Citations per document

A+BE Architecture and the Built Environment 1 0 0.00
Amfiteatru Economic 3 2 0.67
Annals of Operations Research 1 7 7.00
Applied Sciences (Switzerland) 1 1 1.00
Aquaculture International 1 4 4.00
Autonomous Agents and Multi-Agent Systems 1 3 3.00
Business Horizons 1 6 6.00
Business Strategy and the Environment 4 55 13.75
California Management Review 3 4 1.33
Clean Technologies and Environmental Policy 1 0 0.00
Current Opinion in Green and Sustainable Chemistry 1 2 2.00
Ecological Economics 1 0 0.00
Ecology and Industry of Russia 1 0 0.00
Economics and Policy of Energy and the Environment 2 1 0.50
Environmental Engineering and Management Journal 2 4 2.00
Environmental Innovation and Societal Transitions 3 32 10.67
Fashion Practice 2 3 1.50
Forests 1 0 0.00
Green Chemistry Letters and Reviews 1 0 0.00
Industria 1 0 0.00
International Journal of Advanced Manufacturing 2 5 2.50
Technology
International Journal of Business and Globalisation 1 1 1.00
International Journal of Production Research 2 0 0.00
International Journal of Sustainable Engineering 1 0 0.00
International Journal of Technology Management and 1 0 0.00
Sustainable Development
Journal of Business Ethics 1 110 110.00
Journal of Business Strategy 1 0 0.00
Journal of Cleaner Production 26 426 16.38
Journal of Environmental Planning and Management 1 1 1.00
Journal of Facade Design and Engineering 1 0 0.00
Journal of Industrial and Production Engineering 1 110 110.00
Journal of Industrial Ecology 4 32 8.00
Journal of Manufacturing Systems 1 1 1.00
Journal of Manufacturing Technology Management 1 0 0.00
Journal of Remanufacturing 1 4 4.00
Journal of Security and Sustainability Issues 1 5 5.00
Journal of the Indian Institute of Science 1 8 8.00
Management Research Review 1 2 2.00
Marine Policy 1 7 7.00
New Biotechnology 1 8 8.00
Ocean Engineering 1 0 0.00
Philosophical Transactions of the Royal Society A: 2 51 25.50
Mathematical, Physical and Engineering Sciences
PLOS One 1 42 42.00
(Continues)
CENTOBELLI ET AL. 5

TABLE 1 (Continued)

Journal Number of papers Total citationsa Citations per document

Procedia Manufacturing 2 7 3.50
Production Planning and Control 2 2 1.00
Quality—Access to Success 1 0 0.00
Resources 1 20 20.00
Resources, Conservation and Recycling 9 166 18.44
Rivista Di Studi Sulla Sostenibilita 2 0 0.00
Sustainability (Switzerland) 20 227 11.35
Sustainability Science 1 3 3.00
Sustainable Development 1 1 1.00
Technological Forecasting and Social Change 2 40 20.00
Technology in Society 1 1 1.00
Thunderbird International Business Review 4 22 5.50
Waste Management 1 0 0.00
a
Data collected in November 2018.

F I G U R E 2 Distribution of papers across

subject areas

According to Mayring (2000) and Krippendorff (2013), an initial
set of topic areas was identified on the basis of experience with the
context and theoretical based definition of main literature categories
(contextual factors and circular business model dimensions) and
refined once 25%, 50%, 75%, and 100% of the selected papers had
been analyzed. After analyzing 50% of the papers and applying
the procedures of inductive category development, we revised
the initial set of topic areas and included two additional topic areas
concerning the role of the managerial practices for value creation
and value capture and the role of cross-dimensional managerial
practices.
As a result, the content analysis of selected papers makes it possi-
ble to identify four main topic areas (TAs):
TA1.“Contextual Factors”—showing relevant factors affecting the
willingness of companies to do the transition towards a circular
economy;
TA2.“Circular Business Model Dimensions”—in which the main
dimensions associated with the decisions and actions implemented by
6 CENTOBELLI ET AL.

TABLE 2 Occurrence of keywords such as the regulation activity of policymakers and international

Keyword Occurrence Total link strength institutions.

Organizations such as the Ellen MacArthur Foundation or the
Circular economy 102 134
McKinsey Global Institute have found this approach to be a viable
Sustainability 26 36
model for industrial companies because it adds something more to
Business model 25 41
extant sustainable paradigms (Esposito, Tse, & Soufani, 2018):
Circular business model 19 43
It does not only refer to doing more with less or to be environmen-
Business model innovation 12 28
tally friendly, but also aims to maximize the product's lifecycle,
Sustainable business model 10 20 along the whole supply chain, and convert unusable products in
Remanufacturing 8 12 new sources of value of the same supply chain or others.
