Circular Business Model Innovation: Inherent Uncertainties

Linder, M., Williander, M.
Type of publication: 
Journal article

Circular business models based on remanufacturing and reuse promise significant cost savings as well as radical reductions in environmental impact. Variants of such business models have been suggested for decades, and there are notable success stories such as Xerox photocopiers. Still, we are not seeing wide spread adoption in industry. This paper examines causes for hesitation. Drawing on a hypothesis-testing framework of business model innovation we show that circular business models imply significant challenges to proactive uncertainty reduction for the entrepreneur. Moreover, we show that many product-service systems variants, while facilitating return flow in circular business models, further aggravate the uncertainty reduction issue. Through a longitudinal action research study we provide a counter example to many of the challenges identified in previous studies, which could be overcome in this case.

Published in: 
Business Strategy and the Environment (BSE)