ITC 4326: Digital Economy and Future of Work

Year IV – Semester I

Unit 05: New Economy Business Models in the

Concepts of Big Data, the Sharing Economy and the
Circular Economy

Jabłoński, A. and Jabłoński, M. (2020), Social Business Models in the Digital Economy, Palgrave McMillan, Switzerland.
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Learning Outcomes
• Understand the basic concepts related to the new economy.
• Explain the “Open Data” concept and business models.
• Understand the assumptions of digital sharing economy business models.
• Describe the relationship between the actors in the sharing economy
business model.
• Explain the circular economy and circular business models.
• Understand the differences between classical business models, sustainable
business models and circular business models.
• Understand the stock indices which shape robust business models in the
circular economy.

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 5.1. Introduction
• New concepts and ideological trends are operationalized through
innovative technological solutions.
• Thanks to technological solutions, it is possible to implement global
solutions whose potential is not yet being fully utilized.
• This results not only from technological issues but from sociological
ones, in the sense that new generations use these solutions to a
greater extent than older ones.
• Quality of life is now strongly correlated with access to digital
technologies.

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5.1. Introduction
• The countries that have a higher level of digitalization have greater
potential; therefore, they can implement new social ideas faster and
improve people’s quality of life.
• The potential in the concepts of the sharing economy, the circular
economy, and Big Data is very large.
• It allows you to create business solutions, and is also related to the
so-called new concept of public management.

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5.1. Introduction
• The core element of the organization’s operation is to ensure business
continuity, which is no easy task.
• This requires strong embeddedness in the decision-making processes
resulting from a properly constructed business model of the organization.
• The business model is becoming a key determinant of the success of
today’s organizations.
• A business model that is a mapping of tangible and intangible resources
which create value in the short and long term ensures return at the level of
the potential used for all actors gathered around the organization.
• According to this interpretation, it is important to build a robust business
model that will resist market changes while satisfying market expectations.

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5.1. Introduction
• To design business models, a scenario approach can be applied which
may allow for the minimization of the risk of failure of a new business
undertaking, which is frequent in the digital economy.
• It is important to link the concept of business models with their
robustness in the circular economy.
• The scientific problem of management is related to the determination
of mechanisms that ensure the robustness of business models of
companies using the circular economy to ensure survivability, while at
the same time achieving high performance.

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5.2. “Open Data” Concept and Business Models
• The development of database systems, both in terms of the
assumptions of the Big Data and Open Data concepts, creates
conditions for the emergence of innovative business models.
• Collecting a large amount of data, processing it and using it to meet
unrecognized customer needs is an area that has not provided
opportunities to build business ventures so far.
• Open databases offer this opportunity and reveal new and
unconventional ways of creating strategic value.

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5.2. “Open Data” Concept and Business Models

• In recent years, new trends have emerged, namely, “Big Data” and
“Big Data Analytics,” which are becoming popular all over the world.
• They facilitate the analysis of entire databases in real time, as well as
the development and use of machine algorithms for predictive
modeling and decision making based on such models.
• Predictive analytics aim to predict future market development
scenarios, the behavior of consumers and companies.
• It provides knowledge of how to model these behaviors and
influence the formation of desirable attitudes.

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5.2. “Open Data” Concept and Business Models
• Big Data solutions require different processing possibilities that are
not present in traditional databases to process text, image, sound,
spatial data, and so on.
• Figure 3.1 shows Model V, which refers to the Big Data concept
introduced by Brock and Khan (2017).

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5.2. “Open Data” Concept and Business Models

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5.2. “Open Data” Concept and Business Models
• In the context of the development of the Big Data concept, a new
idea of Open Data or—as regards government data—Open
Government Data has emerged in recent years.
• Open Government Data (OGD) initiative was developed with the aim
of publicizing information resources created by public administration
or at their request (excluding sensitive data), as well as the free use
and dissemination of open data by each citizen.
• The main reason for the mass publication of public administration
databases, for example, is to provide software developers with the
necessary information resources, provided that the applications
created in this way will also be publicly available.

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5.2. “Open Data” Concept and Business Models
• Taking into account the noticeable increase in this phenomenon, it
therefore seems important to understand how OGD is used to
develop commercial products and services, and what its value is for
the creation of business models in terms of aiming to describe the
architecture of value creation.
• The core of the business model being developed is access to and the
use of data.
• In the context of the development of the network economy, a need to
design network business models arises.
• Networking may emerge in three basic formats.
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5.2. “Open Data” Concept and Business Models
1. In analogical terms, when relationships occur between companies
in the organizational sphere—in this case, a network solution can
be a cluster of companies and supporting institutions.
2. A network may also have a hybrid character when
interorganizational relationships are supported by means of IT
cooperation platforms used for the development of technology,
communication or the exchange of information and knowledge.
3. In technological terms, a network may be completely
operationalized through communication between technical systems.
Such a situation will concern interfaces between e-business models.