Sustainable development 8 16 The interplay between policymakers and companies is
Resource efficiency 7 18 fundamental for allowing the transition at the firm level, as it can facil-
Value creation 7 17 itate or hamper the development of circular business models by
Industrial ecology 6 14 directly intervening into the industries through normative regulations

Sustainable consumption 6 10 (Levänen, Lyytinen, & Gatica, 2018). An example of this activity is rep-
resented by the European Union Circular Economy Action Plan of
Product-service systems 5 12
2015 (Leipold & Petit-Boix, 2018) or by the United Nation's Sustain-
Sharing economy 5 8
able Development Goals of 2016 (Goyal, Esposito, & Kapoor, 2018),
Bioeconomy 4 2
as well as by the emerging European Regulation Eco-Management
Industrial symbiosis 4 9
and Audit Scheme, which aims to support companies in implementing
Recycling 4 6
voluntary tools for managing the environmental aspects of their oper-
Reuse 4 6
ations (Merli & Preziosi, 2018).
Supply chain 4 8 Other initiatives are under development that call for the proposal
of indicators that more effectively link circular economy and sustain-
ability in order to provide a set of prioritization principles that encour-
companies in the definition and execution of their circular business age businesses and industries to engage in circular economy (Pauliuk,
model are identified; 2018) and to come up with disruptive technology and business models
TA3.“Managerial Practices for Value Creation and Value Cap- that are based on longevity, renewability, reuse, repair, upgrade, refur-
ture”—in which the main practices associated with the value creation bishment, servitization, capacity sharing, and dematerialization
and acquisition of products and processes are identified; (Esposito, Tse, & Soufani, 2017). Furthermore, in the comprehension
TA4.“Cross-Dimensional Practices”—which highlights the role of of the antecedents and impact of the actions undertaken by institu-
the emerging digital technologies supporting the implementation of tional actors, it is necessary to adopt a neo-Schumpeterian innovation
managerial practices that are necessary for making the transition perspective, as a useful lens for understanding the complex articula-
towards a circular economy.These four main topic areas will be ana- tion of the transition process under its sociotechnical configuration
lyzed in depth in the following section. (De Jesus & Mendonça, 2018; Mylan, Holmes, & Paddock, 2016).
Embracing such a perspective and being able to leverage on techno-
logical, sociocultural, economic, and institutional features is strategic
3 | THEORETICAL FRAMEWORK for the full achievement of a circular economy transition that can be
proclaimed by the law but that, without a larger understanding of its
The systematic review of the literature at the intersection between implications for the society, technology, and market, risks being only
business models design and circular economy has enabled us to elabo- partially implemented (Kirchherr et al., 2018), not implementable by
rate a theoretical framework for strategic management scholars that companies and mainly by small and medium-sized enterprises (Rizos
maps the key themes deriving from the extant research (Figure 4). In et al., 2016). In this perspective, the study of De Jesus and Mendonça
particular, the framework highlights relevant dimensions and sub- (2018) on the barriers and drivers, as harder and softer factors, to the
dimensions of major specialization. circular economy transition, becomes useful for understanding which
The following paragraphs provide a detailed description of the contextual factors affect the design and implementation of a circular
dimensions and subdimensions. economy business model. In particular, policymakers and governments
have a high degree of responsibility, not only because their actions
can be either drivers or barriers for a circular economy transition by
3.1 | Contextual factors the companies, but also because, through their contribution, they can
remove existing barriers and support the implementation of dedicated
The willingness of companies to make the transition towards a circular actions at level of market, society, and innovation system (Kirchherr
economy is surely incentivized by some relevant contextual factors, et al., 2018; Rizos et al., 2016).
CENTOBELLI ET AL.
FIGURE 3 Keywords map
3.2 | Circular business model dimensions
The three main conceptual areas that arise in the literature are value
creation, value transfer, and value capture (Ranta, Aarikka-Stenroos, &
Mäkinen, 2018; Urbinati et al., 2017). Within these dimensions, it is
possible to locate all the decisions and actions implemented by the
companies in the definition and execution of their circular business
model (Geissdoerfer, Morioka, de Carvalho, & Evans, 2018; Nußholz,
2017, 2018; Ranta et al., 2018).
In contrast with the linear business model, in which the value
associated to a product or service is lost after its usage by customers,
a circular business model represents a set of strategic decisions
designed to preserve the embedded environmental and economic
value of a product or service into the system (Clift & Druckman, 2015;
Nußholz, 2017).
A circular business model has been defined as the simplified rep-
resentation of a complex organizational systems and relationships
aimed to “slow, narrow, and close resource loops” (Geissdoerfer et al.,
2018, p. 713).
