Abstract
The purpose of this thesis project is to unravel how to facilitate the transition from the current linear economy to the circular economy. Drawing from a review of the circular economy literature, this thesis advocates the importance of business model innovation and circular business models to facilitate the circular transition. Based upon these insights, we designed and conducted three empirical studies. These studies – which are based on both qualitative and quantitative data – provide insight into how companies can engage customers and other actors when making the shift from linear business models to circular business models. The first empirical study outlines the conditions under which customers engage with a specific type of circular business models, that is product service systems. Building on the results of this study, the second empirical study unravels the relative importance of the circularity versus other attributes for customers' engagement with offerings stemming from specific business models. The third empirical study seeks to uncover how firms engage a wide range of actors in the business model innovation process based on the approach of "design thinking" to co-create self-sustaining circular value. These studies unravel the following interesting results. The first empirical study shows that customers prefer product-oriented PSSs to use-oriented PSSs, specifically, they prefer to engage in second-hand followed by rental, swapping. Additionally, most customers prefer to engage with only one PSS consumption scheme (i.e. product- oriented PSS, use-oriented PSS with rental scheme, or use-oriented PSS with swapping scheme). The results also show that women are more likely to engage with use-oriented PSSs, while age, reduces the likelihood of customer engagement with use-oriented PSSs with a rental scheme. Surprisingly, the expected benefits do not explain customer engagement with use-oriented PSSs with a rental scheme, but they do explain customer engagement with use-oriented PSSs with a swapping scheme and customer engagement with product-oriented PSSs. The second study indicates that customers prefer fashion items encompassing a high-end brand, high quality, and derived from linear or remanufacturing business model for the lowest price (i.e. only € 19.99). As such, they are willing to pay a premium of € 47.47 for a high-quality sweater, and a premium of € 8.55 for a high-end brand. However, consumers expect a discount for increasing levels of circularity (e.g., resale, rental) as they require the respective discounts of € 112.64/month, € 39.11, and € 1.58, to engage in rental services, resale services, and remanufacturing. Interestingly, customers consider circularity (i.e., remanufacturing, resale, rental, and linearity) to be the relative most important attribute with 44% impact on their engagement in fashion offers, followed by price, quality, and brand that impact respectively 35%, 18%, 3% of consumers' engagement. The third empirical study provides insights into the way in which four different types of co-created values could emerge from the business model innovation process aimed at circular economy. It argues that a circular mindset is a necessary condition for developing circular value, yet it is an insufficient condition for developing self-sustaining circular value. More explicitly, the emergence of a self-sustaining circular value is conditioned by a high cybernetic process, wherein actors engage intensively in an iterative development process with a major attention for embracing the unexpected, connecting with others, and the aesthetics of use. Subsequently, a high cybernetic approach coupled with a high circular mindset steer a system's level engagement and high convergence of goals in an ever more complex system, thus resulting in a self-sustaining circular value. Overall, this research sheds light on circular business models implementation in organizations, while considering the actors' mindsets and roles, especially customers and their engagement. The whole thesis project presents interesting findings and paves the way to future research about innovating business models for circular economy and sustainability.