Creating Value in the Circular Economy: A Structured

Multiple-Case Analysis of Business Models

Authors:
Valtteri Ranta a*
E-mail: [email protected]
a
Leena Aarikka-Stenroos
E-mail [email protected]
Saku J. Mäkinen a
E-mail [email protected]

aTampere University of Technology, Korkeakoulunkatu 10, 33720 Tampere,

Finland.

*Corresponding author

Abstract:
The circular economy (CE) has gained traction as a pathway towards more
sustainable economic growth. The main actions leading towards a CE have been
identified as the 3R principles of reduce, reuse, and recycle. However,
understanding is lacking regarding how the adoption of CE using the 3R
principles generates value and revenue in a business context. Thus, this study
structurally examines business models used by CE-driven firms utilizing the
fundamental business model components of value proposition, value
creation/delivery, and value capture. By developing a detailed framework of
business model components, acknowledging the particular features of CE
implementation, and conducting a multiple-case study combining the business
model approach with the 3R principles, this study analyzes feasible CE business
models from multiple industries in Europe, the US, and China. The following
five research propositions are derived from the findings of the explorative case
analysis: 1) the cost-efficiency of circular operations is the key proponent to
successful CE business, 2) take-back services enable the acquisition of particular
wastes as resources, but they need to be incentivized through reductions in
customers’ total waste management costs, 3) circular business models require the
focal firm to separately manage multiple positions in the value chain, 4) the take-
back system for gaining value through CE can be implemented successfully in
multiple ways, and 5) recycling is easier to implement than reducing or reusing
due to a smaller impact on the business. These propositions contribute to the
circular business model literature by showing how economic value is generated
by CE initiatives and providing foundations for theory-testing future research.
The propositions also provide guidance for policymakers and managers on
supporting and implementing circular business.

Keywords: Business model; Circular economy; 3R principles; Value

proposition; Value capture; Value creation

Ranta, V., Aarikka-Stenroos, L., & Mäkinen, S. J. (2018). Creating value in the
circular economy: A structured multiple-case analysis of business models.
Journal of cleaner production, 201, 988-1000.

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 Highlights:

- Analytical framework combining the business model and 3R-principles is

developed.
- Business model cases from China, the EU, the US, and Finland are analyzed.
- Five propositions for implementing circular business are derived.
- The economic value of circular business appears to rely on recycling.

1. Introduction

Today’s dominant economic development model—the so-called “take, make, and dispose”
model—is currently being challenged. More sustainable methods of consuming and
managing materials and natural resources are becoming increasingly vital, on both the
regional and global scales. From the perspective of resource intake, the current model relies
on doing business based on the use of virgin material resources (Yuan et al., 2006). Yet, as
many natural resources are limited in quantity, there is an urgent need to create new
methods for harnessing and using resources (Mathews and Tan, 2011). In this challenging
context, the circular economy (CE) provides an alternative model for analyzing and
understanding consumption. In a CE, products and materials continue to circulate in so-
called “loops” for as long as they can provide value, while simultaneously promoting
activities that reduce the need for the material per unit of value produced. These activities
include, for example, service-based offerings such as rental services, the creation of more
durable and/or leaner products, and increasing the use of recycled materials (Zhu et al.,
2010). Due to its potential for concurrent economic value creation and sustainable
development, the CE is increasingly receiving attention on a global scale among businesses
(MacArthur, 2013) and policymakers (European Commission, 2015; Jiao and Boons,
2017).
Yet, for the CE to truly emerge as the new growth model it must be able to deliver on its
promises to provide economic growth along with sustainability. If CE businesses are
unable to compete economically with the current linear model of “take, make, and
dispose,” CE implementation will be an uphill battle (Charonis, 2012). Here, the business
model concept can provide a critical foundation for discussing economic value generation
in a business by linking the value proposition, value creation, and delivery mechanisms,
along with ways of capturing value for a firm (Osterwalder et al., 2005; Richardson, 2008).
Studying business models in a CE is thus vital to determine the actual economic benefits
that can result from embracing CE practices at the company level.
Previous studies focusing on the CE from a business model perspective have consistently
employed the sustainable business model approach (Lewandowski, 2016; Linder and
Williander, 2015; Rizos et al., 2016; Weissbrod and Bocken, 2016), which combines
environmental, societal, and economic value (Bocken et al., 2014). Hence, there is a gap in
the scholarly literature examining business models for CE predominantly from the
economic value perspective. CE-oriented studies outside of business-model research have
typically focused on circulating material flows and advancing the 3R principles of reduce,
reuse, and recycle (Ghisellini et al., 2016) in CE initiatives such as industrial symbioses
(Mathews and Tan, 2011) and increased waste recycling activities (Zhu et al., 2010). These
studies however remain silent on how CE creates economic benefits, value, and revenue at

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the company level. This perspective is critical because, as Lieder and Rashid (2016) in their
comprehensive review of CE in the manufacturing context state, business models, product
design, and supply design are eventually determined by the underlying motivation of
gaining economic value. Therefore, our research question is as follows: With what kinds of
business models do CE-driven business ventures operate in terms of their value
proposition, value creation and delivery, and value capture?
This study fills a current research gap by using an economic value perspective to assess
business initiatives in the field of CE. To this end, we developed a conceptual component-
based business model framework to specifically study CE business models from a review
of the business model literature; this is detailed in section 2. In section 3, we describe our
explorative multiple-case analysis of different CE business models from a variety of
industries and geographical locations. Section 4 outlines the key results of each case and
reveals patterns across cases using the framework developed in section 2. In section 5,
propositions for circular economy business are developed based on the findings and on
earlier literature on business models and circular economy, after which the limitations of
the study are discussed. Section 6 concludes the study by pinpointing contributions,
implications to research and practice, and areas for future research.

