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The order of circular business models: An empirical taxonomy using cluster analysis
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School of Business |
Master's thesis
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en
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95+2
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In the wake of increasing demands for raw materials and the changing climate, the circular economy concept has recently gained traction in academia, business and policy making. A central constituent in order realize it, i.e. to shift to a system in which environmental impact is decoupled from economic growth by circulating products, components and materials at their highest economic and resource value at all times, is the design and implementation of circular business models. Hence, over the last years, academics and practitioners alike have created tools and frameworks that support firms in coming up with new or more effective models. Further, emulating the evolution of general business model literature, researchers have started to propose circular business model definitions and classifications in order to consolidate the existing work and establish common ground. However, a clear understanding of what a circular business model really constitutes is still missing and a careful review of the existing literature reveals that the proposed classifications are either lacking methodological transparency or being purely conceptually derived. Consequently, from a positivistic stance, there is no basis for wider generalization and mid-range theory development.
To address this gap, the thesis at hand constructs a conceptually grounded and empirically derived circular business model taxonomy. Following existing approaches to taxonomy development and building upon an extensive literature review as well as empirical data, it first creates an integrative framework on which basis circular business models can be described. In the process of its development, also a binary-coded matrix expressing the defining business model characteristics of 100 randomly selected firms is generated. This data is subsequently analyzed using hierarchical and non-hierarchical cluster analysis techniques. The final cluster solution reveals a set of seven major circular business model types which are further characterized on the basis of descriptive statistics and representative case examples. Split-sampling and the application of different cluster algorithms indicate that the solution is stable and a silhouette coefficient of 0.53 strengthens its internal validity. Finally, a comparison with existing classifications demonstrates the taxonomy’s usefulness.
While not generating a definitive answer, the proposed circular business model taxonomy provides a novel perspective to the question of what types of circular business models exist and how they can be characterized. It offers a stepping stone for mid-range theory development and in combination with the review of 116 circular business model publications gives a comprehensive overview of the phenomena’s current manifestations. From a practical viewpoint, the thesis’ findings provide useful insights into the structure of circular business models thereby serving as a source of inspiration for the development of new models or as a tool for the strategic positioning of existing ones.