10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022].

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Received: 23 June 2019 Revised: 2 January 2020 Accepted: 21 January 2020
DOI: 10.1002/bse.2477

RESEARCH ARTICLE

Integrating circular business models and development tools in

the circular economy transition process: A firm-level
framework

Li-Heng Chen | Peiying Hung | Hwong-wen Ma

Graduate Institute of Environmental

Engineering, National Taiwan University,
Taipei, Taiwan
Correspondence
Hwong-wen Ma, Graduate Institute of
Environmental Engineering, National Taiwan
University, 71 Chou-Shan Rd., Taipei
106, Taiwan.
Email: hwma@ntu.edu.tw
Abstract
Along with the concept of circular economy growing worldwide, circular business
models (CBMs) have been receiving ever greater attention in both the business sec-
tor and academia. However, the existing literature on the CBM is scattered and frag-
mented; this study offers an integrated firm-level framework to link CBM typologies,
the circular economy transition process, and relevant tools for CBM development
and clarifies the positioning and roles of those tools in the process. In response to
the fragmentation issue, results of this study are presented in three subtopics:
(a) CBM typologies and archetypes, (b) transition guidelines, and (c) major analytical
tools for CBM research. The roles and functions of CBM typologies and tools were
integrated in different stages of the transition process, and the challenges and short-
falls for CBM research in the various stages were identified. This work lays the foun-
dation for future operational studies.

KEYWORDS

analytical tools, circular business models, circular economy, integrated approach, sustainable
development, transition process

1 | I N T RO DU CT I O N profitability is critical in the quest for sustainable development. Con-

1.1 | The growing attention of circular business
models among government, academia, and industry
worldwide
In recent years, a circular economy (CE) has been regarded as a key to
sustainable development, capable of offering a systematic solution to
waste of resources and environmental pollution, a chronic problem
caused by a linear economy and existing consumption pattern. It can
transform linear economic problems into new circular business oppor-
tunities, detaching the consumption of energy and resources from
economic growth and thereby attaining sustainable development
(EMF, 2015a). On the sustainability issue, the market has been the
most important mechanism in driving change, whereas businesses
have been the most important organizations in the market (Hoffman,
2017). Given the critical role of enterprises in the new CE, corporate
sequently, the CE stresses recycling of resources to cut resource con-
sumption and create economic value at the same time. There have
been many studies on estimating the overall economic benefits from
this transition. It is estimated, for instance, that engagement in the CE
would generate economic benefits to the tune of 1.8 trillion euros a
year for the European Union (EMF & McKinsey, 2015) and US$4.5
trillion for the global economy by 2030 (Accenture, 2014). The
European Commission completed a Circular Economy Action Plan that
had been adopted in 2015, which gave a new boost to jobs, growth,
and investment and to develop a carbon neutral, resource-efficient,
and competitive economy (EC, 2019). Businesses, which have been
the main driver for a nation's economic growth, will play an indispens-
able role in the major transition of the economic model. In the face of
the thrust force (increased supply risk and price swing of raw mate-
rials) and pull force (expansion of the middle class and consumption
power) in the overall environment, it will test the adaptability of every

Bus Strat Env. 2020;29:1887–1898. wileyonlinelibrary.com/journal/bse © 2020 John Wiley & Sons, Ltd and ERP Environment 1887