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5.2. “Open Data” Concept and Business Models
• Jabłoński and Jabłoński defined the following attributes of the
networked business model:
1. A business model does not exist without a network.
2. Some components of business models (e.g. a value proposition for
customers) depend on activity in the network.
3. A business model is based on the cooperation of the company with
a minimum of one partner. At least one component of the
business model must integrate with another model.
4. Development of the business model depends on the development
of other business models.

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 5.2. “Open Data” Concept and Business Models
• The graphical model of networked business models was presented by
Palo and Tähtinen (see Fig. 3.2).

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5.3. The Assumptions of Digital Sharing
Economy Business Models
• The digital economy is largely based on the principles of the network
of links between market players, where communication platforms
shape the potential to effectively deliver the proposed value to
customers, who are usually the users of these platforms.
• These platforms are also fully designed to build a community of
supporters who should foster the monetization of business models
after some time.
• Examples of business models of companies referring to the
assumptions of the sharing economy concept include companies such
as Uber, BlaBlaCar, ZipCar, finansowo.pl, Skilltrade and others.
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5.3. The Assumptions of Digital Sharing
Economy Business Models
• The sharing economy is widely discussed in the relevant literature and many
authors interpret this concept differently.
• Given below are a few definitions pertaining to the sharing economy.
• The sharing economy can be defined as “consumers granting each other
temporary access to underutilized physical assets (“idle capacity”), possibly for
money.”
Frenken and Schor (2017)

• The “on-demand” or “sharing” economy is a term that describes digital platforms

that connect consumers to a service or commodity through the use of a mobile
application or website.
Cockayne (2016)

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5.3. The Assumptions of Digital Sharing
Economy Business Models
• In the sharing economy, roles are assigned to three entities that
create a triadic B2B platform relationship.
• These include service enablers such as Uber, Airbnb, Luxe, and so on,
service providers such as drivers, hosts in homes and customers,
such as passengers, guests and users.
• A customer may be a firm (B2B) or an individual (B2C).
• Fig. 3.6 shows the relationship between the actors constituting the
structure of the sharing economy business model.

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5.3. The Assumptions of Digital Sharing
Economy Business Models

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5.3. The Assumptions of Digital Sharing
Economy Business Models
• This approach emphasizes the role of partnerships in the creation of value,
which should be sustainable so as to maintain the consistency of the
business model as well as synergy between the expectations and needs of
its participants.
• If this partnership is not preserved and some participants in the business
model achieve more favorable conditions for themselves, then these
models may wobble and lose their effectiveness and efficiency.
• Therefore, the application of sustainable business model archetypes can
successfully improve the balance between organizational, human and
technological aspects.
• Table 3.1 provides a few Examples of business models in the sharing
economy.
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 5.3. The Assumptions of Digital Sharing
Economy Business Models
Table 3.1 Business models in the sharing economy
Type Examples
Portals offering access to content P2P (Eg: Napster), iTunesMusic Store, Spotify,
Wikipedia, GitHub
Applications for cooperation with the Toyota-Europe, Twitter, IBM X-Force Exchange
customer
Platforms that associate transaction Uber, BlaBlaCar, Lyft, Gett. com, AirBnB,
partners Thingo.pl (active Exchange portal)
Sharing resources designated for this Nextbike.pl, Carsharing, Avis, Hertz,
purpose Wolneauto.pl
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5.4. Circular Business Models
• The circular economy is currently one of the key areas of development on
both the macroeconomic and organizational levels.
• The circular economy should be considered in systemic terms.
• This systemic approach is used to achieve goals focused on the efficient use
of resources and should take into account an organization’s life cycle
assessment and its business model.
• Life cycle assessment is a tool for analyzing the environmental burden
associated with products at all stages of their life cycle—from resource
extraction, through the production of materials, parts of products and the
product itself, and the usage of the product to management after rejection,
through reuse, recycling or disposal (“from the cradle to the grave”).

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5.4. Circular Business Models
• The circular economy integrates social, economic and natural aspects
at every level of management:
• Micro level
• Meso level
• Macro level
• The circular economy aims to separate wealth from resource use.
• That is, to answer the question of how we can consume goods and
services and not depend on the extraction of primary resources, and
thus ensure closed loops, which will prevent the possible storage of
used goods in landfills.
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5.4. Circular Business Models
• The circular economy proposes a system in which reuse and recycling
ensure substitutes for the use of primary raw materials.
• By limiting our dependence on such resources, it improves our ability
and the ability of future generations to meet their needs.
• The circular economy increases the likelihood of the full use of
sustainable development.
• In the circular economy, growth is separated from the use of limited
resources by destructive technology and business models based on
longevity, sustainability, reuse, repair, modernization, renewal,
capacity sharing and dematerialization.
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5.4. Circular Business Models
• Linder and Williander define the circular business model as “a
business model in which the conceptual logic for value creation is
based on utilizing the economic value retained in products after use
in the production of new offerings”.
• A circular business model articulates the logic of how an organization
creates, delivers, and captures value to its broader range of
stakeholders while minimizing ecological and social costs.
www.boardofinnovation.com