2. Theoretical Background

2.1 The Business Model Approach

The concept of the business model encompasses multiple aspects, ranging from how the
firm earns revenue to how it structures its organization (Clauss, 2016; DaSilva and
Trkman, 2014). As this multifaceted concept with various definitions has received criticism
for its ambiguity and thus its usability as a research concept (Mäkinen and Seppänen, 2007;
Massa et al., 2017), reviewing business model approaches is crucial to use this concept to
analyze the economic value of CE initiatives. The general view is that the business model
bridges the gap between the firm’s strategy and its concrete operations by describing the
logic it applies to create value to customers and capture economic value for itself (see the
full review in Appendix A). Early research tended to describe types of business models
almost as formulas to follow (Linder and Cantrell, 2000), but as the field has developed,
the typological view has given way to a more flexible approach treating the business model
as built of parts that together in interaction describe the way the firm does business (Saebi
et al., 2017). The smaller units of the business model represent either defined components
that should be considered while developing or analyzing a business model (Osterwalder et
al., 2005) or an activity system that depicts the interdependent activities required to create
value (Zott and Amit, 2010).
This study adopts the business model component approach, which recent reviews by Clauss
(2016) and Foss and Saebi (2016) have identified as the established approach for analyzing
business models as they appear at a point in time. Hereafter, the business model concept
refers to the set of components in the firm’s business venture that connects the customer
value of the venture with the firm’s ability to generate profit. This definition synthesizes
aspects prevalent in existing business model definitions. The business model is not a factor
to analyze merely as an afterthought but rather a managerial tool for planning a business
venture (Osterwalder et al., 2005) that combines multiple components of the firm’s
activities, capabilities, and resources into a single concept (Wirtz et al., 2016). This
approach is illustrated by the depiction of the business model as a set of components in the

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firm’s business ventures. However, within the component-based approach, multiple
approaches to which components and furthermore sub-components constitute the business
model exist (DaSilva and Trkman, 2014; Wirtz et al., 2016). Table 1 presents the views of
key authors on the components and sub-components of a business model.

Author, Year Components Sub-components

Linder and Cantrell, 2000 Value proposition Value proposition: customer, customer
Value delivery needs, products, services and experiences,
channels, pricing
Financial structure
Value delivery: execution, distinct
capabilities
Financial structure: distinct financial
structure
Morris et al., 2005 Offering Offering: product/service type, value
Market creation and delivery
Internal capabilities Market: type of organization,
geographical market size, customer
Competitive strategy position in the value chain, market
segment, transactional/relational market
Internal capabilities (one or more of the
following): production/operating systems,
selling/marketing, information
management/mining/packaging,
technology/R&D/intellectual/creative or
innovative capability, financial
transactions/arbitrage, supply chain
management, networking/resource
leveraging
Competitive strategy (one or more of
the following): image of operations,
product, or service,
quality/selection/features/availability/inno
vation leadership
Osterwalder et al., 2005 Product Product: value proposition
Customer interface Customer interface: target customer,
Infrastructure distribution channel, relationship
management Infrastructure management: value
Financial aspects configuration, core competency, partner
network
Financial aspects: cost structure, revenue
model
Richardson, 2008 Value proposition Value proposition: offering, target
Value creation & customer, basic strategy to win customers
delivery system and gain competitive advantage
Value capture Value creation & delivery system:
resources and capabilities, value chain,
activity system, business processes, links
to suppliers, partners and customers
Value capture: revenue sources,
economics of the business
Bocken et al., 2014 Value proposition Value proposition: offering, customer
Value creation and segments and relationships

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 delivery Value creation and delivery: key
Value capture activities, resources and capabilities,
channels, partners, technology
Value capture: cost structure, revenue
streams
Clauss, 2016 Value proposition Value proposition: offering, customers
Value creation and markets, channels, customer
relationships
Value capture
Value creation: capabilities,
technology/equipment, partnerships,
processes
Value capture: Revenue model, cost
structure

Table 1 Views on business model components and corresponding sub-components.

Our definition also reflects the view that the business model depicts a single business
venture or offering and does not necessarily reflect the components of an entire firm
(Chesbrough and Rosenbloom, 2002). Another aspect of the business model, illustrated by
this definition, is the need to view a venture’s value from two perspectives. The venture
needs to create value for the customer while also generating profit for the firm (Saebi et al.,
2017; Teece, 2010). The business model serves the important role of bridging these two
types of value creation within a single concept.

2.2 Circular Economy: Objectives and Principles

The concept of the circular economy (CE) proposes new ways for firms to create
previously unattained value for both customers and the firm itself (MacArthur, 2013). This
concept suggests the simultaneous creation of environmental and economic benefits and
has the potential to generate employment opportunities in an emerging industry (European
Commission, 2015). However, in order to analyze where the economic value of CE is
expected to come from in practice, it is valuable to discuss the overall objectives of the
circular economy and, especially, to identify how CE implementation is to have an
economic value-generating effect on a business.
The main actions through which the CE is realized are the 3R principles—reduce, reuse,
and recycle—that focus on the circulation of materials in the system (Ghisellini et al.,
2016). The reduce principle calls for minimizing the overall amount of materials and
energy used and waste generated in the system by increasing efficiency in both production
and consumption through, for instance, improving technologies, simplifying packaging,
and using more power-efficient appliances (Feng and Yan, 2007; Su et al., 2013). The
reduce principle has the most diverse practical implementations because it aims to
eliminate the need to reuse or recycle materials. In one example, the zero-waste strategy
aims to maximize value produced while minimizing waste and environmental impact
(Figge et al., 2014). Unilever (2016) adopted this strategy and eliminated nonhazardous
waste to landfills at more than 600 facilities by February 2016.
The reuse principle holds that “products or components that are not waste are used again
for the same purpose for which they were conceived” (The European Parliament and the
Council of the European Union, 2008, p. 10). Reusing products and components requires
fewer resources and less energy and labor than producing new ones from virgin materials
or even recycling and disposing of products (Castellani et al., 2015). Reuse thus has the
potential to increase overall resource efficiency and to produce additional revenue from

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multiple use cycles. This principle is central in use-oriented product-service systems, where
the firm does not sell its product but offers it as a service (Tukker, 2015), and in the
emerging sharing economy, where people with surplus resources rent them to those who
need them (Belk, 2014) often through platforms, such as Airbnb, which allows people to
rent their unused rooms as accommodations.
The recycle principle refers to “any recovery operation by which waste materials are
reprocessed into products, materials, or substances whether for the original or other
purposes” (The European Parliament and the Council of the European Union, 2008, p. 10).
In recycling, products and components are always transformed back into materials. The
recycling principle also supports using recycled and recyclable materials; as in the case of
Swedish outdoor equipment brand Fjällräven that manufactures a backpack made of 95%
recycled polyester (Fjällräven, 2016). Recycling is often treated as synonymous with the
CE, and waste policies have had a strong focus on increasing recycling rates (Kirchherr et
al., 2017). However, when considering resource efficiency and the ability to maintain the
value of materials in circulation, recycling might be the least sustainable solution of the 3R
principles because it is limited by the natural law of entropy, complexity of materials, and
potential for abuse (Stahel, 2013). The 3R principles are the tangible methods to influence
material use in the CE (Ghisellini et al., 2016), so their implementation should contribute to
economic value when firms adopt CE business models (Urbinati et al., 2017). To analyze
the economic viability of the CE in business, therefore, it is important to examine all three
principles using the business model approach.