1888
business on how to cope with complicated market conditions and
transform the crisis of environmental resources into business
opportunities.
With circular business models (CBMs) having become a hot topic
recently, industry, government, and academia are pondering how to
create business opportunities and forge profitable business models
for the CE. Ghisellini, Cialani, and Ulgiati (2016) pointed out that over-
all benefits of innovative business models, and consumer reception of
CBMs is an important issue pending study at the microscopic business
level. The CE has deep roots that goes back to Kenneth Boulding's
1966 essay on “The Coming Age of Spaceship Earth,” and study on
CBMs has been in progress rapidly. Various international organiza-
tions have presented categories of CBMs and compiled successful
business cases to help businesses understand the concept of the CE
(Accenture, 2014; EMF, 2015b; Forum for the Future, 2016; Circle
Economy, 2016; BSI, 2017). Meanwhile, the fast spread of the
concept of CBMs has given birth to the need for standardization,
including uniform terminology, definitions, and scope, to facilitate
discussion and communications among various parties when
implementing CBM practices. The British Standard Institute (BSI)
unveiled “BSI 8001 Framework for implementing the principles of the
circular economy in organizations—Guide”, in the second half of 2017,
underscoring the growing concern and interest for CBM.
1.2 | Current status of CBM studies
There are different approaches to CBM studies, mainly in the three
aspects of ontology, norms, and operation: (a) studies on ontology
probe cases and phenomena of a specific CBM, discussing its diversity
and complexity; (b) studies on norms probe the definition of CBMs
and infers successful models and mechanisms (Accenture, 2014;
Lewandowski, 2016; Mentink, 2014; Urbinati, Chiaroni, & Chiesa,
2017); (c) studies on operation probe the methods for transition,
focusing on how to develop CBM and how to evaluate benefits of
transition (C2C, BIZZ, 2013; WBCSD, 2016a: EIO, 2016; Antikainen &
Valkokari, 2016; Kraaijenhagen, van Oppen, & Bocken, 2016). This
study focuses on the operative aspect, probing ways for corporate
transformation, supplemented by the clarification and integration of
concepts in the normative aspect.
Studies on the operative aspect often differ in evaluation targets
and purposes. Some are confined to the establishment or modification
of methodology for some stages in the transition process, such as
evaluation tools for delineating circular business opportunities
(Evans & Bocken, 2013; Mentink, 2014), modifying a business model
canvas (BMC) for the development of a CBM canvas (Antikainen &
Valkokari, 2016; Lewandowski, 2016; Mentink, 2014), analyzing tran-
sition benefits or establishing circular indicators through life cycle
assessment (LCA; EMF, 2015a), presenting a relatively complete tran-
sition process (BSI, 2017; C2C BIZZ, 2013; WBCSD, 2016a), or classi-
fying practicable model archetypes via categorization of successful
CBM cases (Accenture, 2014; EMF, 2015b; Forum for the Future,
2016; Circle Economy, 2016; BSI, 2017). This study finds that studies
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CHEN ET AL.
on CBM have distinct perspectives, including the different levels and
stages, and there has yet to be a study portraying the transition pro-
cess completely.
2 | T H E FR A G M E N T A T I O N O F C B M
STUDIES
2.1 | The existence of fragmentation
CBM studies are often plagued by the problem of fragmentation. For
starters, given different approaches that focuses on ontology, norms,
operation, or cases, there still lacks a clear configuration on the topic,
due to the deficiency of a complete set of literature for review. Sec-
ond, for the studies on operation, most existing literature address the
implementation of a single analytical tool in CBM, without specifying
the positioning of the tool in the transition process. There also lacks a
narrative on the suitable timing and method of implementing the tool.
As a matter of fact, the fragmentation that CE studies face has also
recently led to the identification and clarification of the vague defini-
tions and scientific basis for the CE concept, and the drivers and bar-
riers existing in the development of a CE (De Jesus & Mendonça,
2018; Korhonen, Honkasalo, & Seppälä, 2018). With an operation-
oriented approach, this study applies various environmental or busi-
ness management tools in existing literature to analyze and develop
CBM and explains how to carry out integration in Section 4.3.
CE has recently been widely favored as a driver for sustainability,
but it is expected to provide businesses a narrow focus on resources
within the broad aspects of sustainability (Bocken, Schuit, &
Kraaijenhagen, 2018). Although business model innovation is increas-
ingly recognized as a key enabler of CE transition, the four main tran-
sition theories (technological innovation systems, the multilevel
perspective, strategic niche management, and transition management)
lack firm-level perspectives to inform the governance of transitions
and encompass the role and function of CBM and business model
innovation (Sarasini & Linder, 2018). CBM innovation is an experimen-
tation process, during which businesses face uncertainties in shifting
toward CBM whereas no suitable framework is available to provide a
clear process and steps to follow (Bocken et al., 2018). Bocken et al.
(2018) developed a framework for circular business experimentation
to address this specific stage in a broad transition. A comprehensive
framework with a focus on the CE transition process from a firm-level
perspective is still much needed.
Various parties have attempted to ponder CBM development
with familiar research tools, including implementation of LCA to ana-
lyze the environmental impact of CBM (Haskovec, 2016; Haupt &
Zschokke, 2017; Kjaer, Pagoropoulos, Schmidt, & McAloone, 2016). A
product service system has been regarded as a key business model in
the CE. Haskovec (2016) formulated two circular scenarios (buyback
and lease models) with life cycle costing (LCC), both of which have
lower costs than the linear economy. Kjaer et al. (2016) assessed the
environmental impact of the product service system with LCA. Among
existing and dominant linear economy-based business models, LCA