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5.4. Circular Business Models
• Circular business models have proven that they can potentially be
consistent with economic performance.
• In fact, they can contribute to competitiveness by lowering
production costs.
• More ambitiously, they can generate additional turnover by
penetrating new markets and winning new customers, as well as
protecting the corporation against the volatility of raw material prices
in traditional markets.
• Laubscher and Marinelli have identified six key areas for the
integration of the circular economy with the business model:
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5.4. Circular Business Models
1. Sales model—the transition from selling the volume of products to selling services and
recovery of products from customers after their first life.
2. Product design/material composition—the change involves the design method and
product design to maximize the reuse of the product, its components and high-quality
materials.
3. IT/data management—a key competence is required to optimize resources, that is,
the ability to track products, components and material data.
4. Supply loops—turning toward the maximization of the recovery of one’s own assets
when they are profitable, and the maximization of the use of materials from
recycling/components used to obtain additional value from the stream of products,
components and materials.
5. Strategic sourcing for own operations—building trusted partnerships and long-term
relationships with suppliers and customers, including cocreation.
6. HR/incentives—change requires the appropriate adaptation of culture and the
development of capabilities, reinforced by training programs and rewards.

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5.4. Circular Business Models
• Evolutionary change in designing business models also occurs, from
classical business models, to sustainable business models, to circular
business models (see Fig. 3.7).

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5.4. Circular Business Models
• The sustainable business model aims to ensure the company’s ability
to survive in the long-term while maintaining its ability to achieve
long-term value.
• The circular business model aims to provide the ability to create a
closed loop, a cycle which aims mainly to fulfill the environmental
assumptions and criteria in a new dimension of understanding this
solution.
• The assumptions of the circular economy are based on the
application of the following six principles, known as “ReSOLVE”,
introduced by Ellen MacArthur Foundation.

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5.4. Circular Business Models
• The scope and interpretation of these six activities covers the following areas:

1. Regenerate—shift to renewable energy and materials, reclaim, retain and regenerate

the health of ecosystems, return recovered biological resources to the biosphere.
2. Share—keep product loop speed low, maximize utilization of products by sharing them
among users, reuse products throughout their technical lifetime, prolong lifespan
through maintenance, repair and design for durability.
3. Optimize—increase performance/efficiency of a product, remove waste in production
and the supply chain, leverage big data, automation, remote sensing and steering.
4. Loop—keep components and materials in closed, loops and prioritize inner loops.
5. Virtualize—deliver utility virtually.
6. Exchange—replace old materials with advanced non-renewable materials, apply new
technologies.

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5.4. Circular Business Models
• The literature recognizes digital business models and digital technologies as
factors facilitating the transition to the circular economy.
• They can be used to overcome the challenges of the circular economy.
• Digitalization can boost the transformation toward a more sustainable
circular economy.
• It can help to close the material loops by providing accurate information on
the availability, location and condition of products.
• Digitalization also enables more efficient processes in companies, helps
minimize waste, promotes a longer life for products and minimizes the
transaction costs.

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5.5. Stock Indices in Shaping Robust Business
Models in the Circular Economy
• In order to define mechanisms for developing the robustness of business models in the
circular economy, stock exchange indexes can be used.
• There are many indexes used in the circular economy that focus on areas such as energy
efficiency, new products and processes, protection of natural resources and plastic waste
issues etc.
• These indexes can help to identify companies that facilitate a transition to a circular
economy, tackling global resource challenges such as energy scarcity, biodiversity loss,
waste and pollution.
• They further help to identify organizations that meet the criteria of these indexes and
seek to provide growth-oriented, sustainability-minded investors, with a new lens to
assess where value will be created in the 21st century and beyond.
• One such type of stock exchange index is the Sustainable Circularity Index proposed by
Jabłoński and Jabłoński (2020), which considers four key dimensions: social, economic,
environmental and circular.
• Examples of indicators for the Circular Index are provided in Table 3.2.
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 5.5. Stock Indices in Shaping Robust Business
Models in the Circular Economy
Table 5.2 indicators for the Circular Index
Dimension Examples of indicators
Social – Number of accidents per year in the organization
– Loss of efficiency by the organization
– Percentage of women employed by the organization
– Composition of management bodies and division of
employees by sex, age and other criteria
– Percentage of temporary employees in the organization
– Absence indicator in the organization
– The type and rate of injury, illness, days lost, absences and deaths
related to work
– Staff turnover in the organization
– Total number and rate of new employees
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 5.5. Stock Indices in Shaping Robust Business
Models in the Circular Economy
Table 5.2 indicators for the Circular Index
Dimension Examples of indicators
Economic – Direct economic value generated and distributed
(operating costs, salaries and employee benefits, payments to capital
providers)
– Expenses for research and development
– Number of persons employed
Environmental – The rate of hazardous waste
– The rate of non-hazardous waste
– The amount of water used annually in industrial Processes
– The amount of energy consumed annually
Circular – Input data in the production process
– Tools during the usage stage
– Effectiveness of reintroduction to circulation 34