The identification of drivers for value creation, transfer, and
capture has become mandatory for the debate on companies'
7
adoption of circular economy (Lewandowski, 2016). This is because
the economic sustainability of a circular business model is not sec-
ondary to the environmental one (Ranta et al., 2018) and, in
respect of the principles of circular economy, companies are called
to satisfy the expectation of value of all their stakeholders (Ellen
MacArthur Foundation, 2013). The dimensions of value undertaken
into the process of creation, transfer, and capture are tangible,
because they are not only financially and economically measurable,
but also intangible or nonmonetary (Secundo, Del Vecchio,
Dumay, & Passiante, 2017; Wamba, Akter, Edwards, Chopin, &
Gnanzou, 2015).
Despite this, the literature has only recently focused on the
meaning and implications of circularity from a business model per-
spective (Lüdeke-Freund, Gold, & Bocken, 2019; Ranta et al., 2018).
The focus on business models has only arisen as a result of the appli-
cation of circular economy principles and sustainability to the most
well-known logic of business model (Lüdeke-Freund et al., 2019;
Ghisellini et al., 2016).
Contributions in this direction have been addressed towards the
extension of the literature on business models through conceptual and
methodological frameworks that have aimed to overcome the
8 CENTOBELLI ET AL.
FIGURE 4 Theoretical framework
limitations associated to the design of circular business models for mul-
tiple cycles (Nußholz, 2018); to integrate the principles of 3R (reduce,
reuse, and recycle) into the business model (Ranta et al., 2018); to define
the drivers of sustainable value by leveraging value network and organi-
zational perspectives (Geissdoerfer et al., 2018); and to identify new key
performance indicators and two additional blocks (take-back system
and adoption factors) into the classic representation of a business model
canvas framework (Lewandowski, 2016; Osterwalder & Pigneur, 2010)
to assess and explain the different degrees of circularity in business
models (Urbinati et al., 2017). According to Geissdoerfer et al. (2018),
the full exploitation of the strategic, analytical, and communicational
benefit of business models for a circular economy transition requires
three additional dimensions: the sustainable value creation, proactive
management and the enlargement of the stakeholders' network, and a
long-term perspective.
In the review on circular business models, two other frameworks
need to be mentioned because they are largely recognized and
referred to. The first is the “backcasting and eco-design circular econ-
omy” framework (Mendoza, Sharmina, Gallego-Schmid, Heyes, &
Azapagic, 2017), which is a participative tool combining strategic plan-
ning and operations. The second is the regenerate, share, optimize,
loop, virtualize, and exchange framework, a checklist proposed by the
Ellen MacArthur Foundation (2015) to drive circular economy innova-
tion in companies. In addition, it is useful to recall the different pat-
terns identified by Lüdeke-Freund et al. (2019) in their review of
circular economy business models through a morphological analysis of
the alternative design options, in terms of repair and maintenance,
reuse and redistribution, remanufacturing, recycling, repurposing, and
organic feedstock.
The area of value creation encompasses the creation of a prod-
uct/service offer that, in accordance with the principles of circular
economy, is able to preserve economic and environmental value,
through the efficient usage of resources and closed loops (Nuβholz,
2018). Value creation in circular business models has been also associ-
ated with the maintenance of products and processes, the combina-
tion of resources and materials and the purchasing of upcycled waste,
the total recycling of resources, the dematerialization of products, and
on-demand production processes (Lewandowski, 2016; van
Renswoude, Wolde, & Joustra, 2015).
Value transfer recalls all those elements related to the customer
segmentation and customer relationship that are traditionally included
into the value proposition. By including the conception and execution
of a sustainable value proposition, value creation in the context of cir-
cular economy sees companies that are embraced into the develop-
ment of products and services able to ensure the coverage of all the
costs associated to and designed according to the principles of eco-
design and able to address long-term sustainability (Geissdoerfer
et al., 2018).
Value capture can be achieved through capitalizing additional rev-
enue sources and intangibles, reducing costs and changing their struc-
ture, and through value preservation (Nuβholz, 2018; Ranta et al.,
2018). From a circular economy perspective, value capture must also
CENTOBELLI ET AL.
allow companies to preserve natural resources and societal wellbeing
(Geissdoerfer et al., 2018).
3.3 | Managerial practices for value creation
Among the main managerial practices for value creation, existing
research on circular business model points to the Design for X practices,
the efficient use of resources, product upgradability, even intervening
along the product's lifecycle, and the management of waste.