2.3 Towards a Conceptual Framework to Analyze Business Models in the CE Field

Various forms of the business model concept have been recently applied to the circular
economy. Scheepens et al. (2016) discuss the importance of creating both economic and
environmental value in circular business models and apply an innovative Life Cycle
Assessment (LCA)-based eco-costs value ratio approach that focuses on customers’
willingness to pay. While the approach is very promising in that it tests both the
environmental and economic effects of a circular business model, it does not help to
identify how economic value is generated in a circular economy on the firm or systemic
level. Rizos et al. (2016) studied the barriers to and enablers of circular business model
implementation in small and medium-sized businesses (SMEs). Although they highlight
the reasons why SMEs implement circular business models, the authors do not explore
whether these models generate concrete economic value. Research by Lewandowski (2016)
has been the most focused on identifying value creation methods through an analysis of the
business model canvas (Osterwalder et al., 2005) in regard to CE literature.
However, each of the recent contributions to the field have approached CE from the
perspective of sustainable business models. In the sustainable business model approach, the
value centricity of the business model is extended to include societal and environmental
values, as well as economic value (Dentchev et al., 2018). This extension follows the
suggestion that environmental sustainability could provide a competitive edge to
companies as customers and other stakeholders such as legislators become increasingly
aware of environmental risks (Bocken et al., 2014). While the sustainable business model
concept drives its adopters to create more sustainable businesses, it simultaneously
muddles aspects relevant to economic value generation, thus reducing its applicability as an
analytical tool for assessing this type of value generation, which is the ultimate driver of
decision making in business (Lieder and Rashid, 2016).

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Based on the business model literature reviewed, we developed a component-based
framework that enables the analysis of specific cases in a structured, in-depth manner. We
acknowledge the frameworks presented in previous business model literature and adopt the
general business model framework by Richardson (2008). Thus, we use value proposition,
value creation and delivery, and value capture as our main components. The same general
framework has emerged as a leading high-level framework for business model components
(Clauss, 2016). and has already been used in the sustainable business model field (Bocken
et al., 2014). Furthermore, because the business model concept has received criticism for
its ambiguity (Chesbrough and Rosenbloom, 2002; Magretta, 2002; Zott et al., 2011), we
enhance the level of detail by adding sub-components, which, as portrayed in Table 1, is an
established way of concretizing the business model concept. This approach is similar to
that of Lewandowski (2016); however, we decided not to extend the business model
components to include CE-specific components such as take-back programs as those could
be seen as parts of CE business model archetypes and thus limit the usability of the
framework. Rather, our approach was to include components in the business model concept
that can identify the variety of CE approaches during analysis.
To assess value proposition, we selected offering and target customer as sub-components
because they can include, e.g., servitization aspects (Tukker, 2015) or emerging customer
segments (e.g., Chertow, 2007). Resources and capabilities, organization, and position in
the value network represent the sub-components of value creation and delivery in our
model; these can capture, e.g., take-back programs (Lewandowski, 2016) without the need
for additional sub-components. For value capture, revenues streams and the economics of
the business were selected as sub-components because, regardless of the addition of CE
aspects, a firm will capture value through added revenue or realized benefits to the
economics of the venture. The complete conceptual framework developed for our case
analysis is shown in Figure 1. In addition to the business model layer, a separate CE-
specific layer of 3R principles was included to improve and ensure the identification of CE
aspects during case analysis. As stated by Ghisellini et al. (2016), the 3R principles convey
the main “actions” through which the CE concept is put in practice according to CE
research (Ranta et al., 2017; Su et al., 2013). However, directly embedding the 3R
principles amongst the business model components would clutter the framework, as they
could potentially emerge in any of the sub-components depending on one’s perspective.
Thus, rather than embedding the 3R principles in the business model framework, they were
analyzed separately whilst their connections to the business model framework emerged.

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Figure 1 The developed conceptual framework for analyzing business models in the CE
field.

3. Research Methodology

3.1 Research Design

An explorative, multiple-case strategy (see e.g. Eisenhardt, 1989; Miles and Huberman,
1994) was used to examine business models in the field of CE for several reasons. First, the
lack of literature combining the business model perspective and the CE concept signals a
lack of understanding regarding the business potential of CE initiatives (see, e.g., Lieder
and Rashid, 2016) and thus highlights the need to explore CE in a structured way. Second,
as relevant studies to date have been mainly conceptual, a multiple-case strategy allowed us
to empirically analyze the business model components of several cases in a fine-grained,
in-depth, and contextualized way, as well as compare cases and map emerging patterns
between them that represent different types of CE initiatives in different global markets.
Four cases from different geographic locations and employing different types of CE
initiatives were chosen. A purposive sampling strategy was applied, as it is an established
method in case studies (Eisenhardt, 1989, p. 537). We followed several purposeful
sampling principles (see Patton 1990, p. 177) to improve the external validity of the
analysis of our sample (Eisenhardt, 1989). Firstly, we employed maximum variation
sampling based on geographical region, enabling the identification of common patterns
cutting across varying regional legislation (European Commission, 2015; Jiao and Boons,
2017). Second, following extreme case strategy we picked notably functional cases, beyond
mere pilot cases, identified in collaboration with experts in the field. Third, to capture
different types of initiatives, we used theoretical sampling, which allowed us to include
both main types of CE initiatives driven by businesses on the micro-level: production (e.g.,

8
eco-design, cleaner production) and waste management (e.g., “scavengers” and
“decomposer”) (Ghisellini et al., 2016, p. 19).
Case sampling proceeded through two phases. First, through a preliminary search of CE-
related publications, reading previous CE case studies, and discussions with experts from
business and academia, we identified nine potential cases. Second, we selected a final set
of four functional cases representing different global locations and CE initiatives for
detailed structured analysis, as shown in Table 2.

Company
Company revenue
Case Location Industry Background
employees (MEUR**
2015)
Suzhou China Thousands Not Waste Municipal waste
in the available Management management,
informal “scavenger” case
sector*

Dell the U.S. 101 000 51 700 IT End-of-life IT

equipment
circulation

UPM EU 19 600 10 100 Forest Process industry

Industry, eco-design
Energy product

Ekokem Finland 680 260 Waste Source separated

Management and special waste
management,
“decomposer”
case
*Based on Fei et al. (2016, p. 76)
**Million Euros.

