Adapting to Change: The Impact of Circular Economy Practices on the Business Model

The transition to a circular economy is driving companies to introduce significant changes in their business models. This research study has two objectives. First, to detail the types of practices adopted by a company to transition from a linear to a circular business model and the critical components of the business model that are affected by them. Second, to propose a method for assessing the level of circularity achieved by a firm's business model. For this purpose, the case study of an industrial company in transition to a circular economy was analyzed in depth. In addition, Osterwalder and Pigneur's business model and existing literature on circular business practices were used as a theoretical framework for this research. The main findings of the research indicate that circular practices can be very heterogeneous. Moreover, the critical components of a company's business model are not equally affected by the adopted circular business practices, with three components of the business model (activities, channels, and customer relationships) being the most affected by the changes. Finally, the level of circularity within the value network and the value proposition of a business model can be measured systematically, and the level achieved depends strongly on the type of practices adopted and the objectives set by a firm.