Products and processes are the main units of analysis identified in
literature and on which Design for X practices are implementable. As
far as the products are concerned, existing research points to Design
for Recycling, Design for Remanufacturing and Reuse, Design for Dis-
assembly, and Design for Environment (Marconi, Germani, Man-
dolini, & Favi, 2019; Urbinati et al., 2017). All of these practices are
required if companies are to support the end-of-life of the products
and products' circularity (Mendoza et al., 2017; Moreno, De los Rios,
Rowe, & Charnley, 2016). In addition, Design for Environment refers
to the continuous use and improvement of virgin (raw) materials, mak-
ing products safer for any player along the value chain, as well as for
humans and the environment (Niero, Hauschild, Hoffmeyer, & Olsen,
2017; Smieja & Babcock, 2017). In this way, the implementation of
these practices is aimed to support the biological and technical cycles
of materials, that is, materials return safely to the environment with-
out contaminating the biosphere (Moreno et al., 2016). Research also
suggests that a re-design of processes of companies operating along
the supply chain is required to enable the transition towards a circular
economy (Galati, Schifani, Crescimanno, Vrontis, & Migliore, 2018),
which includes reconfiguring the supply chains, implementing new
techniques or production systems, and developing new competences
(Mendoza et al., 2017; Palm et al., 2018). In addition, lifecycle assess-
ment techniques can be useful to determine the effectiveness of
material efficiency to reduce emissions (Gilbert, Wilson, Walsh, &
Hodgson, 2017; Scheepens, Vogtländer, & Brezet, 2016). In addition
to the Design for X practices for products and processes, circular
economy is also a model for the efficient use of resources in order to
reduce emissions and environmental footprint (Frenken, 2017;
Urbinati et al., 2017). Furthermore, as resource and energy efficiency
are becoming key sources of new wealth for the next years, the tran-
sition towards a circular economy gains more importance (Esposito
et al., 2017; Parajuly & Wenzel, 2017). Indeed, a circular economy sys-
tem is based on renewable energies. Accordingly, when designing
their business model, companies should look at preserving resources
that include energy and fuel. In addition, renewable energies can sup-
port the circular economy goal of closing loops in many areas of con-
sumption and production (Esposito et al., 2018; Gilbert et al., 2017).
Recent studies (Lopez, Bastein, & Tukker, 2019) have advanced
resource efficiency measures or practices that companies can imple-
ment at the supply side (supply chain, internal processes, and cost
structure), the demand side (value proposition, customer interface,
and revenue streams), and lifecycle (use and waste phase of products)
to reduce the resources needed for their goods or services.
9
As far as the upgradability of products is concerned, research dis-
tinguishes between functional and parametric upgrading (Umeda, Dai-
mon, & Kondoh, 2007). Functional upgrading refers to adding or
removing products' functions (such as adding the two-sided copying
function to a photocopier), whereas parametric upgrading refers to
changing the performance of products (such as increasing copying
speed). Although products' upgrading surely impacts the value propo-
sition towards customers, its primary aim is sustainable consumption
and production (Pialot, Millet, & Bisiaux, 2017).
An important theme when discussing about the management of
waste is found in the “Design Out Waste.” As underlined by Esposito
et al. (2018), this term means that when products are realized
according to appropriate biological and technical materials cycle,
waste should not exist. While technical materials should be designed
to be used with a lower consumption of energy and for several times,
biological materials may be nontoxic. Design Out Waste is a practice
that should embrace all kinds of waste (Lacy & Rutqvist, 2016) includ-
ing wasted resources (such as fuel), products with wasted lifecycle
(such as smartphones), products with wasted capability (such as cars),
and wasted embedded products (such as textiles that are not reused).
3.4 | Managerial practices for value capture
Among the main managerial practices for value capture, scholars have
focused their attention on take-back systems and product–service
systems (PSSs). In a circular economy, implementing these practices
means that producers maintain the ownership of products, as well as
of their components, while customers become their users and pay for
their use (Goyal et al., 2018; Pezzotta, Cavalieri, & Romero, 2017).
Existing research in the field of circular business model underlines
that take-back systems enable the acquisition of wastes as resources,
although they need to be incentivized by proposing to customers a
lower waste management cost (Ranta et al., 2018). As Lewandowski
(2016) pointed out, take-back systems gain relevance in a circular
economy because this approach “assumes that products, their compo-
nents and/or materials can be cascaded (in case of biological nutri-
ents), and reused/redistributed, remanufactured/refurbished, or
recycled (in case of technical nutrients)” (p. 20); thus, companies are
required to collect back products from the consumer (Krystofik &
Gaustad, 2018). Take-back systems require the design of the take-
back management system including channels and customer relations
related to this system (Lewandowski, 2016).