Table 2 Selected cases and relevant background information

3.2 Data Gathering

We aimed to gather extensive data to uncover the business model elements of the cases and
applied a LexisNexis search to collect a multi-source dataset of versatile, publicly available
documents. LexisNexis was used to improve the quality and reliability of the data, as it is
an established source of archived document data (e.g., Adams et al., 2009; Tankard, 2001).
Between July and September 2016, searches were conducted for each case in LexisNexis
using search terms derived from preliminary information about each case. For example, for
the Dell case, searches were conducted using search terms such “Dell Optiplex” and “Dell
Reconnect,” as those were central components of the case. In general, the data collected
covers 2006-2016, but cases allocated differently within the timeframe and are not
simultaneous. In total, the searches yielded more than 200 media and news articles, press
releases, reports, statistics, and studies (including articles in scientific and professional
journals) (see Table 3). This method of using multi-sourced public data has been employed
before by, e.g., Ansari et al. (2016), who studied TiVo and the television ecosystem in the
U.S., and Ritala et al. (2014), who studied the business models of Amazon.com.

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In addition, we supplemented this extensive archival dataset by conducting one-to-one
interviews with senior executives in the European cases; thematic interviews with company
representatives holding key positions in the focal cases were conducted in June 2016. The
interviews lasted on average 50 minutes and were recorded and transcribed. Informants
were asked to describe the case’s business model through questions related to the value
proposition (value to the customer), value creation and delivery, and value capture (value
to the company). These interviews both complemented and partly validated the archival
data, and targeted the same timeframe as the document data collected for each case.
Collecting extensive data from multiple sources (e.g., research, media, and company
documents) increased data triangulation (Miles and Huberman, 1994) and improved the
construct validity of our study (Yin, 1994).

Other
News Research Company
Case Columns Company
Articles Articles Releases
Material

Suzhou 30 8 8 26 19

Dell 22 12 1 2 12

UPM 12 7 98 27

Ekokem 12 3 1 35 20

Table 3 Data sources collected for each case

3.3 Data Analysis

Data analysis was conducted in two phases. In the first phase, within-case analyses were
conducted (Eisenhardt, 1989; Miles and Huberman, 1994). Analysis focused on retracing,
identifying, and classifying the business model and 3R principle elements from the vast
data collected for each case. In this process, the data was transformed into case study write-
ups structured around the business model and 3R principle frameworks (Eisenhardt, 1989,
p. 540). Using the business model and 3R principles as the basis for analysis and
approaching them from using insights from previous literature improved our method’s
internal validity (Yin, 1994) First, the data was collected on a centralized Excel
spreadsheet, which was used as a supporting tool, not only to manage the data but also to
augment the reliability of the findings through cross-examination of multiple sources.
When identifying and classifying the components of the conceptual frameworks in each
case, the data was manually traced for references to the framework components. For
example, when seeking the “offering” component of the business model framework, data
referring to a product or service on offer to customers was classified in this category.
Similar retracing and categorization was conducted for the CE 3R principles. For example,
if data sources mentioned that an initiative recycled materials, those efforts were linked to
the framework in the analysis.
The second phase of analysis consisted of cross-case analysis. Because this research was
exploratory due to the limited understanding of the phenomena, theory-based pattern
matching from categorization or different dimensions would have had limited feasibility.

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Thus, we employed the tactic of comparing cases through mapping out their differences
and similarities, and identifying the emerging patterns. Together with the rigorous case
sampling principles used, the cross-case analysis improved the external validity of our
results and enabled us to draw broader conclusions about economic value creation in a CE
(Eisenhardt, 1989).

4. Results

The conceptual framework created in section 2 was used to analyze the four cases. The
within-case analyses for UPM’s Profi, Ekokem’s Circular Economy Village, the Chinese
city of Suzhou, and Dell’s Reconnect service comprise of a description of each initiative
using the business model and 3R principle framework. In the last sub-section, the four
cases are further compared in a cross-case analysis using the conceptual framework to
summarize the results and identify emerging patterns to be developed further into
propositions in the discussion section.

4.1 UPM Case Results

This case venture resulted from the identification that a waste stream from the company’s
label business could be used as materials for wood-plastic composite (WPC) products
called Profi. In the process of selling WPC products, the company is capturing new cycles
of value from the same materials it used to manufacture labels that were previously sold to
customers. This is especially true when the label waste used is procured from customers
through the company’s waste management service. As the interviewed director of strategic
partnerships explained, “We have a contract with the customer so that after the lining from
the labels has been used, we collect the waste back—as it is “pure” waste, we know exactly
what it contains and can then use it to produce Profi.”
In this situation, the waste was once a label product for which the company received
revenue and is now returned to the company for another round of revenue generation as a
WPC product. Potentially, if the waste management service is generating revenue, the same
material can then generate a third round of revenue. The case is outlined with the analysis
framework in table 4.
Business model
Reduce Reuse Recycle
component
Offering RafCycle liner waste No reuse identified in the Durable high quality,
management service reduces case. recyclable WPC-
waste to landfill and the products made partly
incineration of label waste. from recycled label
waste.

Target Customer Raflatac label customers and No reuse identified in the Consumers, architects,
all firms involved in the label case. and builders.
value chain.

Resources and Capability to source-separate No reuse identified in the Patented material.

Capabilities label waste where label waste case. Capability to process
is produced. label waste into ProFi-
products using
traditional plastics-
molding processes.

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Organization UPM Raflatac operates No reuse identified in the RafCycle delivers label
RafCycle, leveraging UPM's case. waste to ProFi factories
paper recycling logistics in Germany and
infrastructure and partner Finland. ProFi and
waste management firms. UPM Raflatac are in
different business units.

Position in the New position in the value No reuse identified in the ProFi products are sold
Value Chain chain for UPM: organizing case. to end customers
waste management services to through resellers.
label customers.

Revenue Sources Raflatac revenue from label No reuse identified in the Sales of ProFi.
sales. case.
Economics of the Reduces waste management No reuse identified in the Cost-efficient materials
Business costs for label customers. case. from label waste.

Table 4 Relations of 3R principles and business model components in the UPM case.

The business model reduces the amount of waste by turning a major waste stream into a
resource for another, completely recyclable product (Smith, 2008). Over 60% of the raw
material for the WPC products can be sourced from label waste which previously could not
be recycled and was disposed of through incineration or landfilling (UPM, 2016). Thus, the
primary way that the WPC’s business model enables CE is by reducing the amount of
waste generated through the company’s label business. The recycling principle is being
embraced in the manufacture of the WPC products, which creates a recycling cycle for
previously-difficult-to-recycle label waste (Smith, 2008; UPM, 2013a, 2013b). Comparing
the business model in Figure 2 and the 3R principles in Figure 3, the source of value
similarly appears to be recycling capability, as it enables the service component of the
business model while also contributing to the ability to manufacture WPC products, the
primary source of revenue resulting from the initiative.

