Circular business models: a typology based on actor type, circular strategy and service degree

The circular economy has become a dominant perspective for better integrating firms’ value creation activities with sustainable development. In contrast to the linear take-make-waste approach, it is based on closed product, component, and material flows with the aim to maximise material productivity and resource efficiency at the level of the production and consumption system, while reducing waste. Existing business models often hinder organisations to become an integral part of circular value creation. In this paper, we present a new take on circular business models which puts a) an actor’s position in the value cycle, b) the actor’s dominant circular strategy, and c) the service degree with which circular solutions are provided to the market at the core of business model design. We propose a typology with 22 actor-specific circular business model patterns, each customisable according to three service degrees: product-oriented, use-oriented, and result-oriented product-service system offerings (together leading to 42 business model sub patterns). Each pattern is described in detail regarding how different service degrees enable circular strategies, the role of circular product design, potential partnerships along the value cycle, and practical experiences from case examples. These patterns can be freely combined by organisations to form a custom circular business model.