Strategy in a circular economy: Discussion of opportunities and limitations

A closed-loop production, also called Cradle to Cradle or “circular economy,” offers to fundamentally rebuild the current take-make-waste system of production (McDonough and Braungart 2010). The aim of the circular economy is twofold: on the demand side, to eliminate the need for new resources, and on the supply side, to achieve a product-to-service shift through rental and repair rather than ownership. Therefore, business model innovation of inputs, processes, and relationships with end-users is necessary at an organizational level (Bocken et al. 2014, 2016; Kindström 2010). A business model perspective on organizational strategy is particularly relevant to the circular economy as it focuses on both a strategic and operational level, including designs, products, processes, values, and wastes as key concepts that might normally be ignored by more corporate strategic management (Bocken et al. 2014). There are at least two critical differences in implementing business model innovation in a circular economy. First is the essential importance of initial design that enables a circular flow (Centobelli et al. 2020; Urbinati et al. 2017). Second is the joined-up and inter-dependent nature of supply chains and value networks (Lieder and Rashid 2016), which requires more intense consideration of more diverse, and perhaps initially unwilling, stakeholders, including shareholders, employees, clients, suppliers, society, environment, and government (Geissdoerfer et al. 2018a).