4.2 Ekokem Case Results

The company behind the CE Village concept is a specialized waste management operator
that has recently profiled itself as a CE company. Ekokem’s CE Village is the first of its
kind in Finland and contributes towards the understanding of what CE means in the
country. From the business model perspective, this case is an example of creating value
capture mechanisms to support an increase in recycling capability. An important factor is
the ability to capture value through both the waste treatment service and the end-products
of the CE Village, as the interviewed research & development manager explains the
following regarding revenue sources: “We also collect a gate-fee as we accept the waste, in
addition to the revenue gained from the sales of the process end-products.”

The waste treatment service can be seen as an established source of revenue. The end-
products need to compete with commodity prices in the markets and thus are more
susceptible to price volatility. Overall, the business model aims to maximize value capture
from the mixed-waste stream; thus, this case creates increased economic activity through
CE. The case is outlined in the analysis framework in Table 5.

Business model
Reduce Reuse Recycle
component

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Offering Waste treatment service that No reuse identified in the Recycled plastics
reduces waste incineration and case. granulates and products.
landfilling by increasing
recycling rates.

Target Customer Industrial and agricultural No reuse identified in the Plastics industry for
plastics waste producers, case. granulates; construction
municipal waste management industry for ready-made
operators, and national plastic products.
waste source-separation
program.

Resources and Waste treatment resources No reuse identified in the Combination of an

Capabilities including earlier waste-to- case. ecorefinery, plastics
energy and the new recycling refinery, and
system. biorefinery enables high
recycling rates.

Organization Waste management operators No reuse identified in the Eco- and plastics
deliver mixed waste and case. refineries operated by
source-separated plastics to Ekokem; biorefinery
Ekokem for processing. operated by a partner
firm.

Position in the Provider of waste treatment No reuse identified in the New position for
services to waste collectors, case. Ekokem in selling
Value Chain agriculture, and industry. recycled plastic
granulates and products.

Revenue Sources Gate-fees No reuse identified in the Sales of recycled

case. plastics granulates and
products.

Economics of the Source-separating plastics can No reuse identified in the Recycled plastics are
lead to lower gate fees for the case. cheaper than virgin
Business customer. plastics.

Table 5 Relations of 3R principles and business model components in the Ekokem case.
From the CE perspective, the main contribution of the case comes from the sales of
recycled materials. If virgin materials are substituted with recycled materials, then the CE
Village will reduce the amount of virgin materials used in its market. This seems to be the
case, as the value proposition of the recycled plastics produced include reducing material
costs through the substitution of virgin materials with recycled ones (Ekokem, 2016). No
direct reuse was identified in the case, and the reduce principle is not embraced through the
direct reduction of material usage but rather through the substitution of virgin materials.

4.3 Suzhou Case Results

China has attempted to build a formal recycling system. For example, in Suzhou, the
separation of different sources of household solid waste has been provided by the city’s
government since 2000 (Zhang and Wen, 2014, p. 6446). Yet, this government program
remains largely ineffective because taxes, environmental protection, and other costs have
led to the informal system, still formidable in the country and currently outside of
governmental control gaining a significant cost advantage. For example, in their analysis of
how to integrate the formal and informal sectors, Fei et al. (2016) approximated that over
80% of the cash flow in the recycling system of Suzhou goes through the informal sector,
due to the large advantage in the amount of facilities and amount of material recycled. In
this case, analysis of the business model with the CE principles was conducted to illustrate

13
how Suzhou’s system of recycling household waste operates. The case is outlined through
the analysis framework in Table 6.

Business model
Reduce Reuse Recycle
component
Offering Collection of recyclables No reuse identified in the Cheap recycled materials
directly from households. case. for manufacturing firms.
Reduces total household
solid waste, which is
officially directed to
incineration.

Target Customer Residents. No reuse identified in the Manufacturing firms.

case.

Resources and Capability to flexibly collect No reuse identified in the Capability to process
Capabilities recyclables from residents, case. recyclables into recycled
often door-to-door. materials very
inexpensively. Low
technological resources.

Organization Individual waste pickers. No reuse identified in the Formal and informal
case. recycling sites that
preprocess waste for
processing sites.

Position in the Waste pickers collect No reuse identified in the Recycling sites buy
recyclables from residents case. recyclables from waste
Value Chain and sell them to recycling pickers and sell
sites. preprocessed recyclables
to processing sites, which
sell recycled materials to
manufacturing firms.

Revenue Sources Sales of recyclables. No reuse identified in the Sales of recycled

case. materials.
Economics of the Recyclables have economic No reuse identified in the Each actor in the system
Business value right from the case. has to pay for recyclables,
beginning. and their only source of
revenue is sales of
recycled materials.
Informal sector has a cost
advantage, as they do not
follow environmental
regulations.

Table 6 Relations of 3R principles and business model components in the Suzhou case.
The most notable finding of the business model analysis in the Suzhou case is the single
revenue source from the sale of recycled materials. This is because the recyclables are
traded as valuables from the beginning, as opposed to for example the waste treatment
providers collecting a gate fee like in the case of Ekokem. Informal waste collectors for
example, rely—for part of their living—on their ability to sell recyclables to operators who
can further process the recyclables into materials (Fei et al., 2016). Because the operators
in the recycling system can only acquire revenue from the sale of recycled materials, their
business models must focus on providing materials to manufacturers as cost-efficiently as
possible. In practice, this results in very low income, on average 1200 RMB per month in
2012 compared to the average of 2770 RMB for citizens, for employees in recycling sites
(Fei et al., 2016), and in the use of low-level technology and the reduced ability to compete
if environmental rules (that reduce cost efficiency) are complied with.

14
The main principle through which the CE is advanced and value is generated is through
recycling waste into a resource. A good indicator of this is that the entire system is based
on collecting waste, separating recyclables from waste, and processing the recyclables into
recycled materials. It can be argued that using recycled materials reduces the use of virgin
materials. No direct instances of reuse were identified in the analysis.

4.4 Dell Case Results

Dell is a leading US-based manufacturer of personal computers (PCs) and computer

equipment. It is the third-largest PC manufacturer when measured by units shipped, with
shipments of 10.2 million PCs in the fourth quarter of 2015, according to technology
analyst Gartner Inc. (Renstrom, 2016). By using recycled materials in its products, Dell
saves material costs without altering product performance. Dell says this cost-saving is
currently nominal, but the company expects savings to increase as the use of recycled
materials and the program are scaled up (Dell, 2016). The savings from material costs is,
however, a clear, direct value capture mechanism for Dell. The case is outlined in the
business model framework in Table 7.

Business model
Reduce Reuse Recycle
component
Offering Free take-back service for Used computers from the Closed-loop plastics
consumers to reduce Reconnect program introduced to existing Dell
incineration and through non-profit partner products, improving their
landfilling of e-waste. Goodwill. sustainability.