CHEN ET AL.
objectives may conflict with CE objectives. Methodology has yet to
be developed for evaluating the impact and risk of recycling hazard-
ous materials (Haupt & Zschokke, 2017).
The BMC is another business management tool frequently men-
tioned in studies on CBM, with many studies modifying the BMC with
the concept and principles of the CE, in order to provide businesses a
tool for developing any specific CBM (Antikainen & Valkokari, 2016;
Lewandowski, 2016; Mentink, 2014; Osterwalder & Pigneur, 2010).
Mentink (2014) believes that the existing BMC is based on the per-
spective of a single business that lacks a systematic outlook. By com-
parison, a business cycle canvas directly considers the role which can
be played by businesses from the perspective of the overall environ-
ment, with less emphasis on their current circular status.
Antikainen and Valkokari (2016) believes that given constant
change in the business ecological system, the CE needs multilayer
analysis, in order to achieve systematic innovation. They, therefore,
put forth a brand new BMC with three layers: the macro layer on
overall influence on sustainability, the medium layer on business eco-
logical system, and the micro layer on businesses per se. Due to the
inability of the existing BMC to address the principles of the CE,
Lewandowski (2016) put forth the framework of a circular BMC,
adding two new elements to the nine elements of the original BMC: a
take-back system and adoption factor.
Think tanks and research institutions worldwide have pres-
ented various categories for CBMs, forming part of the CBM study
(Accenture, 2014; BSI, 2017; Circle Economy, 2016; EMF, 2015b;
Forum for the Future, 2016). One major purpose is to define the
concept of the CBM, facilitating communications and differentiation
from the linear economy. Another purpose is to pinpoint key fac-
tors in successful cases, thereby forming feasible models for quick
replication and scaling, so as to encourage engagement by more
businesses. The function and positioning of such categorization of
successful cases in the transition process, however, has yet to be
clarified.
Different evaluation or reasoning tools are applicable to different
stages. Past studies often confine their focus on the merits and flaws
of these tools for implementation in CBM, without mentioning that
transition is a continuing process and is specifying the positioning of
the tools in the process. Therefore, these studies may not see the for-
est for the trees.
2.2 | The importance of a continuing perspective
As transition is a continuing process, CBMs and the positioning, role,
and function of other matching tools should be viewed from a flow
process perspective, to facilitate operation of the model. Good opera-
bility and flow process perspective is essential for the formulation of
CBM, as well as the definition of the positioning, role, and function of
tools. Several studies have presented the “flow process” concept to
describe the transition of CE, stressing the importance of a continuing
perspective. They have offered transition frameworks featuring flow
process procedures, as a guideline for transition (BSI, 2017; C2C BIZZ,
10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1889
2013; WBCSD, 2016a). C2C BIZZ (2013) was an European Union pro-
ject, serving as a guideline for the transition of European enterprises
from the linear economy to circular economic business models. How-
ever, it mainly addressed how to transform the problems of the linear
economy to business opportunities in the initial stage, where most
businesses are situated now. WBCSD (2016a) proposed five proce-
dures for the circular transition, including assessing your current CE
state, exploring new circular opportunities, CE assessments, imple-
mentation, and walking the talk and talking the walk.
BSI (2017) presented BS 8001 transition framework with the
most complete flow process, including eight stages: (a) framing,
(b) scoping, (c) idea generation, (d) feasibility, (e) business cases, (f)
piloting, (g) implementation, and (h) reviewing and reporting. Its frame-
work is based on the plan-do-check-act project management perspec-
tive, emphasizing the need of repeated modifications in the
continuous stages of actual operation.
All of the aforementioned three pieces of literature provide guid-
ance, illustrating from a flow process perspective, although they have
different procedures. Their flow-process frameworks are an important
foundation for operation-oriented studies on CE. In response to the
fragmentation of current literature, this study applies the transition
guidelines to the proposed integrated framework in Figure 2 to give
readers a clearer view and to demonstrate the scope that each guide-
line has covered.
3 | METHODOLOGY
3.1 | A qualitative approach
Considering the fragmentation evidenced in literature review, the
objective of this study is to offer an integrated firm-level framework
to link CBM, the CE transition process, and relevant tools for CBM
development and to clarify the positioning and roles of those tools in
the process. The scope of this study is focused on a single-firm per-
spective to address how firms can identify the internal challenges and
opportunities, how plans for change and adjustments can be gener-
ated and implemented inside the business, and what tools can provide
necessary assistance in this course.
A qualitative method is used in this study, through thematic anal-
ysis of literature in the field of CE transition. The exploratory nature
of this study requires a qualitative and inductive approach based on
literature review of published reports, research papers, and docu-
ments from leading institutions, organizations, researchers, and
experts. With an exploratory qualitative research methodology, an
effort has been made to determine the relevance of (a) CBM typolo-
gies, (b) transition guidelines, and (c) analytical tools in the CE transi-
tion process.
Qualitative research, relative to quantitative research, is a type of
exploratory research. Qualitative research is a form of research in
which researchers explore social phenomena in the natural situation
and collect and interpret data. Compared with the more structured
designs of quantitative methods, qualitative approaches tend to be