In addition, and always based on the shift towards a new way of
proposing value for customers—that is, delivering functionality rather
than ownership—the PSS research also offers the opportunity to
reflect on the transition to more sustainable business models (Nasiri,
Rantala, Saunila, Ukko, & Rantanen, 2018; Yang, Smart, Kumar, Jolly, &
Evans, 2018), which provides the basis for companies to better con-
tribute to a circular economy (Khan, Mittal, West, & Wuest, 2018). In
particular, PSSs tackle the issue of changing the traditional (linear)
industrial paradigm by reducing the environmental consumption and
by contributing to a more efficient use of resources. PSSs can refer to
10
(a) products/services combinations/substitutions, (b) services at the
point of sale, (c) different concepts of product use (subdivided into
product-oriented, use-oriented, and result-oriented), (d) maintenance
services, and (e) revalorization services (Reim, Parida, & Örtqvist,
2015; Tukker, 2015; Witjes & Lozano, 2016). Cherry and Pidgeon
(2018) argued that: “Product-oriented services sell additional services
alongside products, such as extended/lifetime warranties and mainte-
nance services. Use-oriented services are designed to provide access
to products and can include the leasing, renting and pooling of prod-
ucts, the ownership of which remains with the service provider.
Finally, the most radical category, results-oriented services include
home service provision agreements or contracts for the delivery of
functional results, with no pre-determined products involved” (p. 2).
The implementation of PSSs for capturing value from customers
requires a close collaboration between producers and customers
themselves (Mendoza et al., 2017).
The transfer of value by leveraging these new forms of selling
products to customers—that is, take-back systems and PSSs—has to
be supported by effective commercial and promotion initiatives, such
as direct involvement of customers in the same initiatives and an
extensive communication, in order to create awareness to customers
about the educational, ethical, and economic value of products real-
ized on the basis of circular economy principles (Urbinati et al., 2017).
The highest level of the business model's circularity is reached when
companies communicate their circular initiatives through all channels
(in-store advertising, website, sales personnel, etc.).
3.5 | Cross-dimensional practices
In order to practically support the creation, transfer, and capture of
value in a circular business model, existing research has underlined
two main dimensions of analysis: the role of the emerging digital tech-
nologies to support the implementation of some managerial practices
that are necessary for making the transition and the willingness of the
top management to believe this transition and to push the transforma-
tion of companies.
Recent research at the intersection between circular economy
and digital innovation has highlighted how the key enabling technolo-
gies of Industry 4.0 can be useful to accelerate some circular economy
targets (de Sousa Jabbour, Jabbour, Godinho Filho, & Roubaud, 2018)
and enhance sustainable competitiveness and smart growth (Rajala,
Hakanen, Mattila, Seppälä, & Westerlund, 2018). First, these technol-
ogies can find applicability in the regenerate, share, optimize, loop,
virtualize, exchange framework for circular economy transition, which
supports information flows along the supply chain, and the collection
and sharing of data among the stakeholders' network (Despeisse
et al., 2017). In addition, the Internet of Things—although its practical
effects are still unclaimed and under experimentation—can support
the monitoring, analysis, and control of products' data in order to sup-
port their lifecycle and extend their replacement along the entire sup-
ply chain (Da Xu, He, & Li, 2014). Moreover, the Internet of Things
can be used as a digital enabler of circular economy together with
CENTOBELLI ET AL.
(a) system optimization models, (b) real-time measurement, (c) big data
analysis and process control, (d) smart integration of tools and
methods, and (5) data mining techniques, to help quantify resource
efficiency (Akter & Wamba, 2017; Marconi et al., 2019; Witkowski,
2017). In addition, additive manufacturing technologies (also known
as 3D printing) can be used to support the design for assembly and
re-assembly, by producing modular and customized products for cus-
tomers in places that are close to them, thus exploiting a localization
advantage. In this way, manufacturing of products becomes
decentralized, and by shortening the lead time on production and con-
nectivity between designers, engineers, and users, allows a lower dis-
tribution costs and raw materials savings (Holmström, Holweg,
Khajavi, & Partanen, 2016). Finally, cyber-physical systems and cloud
manufacturing can play key roles in enabling a circular economy tran-
sition. As underlined by de Sousa Jabbour et al. (2018, p.5): “Cyber-
physical technological systems enable the integration of cyber space,
physical processes and objects in order to connect machines and
devices in production lines as a network, thus making real data avail-
able for decision-making, such as for the prioritization of production
orders, optimization of tasks, reporting of maintenance needs, etc.
(Ahmadov & Helo, 2018; Lee, Bagheri, & Kao, 2015). Sensors and
actuators are responsible for gathering and distributing this data in
real-time (Yu, Xu, & Lu, 2015).”