Target Customer Consumers with unused Consumers. Current Dell target customers.
and end-of life computers.

Resources and Network of over 2000 Capability to separate Manufacturing capability for
free take-back service computers suitable for closed-loop plastics, take-back
Capabilities locations. reuse. Refurbishing and service, and recycling of
resale services to materials from used
consumers. Both by non- computers.
profit partner Goodwill.
Organization Take-back service Refurbishment and sale of Closed-loop plastics recycling
implemented by the non- used computers is done by and processing is performed
profit partner Goodwill. the non-profit partner by Wistron, and the
Goodwill. manufacturing of computers
occurs in China. Other
materials recycled by partner
recycling firms.
Position in the Free take-back service Goodwill separates The recycling system enables
Value Chain diverts used computers reusable computers from Dell to capture post-consumer
from improper disposal those that need recycling. plastics cost-efficiently while
and integrates them into improving the sustainability of
the Reconnect program. the business.

Revenue Sources Dell pays Goodwill for Reusable computers are Sales of Dell products with
accepting, inspecting, and sold by non-profit partner closed-loop plastics.
packaging computers for Goodwill.
recycling.

Economics of the Take-back service is Goodwill is a non-profit Recycled plastics are cheaper,
Business funded by Dell. organization; a donation and their prices are more
of a working computer stable than those of virgin
can equate to 6.8 hours of plastics.
job training for a
Goodwill employee.

Table 7 Relations of 3R-principles and business model components in the Dell case.

15
A major aim of the closed-loop program is to enable recycling of end-of-life computer
equipment. Dell focuses on recycling the plastic content of computers, which it can
efficiently use to manufacture new products, reducing costs. In 2015, Dell reused more
than 3.4 million pounds of recycled plastics from old electronics in computers and displays,
in addition to 10.7 million pounds of plastics from plastic bottles and other recyclable
sources (Dell, 2016; Renstrom, 2016). Dell does not use other materials extracted from e-
waste, such as valuable metals, but transfers these to recycling companies contracted to
disassemble and separate materials suitable for the closed-loop program (Renstrom, 2016).
While this business model captures computers and displays for reuse, Dell itself does not
gain any economic value from reuse. Instead, Dell pays its non-profit partner Goodwill to
handle the separation and reuse part of the business model (Napsha and Olson, 2009;
Negley, 2012; Renstrom, 2016). This suggests that reuse does not create sufficient
economic value to merit incorporation in Dell’s business model as a source of revenue
because it is a cost. Of the 3R principles, therefore, recycling is the primary contributor of
economic value.

4.5 Summarizing the Results through a Cross-Case Analysis

The analyzed cases each differ with regard to their business models, industries, and
geographical areas, but recurring themes emerge across the cases. Table 8 summarizes all
the recurring themes, and those making the greatest contributions will be discussed in more
detail.

Business model
Reduce Reuse Recycle
component
Offering Reducing mixed waste by Take-back services and Cheaper materials for
increasing source- sales of used and manufacturing or sustainable
separation and increasing refurbished products. high-quality end products.
recycling.

Target Customer New target customers Used products to New target customers for
through take-back consumers. recycled materials.
services.

Resources and Capability to provide Capability to separate Capability to capture source-

take-back services that are working products and separated waste for efficient
Capabilities accessible to customers. components from waste recycling.
and refurbish them for
resale.

Organization Take-back of products Separating reusable Use of recycled materials in

and materials operated products from materials producing products is based in
separately from product and refurbishment a separate business unit from
manufacturing, either organized together. the recycling system.
through partners or by
other business units.

Position in the Diverting waste to Early separation of New position in the value
recycling in various parts reusable products from chain, either in sales of new
Value Chain of the value chain. waste streams. products from recycled
materials or in waste
management or take-back
services.

16
Revenue sources Refurbished reused Sales of recycled materials or
products. products made from recycled
materials.

Economics of the Increasing source- The sales and refurbishing Recycled materials cheaper
Business separation and thus of used products is than virgin materials.
reducing mixed waste subsidized.
reduces waste
management costs.

Table 8 Recurring themes of the relations of 3R principles and business model components
in the analyzed cases.
As the first key theme, in all the cases, the main source of economic value from CE to the
focal firm is achieved through recycling. For UPM, recycling label waste results in cost-
efficient and sustainable materials for the WPC products. In the Ekokem case, adding
recycling capabilities enables the focal firm to capture additional value from the sales of
recycled materials in addition to the existing revenue source of gate fees. In Suzhou, sales
of recycled materials is the only source of revenue, and in the Dell case, the only part of the
Reconnect service that is connected to Dell’s business model is the replacement of virgin
sourced plastics by more cost-efficient closed-loop plastics. The way in which recycling
generates economic value thus differs based on whether the firm is selling recycled
materials or products made from recycled materials, with new revenues streams in the
former case and lower material costs in the latter.

The second key theme is that the analyzed business models included a type of take-back
system to acquire waste suitable for recycling. Although the take-back system contributed
to revenue only in the Ekokem case, establishing such systems in a way that enables
separation of recyclables from mixed waste streams is crucial to the success of economic
value creation through recycling. However, methods of organizing the take-back system
varied widely in the case companies. The system in the UPM case was organized
internally, while it was organized through partnerships in the Dell case. In the Ekokem
case, it was organized through provision of a waste management service with a gate fee,
whereas recyclables were purchased from waste pickers in the Suzhou case.

The third recurring key theme is that either the take-back service or the sold products made
from recycled materials were very closely linked to an existing business, while the new
operation was organized separately. For example, in the UPM case, the existing Raflatac
business unit started offering the take-back program to its customers, while the WPC
product business is arranged as a completely separate enterprise; Raflatac’s RafCycle
service operates as an internal supplier for the WPC product business. In Dell’s case, the
separation is even clearer, as Dell only organizes the take-back program, which then
supplies closed-loop plastics for Dell’s existing products. This allows the original business
to run as before while adding circularity to the business. However, this simultaneously
alters the focal firm’s position in the value chain, as the firm suddenly finds itself both
providing waste management services and selling materials, whereas only one or the other
has been the case previously.

Fourth, in the analyzed cases, the reuse principle is underutilized as a source of economic
value. Only Dell reuses but, even in this case, Dell does not incorporate reuse into its
business model but leaves it to its non-profit partner, Goodwill. Rather than capturing
economic value from reuse, Dell pays Goodwill to separate reusable computers and

17
equipment, so the reuse principle generates costs rather than revenue. The economic value
gained from the reuse principle seems small, especially when considering the Ellen
MacArthur Foundation (2013) and European Commission’s (2015) expectations for major
benefits from increased reuse, such as new jobs servicing and refurbishing products.