1890
more flexible, as it is usually carried out in a natural state without
manipulation and intervention during the process (Corbin & Strauss,
2015; Darlington & Scott, 2002). There are various qualitative
research methods for in-depth research and data collection, such as
field investigation, open and in-depth interviews, participatory and
nonparticipatory observation, literature analysis, thematic analysis,
content analysis, case investigation, historical studies, action studies,
grounded theory, and other methods, whereas induction is the main
method of analysis (Denzin & Loncoln, 1994; Goetz & LeCompte,
1984). Approximately two thirds of the research in environmental
management relied on social surveys and interviews to collect data,
which are qualitative approaches, and among those were the common
use of qualitative methods in exploratory studies that also focused on
the business aspect (Ashley & Boyd, 2006; Boiral, Heras-
Saizarbitoria, & Brotherton, 2019; He, Xu, Shen, Wang, & Li, 2019;
Kahraman &
lu,
Kazançog 2019; Swaffield, Corry, Opdam,
McWilliam, & Primdahl, 2019). Therefore, it is suitable for exploring
the tools and guidelines facilitating CE transition for businesses
globally.
The thematic analysis of this study started with collecting the
referenced literature on CBM, regarding its definition, classification,
transition framework from linear models, and analytic tools to initiate
transformation, followed by a recommended data analysis process for
thematic analysis, involving repeatedly familiarizing with data, gener-
ating initial codes, searching for themes, reviewing themes, defining
and naming themes, and then producing this report (Braun & Clarke,
2006; Vaismoradi, Turunen, & Bondas, 2013). The theme of research
fragmentation is discovered throughout the data set, after gathering
and collating data; then, searching for and reviewing themes, the the-
matic map is generated and illustrated by the integrated framework in
the figures of this paper. The integrated framework attempts to elimi-
nate the fragmentations by linking the studies from a continuing per-
spective and offer a clearer view to businesses and researchers for
comparisons and understandings. Techniques of thematic analysis
were carried out to identify challenges, develop an integrated
F I G U R E 1 The integrated framework of CBM typologies, transition flow process, and analytical evaluation tools. CBM, circular business
model; BMC, business model canvas; LCA, life cycle assessment; MFA, material flow analysis [Colour figure can be viewed at wileyonlinelibrary.
com]
10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHEN ET AL.
framework that organizes fragmented findings of existing materials,
and offer new insights into the ongoing transition process. This study
can lay the foundation for future related operational research.
3.2 | The proposition of an integrated perspective
The CE is not a well-defined concept; in fact, one can enumerate
over 114 definitions of the CE (Kirchherr, Reike, & Hekkert, 2017).
This study employs the definition that a CE is based on the princi-
ples of designing out waste and pollution, keeping products and
materials in use, and regenerating natural systems (EMF, 2015a). This
definition is also applied by the BS 8001:2017 standard. The CE
mainly consists of three strategies to cut the resource consumption
per economic output, which are closing resource loops, slowing
resource loops, and narrowing resource flows (GIZ, 2014; CIRAIG,
2015; Bocken, De Pauw, Bakker, & van der Grinten, 2016; Rizos,
Tuokko, & Behrens, 2017).
Similar to CE, the CBM also lacks a universally shared definition.
In strict definitions, a linear business model is resource-flow based
(the river economy), whereas the CBM is resource-stock based (the
lake economy); the difference in profit-making logic at the firm level
becomes the divide between models (Stahel, 2010). In this study, the
CBM is defined as an aggregate of models and innovations that incor-
porate any business model capable of increasing circularity of
resources in a closed loop.
In view of the fragmentation of past studies on CBM and the
importance of continuity in the transition process, this study inte-
grated CBM typologies, transition flow process, and analytical evalua-
tion tools, in an attempt to present a more complete picture,
facilitating the understanding of CBM (Figure 1). This integrated per-
spective stresses the continuous process of transition and focuses on
the flow-process concept in explaining the positioning, functions, and
importance of CBM categorization and its cases during the transition
process. Moreover, it clarifies environmental management and

CHEN ET AL.
business management tools in need during different stages, explaining
the positioning, functions, application, and challenges of those analyti-
cal tools in CE.
4 | T H E I N T E G R A T E D F R A M EW OR K F O R
C BM ST U D I E S
4.1 | Analysis of flow process and the introduction
of a new framework
This study integrated the transition flow processes proposed by the
three aforementioned institutions and conducted analysis (BSI,
2017; C2C BIZZ, 2013; WBCSD, 2016a) before rearranging the
processes.
Transformations are significant adjustments and require a long
process for businesses. It is crucial and necessary for them to look for
step-by-step guidelines and instructions on how to initiate, make deci-
sions, and execute. This urgent demand is first recognized and
responded by the reports from these institutions. Not only are the
institutions recognized in this field, but the reports also propose their
step-by-step guide to address this issue, which is insufficient in the lit-
erature. These guidelines provided initial and helpful step-wise infor-
mation on the emerging issue that still lacks plentiful discussion.
Although one dates back to 2013, it represents one of the earliest
attempts to address this issue.
The frameworks proposed by the three institutions can all be
rearranged into the following three stages based on these issues:
(a) how to pinpoint problems and generate possible solution pro-
grams? (b) How to evaluate possible solutions and adopt a specific
one? And (c) how to evaluate the performance of the solution after
implementation?
FIGURE 2 The transition framework. CBM, circular business model [Colour figure can be viewed at wileyonlinelibrary.com]
10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1891
Businesses lack solutions in the first stage. A major task in the
first stage is how to identify problems of the linear economy and con-
vert them into opportunities of the CE through the procedures of
understanding the CE, reviewing the circular status of businesses, dis-
parity analysis, stimulating opinions with CBM categorization and
cases, and formulating new solutions. Procedures proposed by BSI
(2017) and WBCSD (2016a) for Stage 1 are rather rough, different
from C2C BIZZ (2013) whose proposal was more sophisticated,
pinpointing key issues via four procedures. In addition to the acquisi-
tion of new knowledge and self-evaluation, the how to design circular
products and service models was included, which are both key ele-
ments in the CE. C2C BIZZ (2013) concretely incorporated key issues
into the flow process, such as pondering ways for reuse and
remanufacturing through redesign, as well as the conversion of selling
products to selling services. This is the most important but also the
most difficult stage, where most businesses are situated now. Execu-
tion challenges in Stage 1 will be discussed in the final conclusion.
In the second stage, when several solutions have been proposed,
businesses must choose which one to adopt by evaluating various
aspects such as circularity, feasibility, or commercial values of the
solutions. WBCSD (2016a) proposed to evaluate comprehensively the
sustainability of innovative solutions in the three aspects of environ-
ment, society, and governance; C2C BIZZ (2013) stressed the eco-
nomic feasibility of business models, including cost control,
investment returns rate, source of funds, and financial mechanisms;
BSI (2017) had a more sophisticated proposal, which includes three
procedures: feasibility evaluation; establishment of complete business
cases; and conducting pilot projects and modification. Through small-
scale pilot projects, businesses may ascertain the practicability and
feasibility of the solutions.
The third stage involves how to track and evaluate the perfor-
mance of solutions after implementation. The proposal of WBCSD

