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Circular business models: Business approach as driver or obstructer of sustainability transitions?

: Hofmann, F.


Journal of cleaner production 224 (2019), pp.361-374
ISSN: 0959-6526
Journal Article
Fraunhofer IZM ()

In times of climate change, biodiversity loss, or growing natural resource scarcity, the circular business model (CBM) concept is increasingly attractive, promoting the reorganization of current value creation architectures and supply chains toward a sustainable system of production and consumption. Driven by a vision of continued economic expansion and growth on a planet with finite natural resources, CBMs are endorsed by political institutions, multinational corporations, business consultancies, and academia. Some argue that CBM configurations contribute to a more holistic and radical change in the existing business logics than approaches that achieve incremental resource efficiency improvements. However, how “holistic” and “radical” are CBMs theoretically constituted in academia if we consider the deep structural and paradigmatic shifts in societies necessary to deal with the challenges associated with the Anthropocene? Prior studies do not examine the inherent normative settings and the operational change approaches beneath CBM concepts. To reconstruct the theoretical foundations of CBMs critically, the recent CBM body of academic literature is systematically reviewed according to (1) the legitimacy of CBMs (why should it be done) (2) the modes of value creation and offerings (what should be done), and (3) the core principles of CBM integration into daily business (how should it be done). From this synthesis, the predominant notion of sustainability behind the CBM concept can be revealed. This study argues contemporary scientifically constructed CBMs need to be reconsidered if they are intended to contribute to a profound economic transition toward sustainability. Hence, the paper shows how principles from more “holistic”, “radical”, and pluralistic economic approaches can widen CBMs and how future research can help to diversify the concept.