Finally, while the recycling principle is the main source of economic value to the focal firm
in each case and the reuse principle appears to be underutilized, the reduce principle
emerges throughout the cases as an incentive for customers to take part in the take-back
services. Reducing the amount of waste by taking advantage of the take-back services
provides economic value to customers in the UPM, Ekokem, and Dell cases. The reason for
this is that in each of these cases, selecting the take-back service instead of the traditional
waste management service effectively reduces waste management costs. While the waste
management costs in the Suzhou case are not clear, participation in the take-back service is
also incentivized since recycling sites pay for the recyclables. Thus, in the Suzhou case,
partaking in the take-back service also results in economic gain for the customer.

5. Discussion

Through a structured analysis and multiple-case comparison, we developed an

understanding of the kinds of business models—with regard to the components of the
business model and 3R principles—that enable CE business operations. In the next section,
findings of this theory-developing qualitative multiple case study are developed into
circular business model propositions that provide theoretical implications for further
circular business model research as well as implications for managers and policymakers for
moving towards CE.

5.1 Propositions for CE business models

Based on our explorative case analysis we suggest the following five propositions for
implementing CE business models from the perspective of economic value creation and the
3R-principles.

Proposition 1: Cost efficiency of circular operations is the key proponent to successful

CE business

In each of the analyzed cases, the main economic value to the focal firm was gained from
using recycled materials as cost-efficient alternatives to virgin materials, or from selling
recycled materials to manufacturers for this purpose. Thus, from a business model
perspective, the improvement to the business model was due to the economics of the
business component of the business model. Richardson (2008) describes the economics of
a business as the way the firm gains a profit margin through higher revenues or lower costs.
In the analyzed cases, leveraging recycling resulted in better cost efficiency through lower
overall material costs.

Proposition 2: Take-back services enable the acquisition of particular wastes as

resources, but they need to be incentivized through reductions in customers’ total
waste management costs.

18
In each case, cost efficiency is driven by a take-back system ensuring that the focal firm
can acquire waste suitable for efficient recycling. Lewandowski (2016) has suggested
including take-back systems in CE business models, and our findings support that
conclusion. However, our findings also provide further insight into customer incentives to
use take-back systems. In waste management infrastructures that reliably collect gate fees
from waste producers, the ability to reduce waste management costs provides an incentive
in the analyzed cases. Take-back services also blur the lines between the 3R principles
because the adoption of take-back services reduces the generation of waste for disposal by
replacing disposal with either reuse or recycling. Thus, although from the focal firms’
value-capture perspective, efficient recycling appears to be the driver of economic value of
take-back services, the reduce principle is central in the value-proposition perspective of
take-back services.

Proposition 3: Circular business models require the focal firm to separately

manage multiple positions in the value chain.

Our analysis also shows that moving to a more circular business model introduces new
positions in the value chain for the focal firm. For example, if the original business model’s
revenue sources were from product sales, the focal firm’s position in the value chain
diversified due to the introduction of a take-back system, which enabled the materials to
loop back and generate value (MacArthur, 2013). An especially interesting aspect of this
appearance of multiple positions in the value chain was that these two positions were
managed separately. A reason for this could be that, as implied by our second proposition,
the take-back system itself should be able to provide value to customers, and thus it should
be managed separately as a business model of its own (Chesbrough and Rosenbloom,
2002).

Proposition 4: The take-back system for gaining economic value through CE can
be implemented successfully in multiple ways.

The necessity of the take-back system and its enabling of cost-efficient circular operations
were central to each of the analyzed cases. However, the organization of the take-back
system and thus the way cost-efficiency was achieved could be designed in multiple ways.
This suggests that while the take-back of suitable waste is a requirement, there is no single
right answer as to how it should be implemented, other than that it should be managed
separately. Implementation of the take-back system internally, through partnerships, or
through purchasing from markets all appear to be applicable and successful approaches.

Proposition 5: Recycling is easier to implement than reducing or reusing due to

its smaller impact on the business model.

The dominance of recycling to obtain economic value from CE business was a surprising
finding, especially considering that previous CE literature has highlighted the potential
economic value of moving towards reuse since it preserves products at a higher value
(MacArthur, 2013; Stahel, 2013). We propose that the dependence on recycling is a result
of it being easier to implement into a previously linear business model. Compared to reuse,
where new activities such as refurbishment, maintenance, and remanufacturing as well as
separate sales of new and used products are required for implementation (Lieder and
Rashid, 2016), introducing recycling merely replaces virgin materials with recycled
materials, with little effect on the fundamentals of the business model (e.g., target
customers or revenue sources). The separation of management of the different positions in

19
the value chain also supports our fifth proposition that managing CE activities so that they
have minimal impact on the original business model is easier than integrating CE directly
to the original business model through reduce or reuse.

5.2 Implications to research and practice

The five propositions provide theoretical implications for the academic discussion on the
CE and business models. Linking to earlier business-model and CE literature, these
propositions explain why recycling is a dominant method of implementing circularity
within businesses. Future research could test and develop the propositions established in
this qualitative explorative study. Quantitative methods are rarely used in CE business
model research, and these propositions could serve as initial research questions for
quantitative analyses to test theory in this area. In particular, the importance of the take-
back system to recycling’s ability to generate economic value and the finding on the
separate management of diversified positions in the value chain indicate interesting areas
for future circular business model research. Reuse is underrepresented in economic value
generation, so future studies could also be aimed at providing concrete evidence on how
reuse generates economic value in circular business models. Furthermore, although
recycling is the dominant source of economic value in the business models, the reduce
principle often coincides with recycling as a central contributor to the value proposition for
customers in take-back services. Thus, following Kirchherr et al. (2017), we recommend
further detailed, structured investigations on the CE implementation methods because the
lines between the 3R-principles as the methods of implementing CE can become blurred
and co-dependent.

The propositions also have practical managerial implications as they offer concrete
guidance on how to gain economic value from CE business. Managers implementing CE
business should pay specific attention to the cost-efficiency of circular operations as it is
the key proponent to gaining economic value from CE. The need of incentives for the
customers of the take-back system, the implication of benefit from managing the take-back
system separately from other business, and the notion that no one single implementation for
the take-back system is the only way to success are all practical learnings that can be
transferred to the design of CE business models. The relative ease of implementing CE
through recycling as opposed to reduce or reuse is also an important consideration,
allowing firms to embrace CE faster without drastic changes to current business models.