1892
(2016a) for the third stage consists of two procedures: tracking and
evaluating solutions underway and experience sharing, encouraging
businesses to share their transition experience with others. C2C BIZZ
(2013) only delineates new business opportunities and development
during the start of the transition, without addressing evaluation pro-
cedures after implementation. BSI (2017) proposes the two proce-
dures of implementation and review & reporting.
With the integrated framework from this study, there would be
more clear comparison and discussion of the transition frameworks of
the three institutions (Figure 2). The frameworks of BSI (2017) and
WBCSD (2016a) both contain a complete set of three stages, whereas
C2C BIZZ (2013) only covers the first two stages. Furthermore, it can
be observed that BSI (2017) has more detailed flow-process proce-
dures than WBCSD (2016a). Other or future transition frameworks
may apply this integrated framework, to facilitate understanding of
the aspects and completeness of their coverage. Businesses can also
employ the integrated framework in choosing a suitable transition
framework according to their needs.
4.2 | The positioning and function of CBM
classification in flow process
Rather than any specific new concept of a business model, the CBM
is an aggregate of innovations and models, incorporating any business
model capable of boosting circularity of resources in a closed loop
(EMF, 2013; Mentink, 2014; Linder & Williander, 2017; Bocken,
Miller, & Evans, 2016). As many business models have been in opera-
tion for a long time, such as leasing, second-hand markets, repair and
maintenance, and resources recycling, the CBM in discussion now
mainly addresses the integration of life cycle thinking and the con-
stantly progressing technologies, in a bid to present a complete CBM.
Through analyzing the CBM categories proposed by five international
organizations and consulting firms (Accenture, Ellen MacArthur Foun-
dation, Forum for the Future, Circle Economy, and BSI) actively
engaged in advocating the CE, this study probes their motives and
10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHEN ET AL.
the positioning and functional roles that CBM categorization holds in
the flow process.
As an induction from the analysis of 120 business cases,
Accenture (2014) is the first organization to present a CBM typology,
containing five categories under a life cycle thinking framework,
along with a life cycle diagram to explain the categorization and con-
cept through clear visual presentation. As a result, many organiza-
tions have subsequently cited its categorization when illustrating the
business models of CE (WBCSD, 2017; ING, 2015; EY, 2015). A joint
study of EMF and management consulting firm McKinsey & Com-
pany (2015) proposed the ReSOLVE framework containing six CBMs
and applied it in a European Union scenario analysis of three major
sectors closely related to people's livelihood, which are food, accom-
modation, and transportation. The study analyzed the business
potential in three sectors and predicted that should the EU adopt
CBM in combination with technological developments, it could
decrease the total cost by 900 billion euros annually by 2030 than
linear economy today.
Another joint study of Forum for the Future and Unilever
(2016) on fast moving consumer goods presented 10 business
models under the two categories of circular business models and
enabling business models. Circle Economy (2016) combined value
hill theory and life cycle concept and divided the concept of
value into three life cycle stages: Uphill, Circular Design; Tophill,
Optimal Use; Downhill, Value Recovery. In addition, another busi-
ness model was presented for the entire life cycle, which is
network organization. It is a business model that stresses the
promotion of horizontal communication and the strengthening of
network connection, in support of the cross-industry and cross-
organization innovative reform. In “BSI 8001 Framework for
implementing the principles of the CE in organizations- Guide”, BSI
(2017) proposed six CBM categories, in order to clearly define and
consolidate the CE concept, terminology, scope, and business
models and develop a common language through universal stan-
dards and definitions. This may accelerate the cooperation and
development of the CE.
F I G U R E 3 The positioning
and function for CBM
classification and case analysis in
the transition process. CBM,
circular business model [Colour
figure can be viewed at
wileyonlinelibrary.com]

