Introduction

Ecological growth aims to fulfil current necessities without obstructing future generation potential to satisfy their demands. It considers the restrictions of globe’s reserves on human-growth and the working together and trade-offs among monetary, ecological and communal objectives (D. Singh and Verma 2018). The UN has introduced seventeen ecological growth goals to be attained, encompassing areas such as continuing from the Millennium Goals (Işık et al. 2019b). The new targets focus on reducing poverty, achieving gender equality and promoting sustainable urban development. The CE (circular economy) is founded on leveraging private enterprises to facilitate the move towards a more ecological system (Hailiang et al. 2023). As companies have the most significant pool of resources and capabilities, they can considerably drive this change by producing added benefits through an expanded, carefully overseen setup of stakeholders. Specifically, the Failed-Value Interactions awareness is crucial in this framework; it undertakes that by capturing value that is forfeited, ruined, not incorporated or not provided scorn claim in the market, establishments can hypothetically enhance societal well-being while simultaneously achieving a competitive edge (Godil et al. 2020).

The idea of the CE is progressively recognised as a potential mixture to achieve ecologically by minimising waste, emissions and energy leakage in the economic system (Irshad et al. 2019). This notion was initially presented in 1990 to explore the connection between the environment and its financial functions, which include amenity values, resource base and support system. The goal was to develop a self-replenishing plan that limits the input of materials and energy while preventing environmental harm and hindering growth and progress (Chen and Paulraj 2004).

However, it is plausible that the concept of a self-replenishing system was introduced earlier. The idea of a business model gained popularity during the rise of e-commerce in the 1990s to present investors with clear and comprehensive business ideas (Coenen et al. 2022). Although various sources need to be specified, the model inversely, a unified understanding has been established through thorough reviews of these definitions. A business model can be described as a simplified representation of components of an intricate organisational structure and links among these aspects (Cambero and Sowlati 2014). It outlines an organisation’s value intention, how quantity is created and delivered and how it is captured. The goal is to facilitate analysis of the appearance of growing intricacy. Most approaches consider the organisational value network to some degree (Begum Siddiqui et al. 2023). Circular business models (CBMs) are designed for the CE and include factors that close means loops to reduce feedback into the association and its cost link while minimising emissions. CBM is linked to circular CSCM to achieve closed loops through different methods.

The primary distinction between traditional corporate models and those intended for the CE is observed mainly in their benefit design and element, especially in the CSCM for sustainable innovation. CSCM involves arranging and coordinating the supply chain to close resource loops (Govindan et al. 2023). Despite its significance for CBM and the circular economy, CSCM is an under-explored research area (Sharif et al. 2020b). And to obtain more comprehension of CSCM and CBM, a framework is suggested to combine these ideas towards ecological growth (Ahi and Searcy 2015), and the economically viable material reuse needs to be complemented by appropriate business models that can commercialise price-competitive products, meet regulatory standards and deliver substantial sustainability benefits. A business model perspective is valuable for studying issues related to related innovation processes, such as how companies create value through new products and technologies, and revised value propositions and value chain networks while adhering to circular economy principles. Other questions of interest in business model analysis include what value a business model creates for the firm and its customers, and other stakeholders such as the environment or society.

Although new business models for material reuse in construction have emerged recently, their spread has been slow. Khokhar et al. (2020a) found that a limited understanding of the impact of material reuse is one of the main barriers for companies to develop circular economy solutions in the construction sector. Developing products using reusable materials that are price-competitive with primary resources remains a challenge, as innovations in material reuse often require technology development and upfront investment. At the same time, a product’s market success and sustainability impact is often uncertain. The business and environmental case for material reuse remains underexplored mainly, and rigorous case studies that can validate the value creation of reuse strategies are lacking.

This study includes four case studies: alpha, a recycled office furniture manufacturer; beta, a flat aluminium sheet manufacturer with high reprocessed matter and gamma, which generates trendy decorations from delta, offer motorcycle-sharing assistance. The research paper ends with a summary and a look towards the future.

Literature review

Circular economy: adopting circular business models

The current interpretation of the CE originates from various schools of thought. The key objective of this economic system is to minimise excess and preserve the innate worth of food for as long as feasible. Achieving this goal involves recycling items and energy after usage to prevent them from escaping the system (Sauer and Seuring 2018). The butterfly diagram illustrates the constant flow of resources through the amount set and emphasises the genetic and technological closed twists rather than any circular loop (Hou et al. 2023).