In addition, cloud manufacturing represents a service-oriented
business model to share manufacturing capabilities and resources on a
cloud platform and to enhance sustainable process manufacturing
(Fisher et al., 2018). “Cloud manufacturing is a technology that creates
a virtual and global space for enabling a shared network of
manufacturing resources and capabilities through the internet. The
logic of cloud manufacturing is service-based, meaning that suppliers
and customers interact in order to sell and buy services—for instance,
design, simulation, manufacture, and assembly of products. Cloud
manufacturing is recommended for its e-commerce features (Yu et al.,
2015), and also involves other technologies from Industry 4.0, such as
additive manufacturing” (de Sousa Jabbour et al., 2018, p. 5).
We also found some evidence about the importance of manage-
rial commitment of the top executives to enable the transition. Circu-
lar economy requires the development of a completely new mindset
that helps managers and practitioners develop competencies and
capabilities, such as balancing linear and circular systems, addressing
complex and highly dynamic factors, including rapid technological
shifts and market volatility. Managerial commitment is necessary if
managers intend to spread these competencies and capabilities to the
whole organization and to create a culture of circular economy (Hop-
kinson, Zils, Hawkins, & Roper, 2018). In addition, the managerial
commitment of the top executives mediates the effectiveness of rela-
tionships along the supply chain with all the involved actors. Some
scholars have shown that a growing number of companies are able to
partner with each other and to extend the collaboration towards
policymakers and institutions, to reduce waste and advance product
reuse, thanks to sustainability commitments and the sharing of zero-
waste goals (Veleva & Bodkin, 2018). Moreover, research suggest
defining good practices or standards (with upstream stakeholders,
CENTOBELLI ET AL.
such as suppliers) to drive down costs and promote these practices or
standards (with downstream stakeholders, such as customers), to
improve customer awareness and engagement, as well as to sensitize
purchase decisions. In doing so, managerial commitment represents a
key practice for enhancing an alignment of values that facilitates value
cocreation and cocapture processes (Ünal, Urbinati, & Chiaroni, 2019).
4 | RESEARCH AGENDA
Despite the proliferation of studies at the intersection between circu-
lar economy and business models that advance relevant managerial
practices for value creation, transfer, and capture in a circular business
model and for a business model transition of companies towards a cir-
cular economy, major research avenues remain to be explored within
each dimension and subdimension characterizing the proposed theo-
retical framework.
4.1 | Contextual factors
First, we recognize the need for further theoretical and empirical
research on the role that contextual factors can play to enhance the
transition (Esposito et al., 2017, 2018; Merli & Preziosi, 2018). This
aims to create a favorable environment and a responsible political
agenda that is able to leverage the technological, sociocultural, institu-
tional, and economic features for the full transition towards a circular
economy (Kirchherr et al., 2018; Rizos et al., 2012), by removing the
barriers and limitations related to its implementation (De Jesus &
Mendonça, 2018). Future contributions should focus more on the
influence of political initiatives and/or supporting regulatory frame-
works on the adoption of circular economy in a given region or coun-
try (Katz-Gerro & López Sintas, 2018; Leipold & Petit-Boix, 2018;
Pauliuk, 2018). To this end, we still lack a set of robust indicators to
measure the degree of circularity at the industry, regional, or national
levels.
4.2 | Circular business model dimensions
Second, there is a need to carefully study the existing taxonomies of
circular business models to understand the most critical drivers of
value creation, transfer, and capture in a circular business model
(Heyes et al., 2018; Ranta et al., 2018). As we have noted, circular
business models require companies to adopt a systemic perspective
for managerial practices implementation in all the dimensions of value
and a higher number of relationships along the value chain compared
with a traditional linear model (Prieto-Sandoval, Ormazabal, Jaca, &
Viles, 2018; Ünal, Urbinati, & Chiaroni, 2019). Scientific research has
traditionally dealt with circular economy by adopting particularistic
and functional approaches, which neither explore the circular econ-
omy concept in its extended format nor highlight its diverse research
trajectories and its forecasted development. In other words, current
11
research still falls short of providing a holistic and systemic view of cir-
cular economy that combines existing themes and emerging research
trends, especially in relation to the design of circular business models.