CHEN ET AL.
The five international organizations mentioned in this study pro-
posed CBM typologies according to their analysis of business cases.
Despite some differences in definition, categories, and scope, all
emphasize life cycle thinking, consider that traditional recycling busi-
ness model remains a centerpiece of CBMs, and regard a sharing
economy model as a key to accelerating the development of the CE
(Accenture, 2014; EMF, 2015b; Forum for the Future, 2016; Circle
Economy, 2016; BSI, 2017). In addition to existing business models
that are directly related, such as recycling, second-hand market, repair
and maintenance, and remanufacturing, CBM also includes business
models deriving from technological development, such as sharing plat-
forms, integrated resources-tracking systems, flow-process design,
and reverse logistics, or enabling business models that facilitate recy-
cle and reuse of resources indirectly. Although there are differences
in the definition, categorization, and scope of the CBM proposed by
the five organizations, the differences and standard discrepancies are
more conspicuous in enabling business models. Narratives with visual
assistance facilitate clearer understanding of the definition, categori-
zation, and scope of CBM (Accenture, 2014; Circle Economy, 2016).
The categorization method and benchmark cases of CBM should
be regarded as a tool for strategic development during the entire tran-
sition process, rather than an objective or end goal (Figure 3). This
study includes CBM categorization and case analysis into the transi-
tion framework and assigns its positioning at the first stage. CBM and
their cases are mainly applied in brainstorming before the formulation
of a solution, stimulating ideas from practice cases. Through system-
atic thinking for life cycle induction, businesses will be able to search
for shortfalls in the industry chain and a suitable role that they can
play, so as to ascertain the opportunities and directions for CE
development.
4.3 | Integrating environmental management and
business management tools for CBM development in
the transition process
The transition from a linear economy business model to the CBM
involves a series of processes, which cannot be accomplished with a
single analytical tool. Various tools are suited to implementations in
F I G U R E 4 The positioning
and roles of environmental
management and business
management tools in the
transition process. LCA, life cycle
assessment; MFA, material flow
analysis; MFCA, material flow
cost accounting [Colour figure
can be viewed at
wileyonlinelibrary.com]
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1893
different transition stages, with distinct functions and objectives,
which were not addressed by past studies in an integrated manner.
This study integrated several common analytical tools (environment
management and business management tools) under the transition
framework in Section 4.1, illustrating their objectives, and suited tran-
sition stages for implementation, implementations in CBM studies,
and implementation challenges (Figure 4, Table 1).
During the first stage, when there has yet to be a solution for
businesses, the main task is to review the current status, pinpoint
problems, discover solutions, and tap business opportunities. There
are two major procedures for this stage: status review and new solu-
tion development (new business opportunities). Common analytical
tools for status review to locate hot spots include qualitative ques-
tionnaires and quantitative material flow analysis. For new solution
development, CBM typologies and their cases are employed for brain-
storming, in order to formulate various new solutions (Ovaska, Pou-
tiainen, Sorasahi, Aho, & Annala, 2016; SITRA, 2015; WBCSD,
2016b).
Status review supports businesses ascertain their circular extent,
which can be divided into the circularity of resource use (the
resource aspect; Evans & Bocken, 2013; EMF, 2015a) and organiza-
tion culture (the cultural aspect; BSI, 2017; EIO, 2016; WBCSD,
2016a). Qualitative questionnaires or quantitative material flow anal-
ysis (and material flow analysis derivative tools) can be applied in
evaluating the circularity of resource use. Material flow analysis
implementation can be divided into two levels. One is the industrial
level, which involves understanding the resource consumption short-
falls of industries through literature and evaluates the possible roles
for businesses in assisting industrial resource recycling in an industry
chain. The other level involves material flow cost accounting, in order
to understand the resource utilization efficiency and consumption
shortfall of businesses (Zhou, Zhao, Chen, & Zeng, 2017) or to calcu-
late circularity indicators for the circular extent of current products
(EMF & Granta, 2015). The circularity evaluation of organizations
leans towards the review of organizational behaviors or organiza-
tional culture, assessing the capability and maturity of an organization
in marching towards the CE with checklists or review forms, which
can be designed based on CE principles or life cycle thinking (BSI,
 1894

TABLE 1 Positioning of environmental management and business management tools in transformative flow process and CBM applications and challenges

Methodology Objective Qualitative/ Applicable stage Application in CBM Challenges for CE applications
quantitative
1 Checklists/review forms Design checklists or review forms Qualitative No solution Assess the capability and maturity of an How to design a good checklist/review
bases on CE principles; review organization in marching towards form covering all CE aspects and
and grade items one by one; circular economy. Encourage thinking evaluate with a systematic
self-review the circular extent and discussion with question lists, perspective is the objective of many
of business organization; and and pinpoint problems. ongoing studies.
encourage reasoning and
discussion.
2 Material flow analysis/ Examine the consumption and flow Quantitative Evaluate the circular extent of resources Applied mainly on the industry level,
material flow cost of resources during the product in businesses/industries, pinpoint pinpoint resource waste problems of
accounting manufacturing process, locate problems (links that waste resources). the overall industry via MFA and
inefficient hot spots, and consider responsive measures for
formulate improvement businesses. At the business level,
strategies, so as to boost resource businesses are lukewarm for
productivity. implementing MFA, due to difficulty
in data collection, which is time-
consuming and costs manpower.
3 Case study Analyze business cases, collect Qualitative No solution Stimulate brainstorming and discussion In practice, contents of business cases
documents, and conduct in-depth through case studies, in order to compiled by various international
interviews to identify key factors understand and probe circular bodies are rather rough. In the course
in the success or failure of cases. business opportunities. of innovation development and
Analyze internal and external implementation, few existing studies
influencing factors to facilitate cover the awaiting difficulties, the
model formulation. how to make decisions, the how to
overcome difficulties, and the key
factors to success or failure. In addition,
to determine whether an innovative
business model is successful or not, it
requires more time for longitudinal
study, in order to analyze the key
processes and stages.
4 Business model canvas Develop new business models Qualitative Solutions available An analytical tool applied in CBM The lack of systematic perspective
(products/services), analyze how development, which materializes conflicts with the principles of circular
to create and transfer value, and business ideas by considering business economy. Therefore, researchers are
focus on the connection with model elements, and evaluate their still engaged in the study of modifying
the consumption market. feasibility. the business model canvas. It needs
to coordinate with other analytical
tools to conduct evaluations.
(Continues)
CHEN ET AL.

