Sustainability in the Circular Economy: Insights and Dynamics of Designing Circular Business Models

The integration of sustainability in the circular economy is an emerging paradigm that can offer a long term vision to achieve environmental and social sustainability targets in line with the United Nation’s Sustainable Development Goals. Developing scalable and sustainable impacts in circular economy business models (CEBMs) has many challenges. While many advanced technology manufacturing firms start as small enterprises, remarkably little is known about how material reuse firms in sociotechnical systems transition towards circular business models. Research into CEBMs integrating sustainability and environmental conservation is still in its early stages. There has been increased interest in sustainability and circular economy research, but current research is fragmented. The innovation surrounding CEBMs eludes some firms with relatively limited evidence of the transitional perspective necessary to integrate aspects of sustainability. This lack of evidence is especially applicable to the context of circular economy practices in small and medium enterprises in the United States regarding capabilities, operations obstacles, and elements of success in designing circular business models. Based on a qualitative, interview-based inductive study of a material reuse firm, our research develops a conceptual model of the critical success factors and obstacles that are part of implementing circular economy practices. Firms must first manage strategic enablers and monitor tactical enablers to achieve sustainability goals. In this study, we identify the underlying enablers of how these capabilities affect the transition to a CEBM that integrates sustainability. The framework emerging from our findings highlights the interplay of CEBM, innovation success factors, and obstacles at a micro-level. The investigation of a material reuse firm serves as the foundation for developing a framework for how managers can alter a company and revise the business model to transition towards a more innovative circular economy.