ESSAY IV: A VALUE NETWORK PERSPECTIVE ON CIRCULAR

CASE STUDIES

4.4.1 Background and objectives

As new business models are identified as a powerful transformative tool towards the circular economy paradigm, new knowledge on designing circular business models is needed to foster a successful implementation of the circular economy.

Literature focusing on inter-organizational relationships in a circular economy context has mainly focused on remanufacturing, closed-looped and reverse supply chains, without necessarily taking a holistic systemic approach. There is indeed only a limited understanding on how circular value networks emerge and are maintained, and more specifically on the expected roles of focal companies when actively developing networked circular business models. Taking a value network perspective on circular business models can thus offer relevant insights on how value creation occurs within circular business models. The goal of this paper is to contribute to the ongoing discussion related to the theoretical foundations of circular business models, by adopting a value network perspective. In this paper, we posit that value creation mechanisms in circular business models need to be vested in a value network perspective. We therefore aim to answer the following research question: which attributes of a value network perspective can support the development of circular business models? As circular business models can be classified according to specific distinctive typologies, we also posit that the circular business model configuration influences the way the value network is emerging

and organized. Through a multiple case study approach, the paper aims to uncover the distinctive value network configuration approaches implemented by focal companies in light of their distinctive circular business models archetypes while highlighting common features characterizing circular value networks.

4.4.2 Main findings

The results of the study allow us to highlight specific characteristics defining circular value networks: first, the studied cases all display a purpose alignment from all actors involved in the network. This feature can be considered as the foundation of a circular value network. Concretely, addressing a wicked resource problem that requires complementary tangible and intangible resources pooled together in a symbiotic fashion is the main driver leading to the emergence of a circular value network. Shared mindsets from multiple actors involved in concomitant sectors consolidate the forming of circular value networks. When analyzing business model components of focal firms embedded in circular value network, we can highlight the following characteristics. Looking at the value proposition component, focal companies design their own value proposition in light of other actors’ needs in the network, and strive to offer multiple complementary benefits to the network. Consequently, the focal company value proposition can be described as a nested component of the whole value network proposition. Looking at value creation and delivery mechanisms, we highlight that value creation is built upon a systematic value leakage assessment at network level which is turned into a new value opportunity. For the focal firms, providing adaptive and locally attuned responses aiming at dynamically build symbiotic relationships support value creation at network level. Taking a circular economy network perspective, value capture at network level not only benefits the focal firm with profit making realization, it extends to the capture of societal and environmental benefits that go beyond the collaborative network of direct stakeholders.

A closer look at the five circular value networks investigated in the study allows us provide generic characteristics of circular value networks. Circular value networks can be characterized by a high level of embeddedness (i.e. the measurement of a firm’s relation to its environment through an aggregate measure of the quality and quantity of firm ties), displaying tight interconnections between a core set of complementary actors which act in reciprocal interdependence (i.e. the output of one unit provides input for another and vice versa). Circular value networks are built on a heterogeneous set of actors, often spanning through multiple sectors, which rely on symbiotic service provision. Often created from an intentional

perspective strongly associated to the grand challenges they aim to tackle, circular value networks as they formalize, display some emergence features (i.e. the arising of novel and coherent structures, patterns and properties during the process of self-organization in complex systems (Goldstein, 1999)). Value networks are like living organisms and thus are constantly learning, evolving and adapting to changing requirements (Lusch et al., 2010).

Beyond these generic features, we highlight that circular value networks can take different forms and characteristics depending on where one’s circular business model is positioned on the life cycle of a product-service. The shape or pattern of the circular business model built within a value network depends on the needs addressed within the network. It is possible to identify specific archetype roles for companies active in circular value networks: based on the position of the focal company in its value network, specific roles (enablers, extender, optimisers, recoverer, integrators) lead to associated value creation, delivery and capture mechanisms. The more integrated, the more modular and multi-functional the circular business model is. To successfully operate within a circular value network, specific capabilities can be highlighted: Network scanning, network graspingg, network reshaping, network zooming, network marketing and network bridging capabilities.

4.4.3 Main contributions

Beyond this attempt to characterize circular value networks, several managerial implications are inferred. The article illustrates through the five cases how adopting a value network perspective when engaging in circular business model innovation can bring new value opportunities. The circular value network framework used to analyze the cases can also provide a more systematic method to position oneself in one network depending on the business model archetype pursued. By highlighting specific roles and capabilities, the study also offers managers of circular economy-oriented companies relevant insights to support their managerial postures at network level.