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 10990836, 2020, 5, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2477 by UTFPR - Universidade Tecnologica Federal do Parana, Wiley Online Library on [14/10/2022]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHEN ET AL. 1895

2017; EIO, 2016; Evans & Bocken, 2013; WBCSD, 2016a). During
the initial stage of solution development, which is full of uncertainties

2. The how to evaluate the impact and

risk of recycling hazardous materials

appear when using LCA to evaluate

boundaries are challenges that will
1. Amid the existing linear-economy
and unclear parameters and elements, it is more suitable to employ

objectives may conflict with LCA

3. The definition and delineation of

reference systems, the setting of

product service systems, a major

dominated business models, CE
qualitative tools, such as checklists and directional tools, in evaluating
Challenges for CE applications

functional units, and system

the current status and pinpointing problems. It may be more efficient

circular business model.

than material flow inventory and analysis (Bocken, Miller, & Evans,
2016).
The second procedure is new solution development, using CBM
objectives.

is unclear. typologies and cases as the main tool for brainstorming and discus-
sions at workshops to produce new solutions. Evans & Bocken (2013)
proposed a Circular Economy Toolkit to bridge the review of current
status and the development of new solutions, using review forms
designed with life cycle thinking to help businesses conduct quick
consequential LCA before transition.

self-reviews, so that businesses can identify the specific links in the

2. Evaluate solution performance
with attributional LCA as after

life cycle most needing improvement for themselves. Review forms

1. Evaluate new solutions with

along with workshops and benchmark case studies, may help busi-
nesses stimulate discussions in locating suitable circular business
opportunities.
Application in CBM

The second stage is when solutions have been designed. The

next step is to evaluate those solutions and select one of them to
transition.

implement. Following an initial feasibility evaluation that eliminates

the less suitable solutions, an optimal solution may be chosen by
assessing the environmental impact and cost of different scenarios
with LCA and LCC. An optimal solution is then combined with the
after implementation.

BMC or circular BMC for the conversion into a concrete business

solution design.

Evaluate solution
Applicable stage

model after taking into account elements of the business model.

performance
select after
Evaluate and

The concrete business model would encompass value proposition,

market perspectives, operational and financial aspects, and espe-
cially the recycling system.
Abbreviation: CBM, circular business model; CE, circular economy; MFA, material flow analysis.

When an optimal solution is implemented in the third stage, LCA

may continue to be applied in this stage, to evaluate the sustainability
Quantitative
Qualitative/
quantitative

performance of the solution. In addition, delineate key circular econ-

omy indicators for result reviewing.

5 | DI SCU SSION AND CO NCLUSIO N

Assess environmental impacts of

Literature has discussed CE transition with a wider lens, involving

other actors and the ecosystem. This study narrowed down the scope
products/services.

from the total transition perspective and focused on how to stimulate

internal transition from a single-firm perspective, which is insufficient
Objective

in literature. In our view, a flow process framework can provide the

assistance and information required to initiate the transition within
and guide businesses through the process. A causation-based decision
logic may be more convincing and low-risk to persuade conservative
Life cycle assessment/

management to approve intratransition plans or authorize a trial.

(Continued)

However, in a more radical or larger magnitude of change that

LCA derivatives

involves a wider ecosystem and coevolving businesses models among

Methodology

several actors, effectuation-based decision logic may be more effec-

tive. Before the stage of radical transition takes place, the reconstruc-
TABLE 1