Our findings also suggest implications and offer guidance for policymakers. The recycling
principle was the dominant source of economic value for the focal firms in our study. From
an environmental standpoint, this is concerning, as recycling requires more energy than
reusing products or reducing the use of materials and inevitably leads to the loss of some of
the original materials as well as some of their properties (Charonis, 2012). Hence, this
limits the ability of recycling to close material loops completely. Many of the positive
social impacts of CE are also expected from refurbishing, maintaining, and
remanufacturing products, none of which are introduced when only recycling is
implemented. The incentive of waste management costs was a major enabler of take-back
systems for recycling, and thus providing further incentives that directly support reuse—
even to the detriment of recycling—could move firms towards implementing reuse in their
operations. However, since reusing has a much larger impact on the business model than
recycling as it requires the fundamental change of starting to sell used products, the

20
direction of incentives towards the actual activities required for reuse could be more
effective.

5.3 Limitations
This study relied on purposefully chosen cases; therefore, we acknowledge that the case
selection posed limitations to the study’s external validity, as not all types of CE initiatives
could be directly analyzed within the scope of the study. However, we rigorously sampled
the case studies based on multiple purposeful sampling criteria to capture a broad set of
different CE initiatives and conducted a cross-case comparative analysis. This was intended
to improve the study’s external validity and enable more generalizable conclusions from
the findings (Eisenhardt, 1989).
Subsequent research on the subject should target cases that help explain the relative
dominance of recycling as a driver of economic value and should consider expanding the
3R principle framework in the business model context. Although the definitions of the 3R
principles are clear from the perspective of a waste management hierarchy, their
boundaries can become blurred when analyzing value creation from a business model
perspective as they often co-exist. A more holistic categorization acknowledging the
connections and interlinkages between the principles could clearly capture the essence of
diverse CE business models. For example, in a review of CE conceptualizations, Kirchherr
et al. (2017) identified the 3R principles framework as dominant in the CE literature but
also found more extensive frameworks that suggest new principles and make their
definitions more explicit from a value-creation perspective.
Regarding data collection, the majority of the data came from the four focal case
companies, although LexisNexis was used to gather secondary material from reliable news
outlets. To address the validity of the media-originated data, we performed triangulation
using, for example, company data (see e.g., Ansari et al., 2016). However, media- and
company-originated data could have introduced bias into the results, even though
triangulation through multi-sourced data was performed in attempt to reduce it. Sampling
that is also based on the timeframe of the cases could increase the validity of future
multiple-case research by improving the triangulation effect of cross-case analysis (Yin,
1994).

6. Conclusions

In this study, we approached the emerging CE concept from the business model
perspective, contributing towards the research gap on the economic value of CE for firms
(Lieder and Rashid, 2016). Through linking case analysis to previous literature, we
developed five propositions for conducting circular business: 1) the cost efficiency of
circular operations is the key proponent to successful CE business, 2) take-back services
enable the acquisition of particular wastes as resources, but they need to be incentivized
through reductions in customers’ total waste management costs, 3) circular business
models require the focal firm to separately manage multiple positions in the value chain, 4)
the take-back system for gaining economic value through CE can be implemented in
multiple ways, and 5) recycling is easier to implement than reducing or reusing due to a
smaller impact on the business model. Based on these findings, the “recycle” principle is
surprisingly more dominant in economic value creation in CE when compared with the
“reduce” and especially “reuse” principles. As recycling has a limited ability to keep
materials in circulation (Stahel, 2013), it is important that policymakers find ways to

21
facilitate value creation through the principles of “reduce” and “reuse” for the CE to reach
its full potential.

Acknowledgements

The authors gratefully acknowledge the support of the participants of the ARVI – Material
Value Chains research program organized by Clic Innovation and the related research
funding from Tekes – the Finnish Funding Agency for Innovation.

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Appendix A: Reviewed business model research and definitions

Author, Year Research Type Business Model Definition

Linder and Cantrell, Typology of business “A business model, strictly speaking, is

2000 models, based on a the organization’s core logic for creating
practitioner survey value.” (p. 1)
Amit and Zott, 2001 Analysis of business “A business model depicts the content,
models in 29 European structure, and governance of transactions
publicly traded e- designed so as to create value through
businesses the exploitation of business
opportunities.” (p. 511)
Chesbrough and Case study of business “A successful business model creates a
Rosenbloom, 2002 models for innovations in heuristic logic that connects technical
Xerox’s R&D potential with the realization of
economic value.” (p. 529)
Magretta, 2002 Analysis of the relation “Business models are, at heart, stories –
between strategy and the stories that explain how enterprises
business model, using case work. A good business model answers
studies Peter Drucker’s age-old questions: Who
is the customer? And what does the
customer value? It also answers the
fundamental questions every manager
must ask: How do we make money in
this business? What is the underlying
economic logic that explains how we can
deliver value to customers at an
appropriate cost?” (p. 4)
Morris et al., 2005 Review of business model “A business model is a concise
literature from an representation of how an interrelated set
entrepreneurial of decision variables in the areas of
perspective venture strategy, architecture, and
economics are addressed to create
sustainable competitive advantage in
defined markets.” (p. 727)
Osterwalder, 2004 Review of business model “A business model is a conceptual tool
literature leading to a containing a set of objects, concepts and
component-based their relationships with the objective to
framework express the business logic of a specific
firm. Therefore, we must consider which
concepts and relationships allow a
simplified description and representation
of what value is provided to customers,
how this is done and with which
financial consequences.” (p.3)
Richardson, 2008 Review of business model “A well-designed business model defines
literature from a strategic and organizes the activities of the firm to
perspective execute the strategy. The activities are
chosen and organized to create and
deliver the value proposition, i.e., to
implement the firm’s theory of how to
compete.” (p. 141)
Teece, 2010 Explores the business “A business model articulates the logic,
model concept’s the data, and other evidence that support
connections with strategy, a value proposition for the customer, and

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 innovation, and economic a viable structure of revenues and costs
theory for the enterprise delivering that value.”
(p. 179)
Zott and Amit, 2010 Review of business model “The content, structure, and governance
literature leading to an of transactions designed so as to create
activity system value through the exploitation of
perspective to business business opportunities” (p. 219)
model design
Bocken et al., 2014 Review of business model “In this paper, a business model is
literature and practice to defined by three main elements: the
develop archetypes for value proposition, value creation and
sustainable business delivery and value capture.” (p. 43)
models
DaSilva and Trkman, Conceptual paper “The core of the business model is
2014 discussing the theoretical defined as a combination of resources
foundations of the which through transactions generate
business model approach value for the company and its
customers.” (p. 383)
Clauss, 2016 Review of business model “Business models are structural
literature to develop a templates of how firms run and develop
scale to measure business their business on holistic and system-
model innovation levels ” (pp. 386-387)

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