Accordingly, our study emphasizes the importance of analyzing not
only the results of a circular economy implementation in a company's
business model, but also the process according to which these results
are achieved, that is, which business model's dimensions are involved,
which managerial practices have to be adopted, and details about the
interdependencies between the dimensions and the practices. Thus,
similar to Zott, Amit, and Massa (2011), the present paper aims to
highlight the relevance of adopting “a holistic and systemic
(as opposed to particularistic and functional) perspective, not just on
what businesses do (e.g., what products and services they produce to
serve needs in addressable market spaces) but also on how they do it
(e.g., how they bridge factor and product markets in serving the needs
of customers)” (Zott & Amit, 2010, pp. 1036–1037). Again, like Zott
and Amit (2010), the purpose of our systematic review is to “encour-
age the firm in systemic and holistic thinking when designing its busi-
ness model, instead of concentrating on isolated, individual choices”
(p. 223). Promising streams of future research would be to investigate
how a systemic perspective helps to design circular business models
(Ünal, Urbinati, Chiaroni, & Manzini, 2019). Furthermore, on this issue,
research is needed to unravel the process through which companies
transform their current linear model into a circular one (Lewandowski,
2016; Mendoza et al., 2017). In this perspective, our review aims to
overcome the gap highlighted in the study of Lüdeke-Freund et al.
(2018) with reference to investigation of the circular economy busi-
ness model in a strategic management perspective.
4.3 | Managerial practices for value creation and
capture
Third, future research should further deepen the managerial practices
for value creation, transfer, and capture, thereby linking to the litera-
ture on business model design, redesign, and innovation (Linder &
Williander, 2017; Massa, Tucci, & Afuah, 2017). In particular, future
research could explore how the managerial practices of value creation,
transfer, and capture in circular business models are linked each other,
in order to also encompass a systemic perspective of the business
model (Velu, 2017; Zott & Amit, 2010). Again, further investigation is
needed to deepen knowledge of how the identified managerial prac-
tices for value creation, transfer, and capture can be implemented
specifically for each kind of company and industry (Urbinati et al.,
2017). In addition, several subdimensions of value creation and cap-
ture deserve particular attention in future studies. For example, circu-
lar business models' design requires the involvement and interaction
of a high number of actors for value creation. Therefore, scholars
should investigate how companies' partnerships influence the creation
of value in a circular business model (Manninen et al., 2018). In other
words, we call on management scholars to explore the existence of
new approaches of stakeholders' involvement and management in cir-
cular business models initiatives and projects (Leipold & Petit-Boix,
12
TABLE 3 Emerging and promising questions for future research
Thematic area
Contextual factors
Circular business model dimensions
Managerial practices for value creation
Managerial practices for value capture
Cross-dimensional practices
Digital technologies implementation
CENTOBELLI ET AL.
Emerging research questions
• What role do political initiatives and
supporting regulatory frameworks play in
fostering the diffusion of circular
economy?
• At which level (national vs. regional vs.
local, industry vs. industrial clusters vs.
single companies) are the above
initiatives and frameworks most
effective? And what is the influence of
interactions among different levels?
• Which is the best set of indicators to
measure the degree of circularity at the
national, regional, and local levels?
• Does a systemic perspective improve the
effectiveness in designing circular
business models, and if so, how?
• How does in practice the process of
transition take place from a linear to a
circular business model for existing
companies?
• Which is the best set of indicators to
measure the degree of circularity at the
company level?
• How do companies integrate and
coordinate Design for X (including
emerging “design out waste”), resource
efficiency, and upgradability practices to
enable the creation of value in a circular
business model?
• How do the companies' partnerships
influence the creation of value in a
circular business model?
• Are there new approaches of
stakeholders' involvement and
management in circular business models?
• How do companies implement the new
forms of selling products to customers,
such as take-back systems and PSS?
• How can the above forms be conceived
to the customers in an effective way to
ensure the right perception of the circular
business model?
• How can the customer be effectively
engaged in a circular business model to
maximize companies' value, avoiding risks
of opportunistic customers' behavior?
• What role do digital technologies play in
the design of circular business models?
• How can the influence of digital
technologies be measured in value
creation and capture for a circular
business model?
• How can the key enabling technologies of
Industry 4.0 be applied in practice by
companies to achieve specific circular
economy targets?
(Continues)
CENTOBELLI ET AL.
TABLE 3 (Continued)
Thematic area
Managerial commitment
Abbreviation: PSS, product–service system.
2018). On the other hand, the role of the customer in a circular busi-
ness model is still under-researched and much more effort is needed
to understand how companies involve customers in their circular ini-
tiatives (Hazen, Mollenkopf, & Wang, 2017), as well as how the role
of the customer in a circular business model makes it possible to maxi-
mize companies' value.
