Measuring maturity in corporate Circular Business Models

Abstract

Circular economy (CE) remains underdeveloped although it is gaining momentum as an alternative to the current environmentally damaging linear economy. Organizations, under socio-technical regimes, are currently trapped in path dependencies towards linear production processes. However, they can become enablers of a transition towards a CE by implementing circular strategies in their business model (CBM) such as cycling, extending, intensifying or dematerializing their value chains. In any case, there is a lack of guidance on the know-how required to effectively implement CBMs in organizations and on how to assess their progress. The present study aims to develop a maturity model for CBM implementation that takes into account the dynamic process of innovation, while providing a diagnostic and a benchmarking tool for organizations and policymakers. To build such a model, the following research question was investigated: How can organizations measure their maturity in terms of CBM implementation? Research for the study followed a deductive design, conducting an integrative literature review to identify 14 organizational capabilities required for CBM implementation, according to recent research on Dynamic Capabilities applied to CBMI. Such capabilities are described according to four levels of maturity, setting best practices at the highest level. The maturity model also contains a grading mechanism that provides organizations with an overall grade, as well as a grade per stage of implementation to guide them into identifying areas for improvement. Such a preliminary model was then tested with two case studies from the denim industry, following a maximum variation sample approach and refined with their feedback as a way to validate the model and improve its universality. Compared to existing theory on CBM implementation where practices are cataloged, the present study not only gathers more recent practices, but also introduces an unprecedented assessment mechanism that allows organizations to evaluate their current CBM implementation status and to plan their future steps, for each level of maturity. The maturity model developed in the present study provides guidance on CBM implementation that policy makers, academics, and practitioners have been requesting, thus enabling a wider discussion on CE adoption.