tion and repositioning of actors in the ecosystem must first be

commonly addressed. Smaller magnitudes of change that are success-
5

fully attained within a single firm may reinforce their transition


1896
intention, so businesses may then further seek to coevolve with other
actors in the ecosystem.
This study attempts to pinpoint possible operating challenges
during the three stages of the transition process, as well as short-
falls of existing related studies, for discussion. The development of
CBM is a continuing process, which cannot be covered by a single
development/evaluation tool, as different tools have different func-
tions, objectives, and applicable stages. Based on the transition pro-
cess, this study proposed an integrated framework that integrates
CBM typologies and cases and the positioning and role of different
tools in the process, helping future CBM researchers have a more
complete grip on CBM. Future transition frameworks may apply
this integrated framework to understand the completeness of their
coverage, whereas businesses may employ it to serve as an opera-
tional guide and choose a suitable transition framework according
to their needs.
Evaluation tools for CBM include environmental management
and business management tools, which are products of the linear
economy, raising concern for their applicability in the CE. Special
attention should be paid to the implementing occasions and methods
for these tools, applying them to suitable stages based on their posi-
tioning. To assure good effectiveness, businesses should consider var-
ious aspects when implementing tools, such as the differences
between LCA and CE objectives, system boundaries and functional
unit setting for applying LCA in the CE (e.g., servitization of products),
the lack of systematic perspective for the BMC, and the need to
include a recycling mechanism, a key element of CE, into consider-
ation. Confusion and misinterpretation should be carefully avoided
while implementing and comparing results of LCA & LCC on cases of
CE and linear economy.
During the first stage, when there are no solutions available, the
major challenge for the development of CBM is to pinpoint problems
and convert them into circular business opportunities. Business model
transition involves systematic transformation with a large boundary,
and not all discovered “problems” can be converted into profitable
business models. Analytical tools for status review to locate hot spots
include qualitative questionnaires and quantitative material flow anal-
ysis. However, it may be more efficient and suitable to employ quali-
tative tools. Then, CBMs and case studies are the main tools for
brainstorming and discussions. Though generally not regarded as a
tool, the analysis of typologies and archetypes is viewed as a tool in
this study. The purpose is to help businesses formulate possible solu-
tions by analyzing and comparing themselves with reality cases and
let business model hypotheses match reality, which is essential to the
initiation of the transition process. In addition, a business-model con-
version needs commitment and support of executives, as it relates to
the rethinking of corporate vision and value proposition, as well as the
readiness of corporate culture and core capabilities for the transition.
In the second stage, when there are solutions available, the major
task is how to evaluate those solutions and select one to develop into
a business model. LCA and LCC may be used in evaluating and elimi-
nating the less suitable solutions to choose one optimal solution of
different scenarios and then combining the (circular) BMC to convert
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CHEN ET AL.
the solution into a concrete business model. In addition to internal
corporate factors (such as their role in the industry chain, internal
resource utilization efficiency, and consumption shortfalls, organiza-
tional behavior, and the capability and maturity of organizational cul-
ture), readiness of the external environment would also affect the
solution choice. For external factors, political, economic, social, and
technological analysis can be employed in analyzing the development
condition of the overall environment. It must take into account
domestic and international policies and regulations, market reception,
and technological feasibility. Consumer reception is a major external
uncertainty, which needs engagement of more studies.
It is advised to include the consideration of time course in the
evaluation, so as to give businesses a more complete evaluation. Busi-
nesses should clarify the transition objectives and internal and exter-
nal environmental factors in the short, medium, and long term.
Transition objectives can include the scale and speed of the transition
set by businesses, that is, the initial scale of actions and the expected
execution speed. It is commonly suggested to carry out pilot plans at
a limited scale initially and foresee possible internal and external envi-
ronmental factors confronting in the short, medium, and long term.
Another applicable evaluation tool is business risk assessment. It
takes into account the transition objectives of each time horizon and
the internal and external factors; then, businesses may obtain options
with lower risk. This avoids causing contradictory or conflicting situa-
tions for businesses in the future, such as assuring that short-term
benefits would not be offset by long-term factors or that enterprises
would not overlook potentially significant long-term benefits, due to
lack of short-term incentives. Planning for business transitions should
consider temporal and internal/external factors, with the utilization of
proper tools, in order to obtain evaluation information and outlook
that is more thorough and accurate.
The task in the third stage is to evaluate the performance after
solution implementation and the overall sustainability performance of
a business. LCA may continue to be applied in this stage. Corporate-
level CE performance indicators still need more research. The lack of
systematic perspective in a CE strategy, may not enhance the overall
circular extent or lower the overall environmental impact from an
innovative corporate-level business model.
This study emphasized utilizing environmental management tools
to discover internal opportunities from resource efficiency improve-
ment and supplement business-transition decisions. Due to limitation
from the scope of this study, not all useful tools were discussed and
examined. Other class of tools that are possibly useful and could be
further included are value-based circularity metrics (Linder, Sarasini, &
van Loon, 2017), business model innovation methods (Blank & Dorf,
2012), business ecosystem tools (Adner, 2012), mental models, and
decision logic tools (Dew, Sarasvathy, Read, & Wiltbank, 2008).
Perspectives from other fields are particularly critical and gener-
ally overlooked in the aspect of conceptual development (Whetten,
1989), and the attempt to offer an integrated approach to link
scattered research is necessary in phenomenon-based research (von
Krogh, Rossi-Lamastra, & Haefliger, 2012). The value-added contribu-
tion of this study largely stems from the point above. With a strong

CHEN ET AL.
emphasis on process continuation, a framework is proposed to inte-
grate fragmented studies and discoveries, including transition frame-
works, CBM typologies and case analysis, and the positioning and
roles of analytical tools, that relate to circular transition of businesses.
Furthermore, from the environmental management perspective, this
study stresses the understanding of material use and environmental
impacts of businesses, which would supplement business-transition
decisions with the information gathered from identifying the improve-
ment opportunities of resource use. Based on a qualitative study with
literature published by leading institutions, organizations, researchers,
and experts in this area, the conclusions drawn in this study are
exploratory. A qualitative method was carried out to identify chal-
lenges, develop an integrated framework that organizes fragmented
findings of existing materials, and offer new insights into the ongoing
transition process. Further research is needed to explore the limita-
tions and possible improvements discussed in this section. This study
helps lay the foundation for future related operational research.
ORCID
Hwong-wen Ma https://orcid.org/0000-0002-7595-2343
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How to cite this article: Chen L-H, Hung P, Ma H-w.
Integrating circular business models and development tools in
the circular economy transition process: A firm-level
framework. Bus Strat Env. 2020;29:1887–1898.
https://doi.org/10.1002/bse.2477