4.4 | Cross-dimensional practices
Fourth, there is still a lack of empirical evidence on how digital tech-
nologies, such as those involved in the concept of Industry 4.0, are
applied in practice by companies to reach specific circular economy
targets (de Sousa Jabbour et al., 2018; Marconi et al., 2019). This calls
for a better understanding of how these technologies can properly
support the supply chain of actors (customers, suppliers, institutions,
etc.) involved in a circular business model, enabling and supporting
the active involvement of external actors along all the phases of a cir-
cular lifecycle (Fisher et al., 2018; Moreno, Court, Wright, & Charnley,
2018). In addition, the role of the managerial commitment is even
more relevant to explore in future studies (Ünal, Urbinati, & Chiaroni,
2019; Veleva & Bodkin, 2018). Indeed, as circular business models
require the involvement of a large and complex system of actors—and
this may mean additional inertia challenges for companies—the com-
mitment of managers to make the transition can address these issues
most effectively (Hopkinson et al., 2018). Thus, further investigation is
needed to also explore the “soft” metrics for measuring value in circu-
lar business models.
Accordingly, the analysis of the dimensions and subdimensions of
major specialization characterizing the theoretical framework has
made it possible to identify some emerging and promising questions
for addressing future research, as synthesized in Table 3 below.
The questions proposed in Table 3 aim to identify the main
open issues in the debate on designing business models in circular
economy by adopting a strategic management perspective and to
inspire the future work of scholars and researchers towards the
comprehension of innovation patterns occurring at company level.
The areas identified in our study aim to offer an original reading of
the debate and make it possible to derive a holistic understanding
13
Emerging research questions
• How does the commitment of
managers enhance the transition
towards a circular business model?
• How does the implementation of a
circular business model impact on
human capital and what can managers
do to overcome companies' inertia?
• Which are the “soft” metrics for
measuring value in a circular business
model?
of the main issues of specialization. In doing so, our research aims
to contribute to the advancement of the research in the field of cir-
cular economy by adopting the perspective of strategic management
scholars.
Deeper comprehension of the proposed areas of major specializa-
tion, such as the dimensions of contextual factors, business models,
and cross-dimensional practices, implies conducting future research
on the interdependences of the dimensions and examining in much
more detail different perspectives and research domains, such as
organizational culture, managerial commitment, digital technologies,
external environment, and the stakeholders' community, as well as the
techniques and approaches that allow for the effectiveness of a circu-
lar economy business model design.
The strategic management perspective that we have assumed
as the basis of our investigation is expected to offer a wide spec-
trum of future works. This is because the comprehension of how a
business model is able to create value for the company by creating
value for the customers is challengeable and is a never-ending topic
of research. If this is observed from the perspective of sustainability
science and circular economy, the opportunities for investigation are
tremendously high and the emerging areas of research resulting
from our systematic literature review have aimed to work in this
direction.
5 | CONC LU SIONS
This paper provides a systematic review of the literature on the busi-
ness models design for a circular economy transition, with the aim of
offering an overview of the state of research and outlining a future
agenda.
The results of our study highlight the relevance of business
models' issues into the debate on circular economy by providing a
theoretical conceptual framework for management scholars. The pro-
posed framework clusters the main themes and deepens the
unexplored dimensions and topic areas to offer a ground for inspiring
future academic studies, the actions of managers, and the
policymakers' activities. In particular, the paper shows that, in order to
design a circular business model, companies have to implement some
14
managerial practices that are specific for each dimension of the busi-
ness model: value creation, value transfer, and value capture.
It also shows some aspects that have to be considered in the
business model transition of companies for a circular economy. The
first is the role played by policymakers or international institutions
that are pushing for a radical change of the production model: from
a “linear, take, make, dispose,” a unidirectional model of production
where natural resources provide inputs for creating mass products
to be consumed and disposed after use, to a “circular economy”
model of production, where economic growth is enhanced by virgin
resource consumption. Second, in order to practically support the
creation, transfer, and capture of value in a circular business model,
existing research underlines both the role of the emerging digital
technologies of Industry 4.0 to support the implementation of some
managerial practices and the managerial commitment of the top
management to accelerate the transformation of companies.
Finally, the practical transition towards a circular business model
requires a continuous monitoring and control of the entire changes
of the business model dimensions, verification of the circular econ-
omy targets that have been reached, and eventually the corrective
actions.
Given the preliminary nature of this work, we aim to provide an
effective reference framework for management scholars and practi-
tioners operating in the fields of circular economy and circular busi-
ness models, as well as promising avenues for further investigation.
ORCID
Piera Centobelli https://orcid.org/0000-0002-3302-2236
Roberto Cerchione https://orcid.org/0000-0002-7025-3295
Davide Chiaroni https://orcid.org/0000-0001-7451-8927
Pasquale Del Vecchio https://orcid.org/0000-0001-9791-3049
Andrea Urbinati https://orcid.org/0000-0002-5802-8597
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How to cite this article: Centobelli P, Cerchione R, Chiaroni D,
Del Vecchio P, Urbinati A. Designing business models in
circular economy: A systematic literature review and research
agenda. Bus Strat Env. 2020;1–16. https://doi.org/10.1002/
bse.2466