Incorporating sustainability into business operations through sustainable business models (SBMs) requires integrating three key elements: sustainable value, proactive management of a diverse range of stakeholders and a long-term perspective, as shown in Table 1. These elements are increasingly emphasised in SBM literature. SBMs prioritise exceptional customer value and social and environmental benefits, economic advantages and reducing environmental and social problems (Hossain et al. 2023). Collaboration with various stakeholders is critical for creating social, environmental and economic value and aligning the interests of a broader range of stakeholders, rather than just focusing on financial returns for consumers and investors, as unsustainable corporate models do (Suhandi and Chen 2023).

Table 1 Deployment of sustainability dimensions into circular business models (CBM)
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We believe that circular economy business models belong to sustainable business strategies. Their main aim is to improve sustainability performance by minimising contributions of resources and curtailing trash and emissions outflow from the administrative approach, achieved by closing loops (Khan et al. 2021), as shown in Fig. 1. Closing loops pertain to the natural and technological nutrition drives of the CE, which involve reprocessing, enhancing efficacy (Işık et al. 2023) and extending the application phase. While it was initially classified as part of the slowdown process, we want to underscore the importance of an intensified utilisation phase and introduce the notion of substituting product utility with software and service options (Khan et al. 2021).

Fig. 1
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Comparison of circular business models

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In terms of an organisation’s value proposition, its main goals and vision must be translated into offerings that generate revenue, which can cover direct and indirect expenses (Afshan and Sharif 2016). These offerings should be developed using eco-design and design-for-disassembly techniques, which aim to promote the well-being of society and the ability to tackle long-term economic, environmental, and social issues (Zhu and Sarkis 2004) and create value for CBM. It is vital to establish a profit link involving investors driven by and providing financial viability, environmental benefits, social considerations, and long-term business sustainability (Khokhar et al. 2020b). Additionally, the value obtained by the CBM system comprises not only financial benefits but also the preservation of natural resources and the well-being of society in the quick and lengthy term (Luo et al. 2022).

Circularity in supply chain management

The origin of supply chain management (SCM) can be traced back to the work of Oliver and Webber, which generated considerable interest from various fields, including operations management and psychology. As a result, a vast collection of literature comprising more than 40 thousand books and articles has been produced on the subject (Khokhar et al. 2022). However, the concept has numerous definitions and interpretations due to the various disciplines and research methodologies involved in SCM. Upon reviewing the literature, we describe SCM as the coordination and management of diverse organisational purposes, such as promotion, IT, economics and customer facility, within and across businesses and administrations to optimise operational efficiency and effectiveness, leading to a competitive edge (Wan Ahmad et al. 2016).

The success of SCM relies on the organisation’s networks, as no single entity possesses all the essential abilities and assets to produce its profit proposal (Hou et al. 2021a, 2021b). The configuration of these associations varies based on specific attributes, such as the features of each organisation being the system nodule and the type of product (Liu et al. 2019). Additionally, the extent of cooperation between governments depends on the level of dedication, duration and formality of the relationship, ranging from a minimal market shift to an integrated company (Khaskhelly et al. 2022). This debate is especially significant in community sustainability because robust alliance networks are vital in improving sustainability performance (Bag et al. 2022).

The literature contains more specific descriptions of SCM that often focus on procurement. These definitions prioritise tactical variety, cooperation with and management of contractors (Işık et al. 2019a), as shown in Table 2. Despite their practical usefulness and theoretical distinctiveness from other concepts, we employ a broader description to permit our debate’s most comprehensive possible range of applications (Liang et al. 2022). Depending on its focus, SCM can be an essential portion of, or roughly indistinguishable from, the value chain and the creation and delivery of value (Kocaoǧlu et al. 2013). Thus, it is a crucial component of an organisation’s corporate models and has a significant role in converting them to CE. Managerial links must reconsider how and where value is generated, utilised and recovered (Işık et al. 2019a).

Table 2 Literature overview circular value creation and its implications for business models and supply chain strategies from 2010 to 2022
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The discrepancies between traditional and circular business models in their supply chains are due to the necessity of closing, slowing and restricting the movement of materials and energy. We believe that for the most favourable sustainability act, all aspects of the company style must be consistent with these three objectives (Sreenu et al. 2022). Although some investigations have explored sustainable and ecologically responsible supply chains, such as the specialised issue of the research on SCs, for the CE, it is still in its emerging stages. The literature on the circular economy is limited, mainly concerning its implementation in China, with only a few evaluations focusing primarily on waste-to-energy supply chains (Hu et al. 2019).

Based on the available literature, we define CSCM as coordinating and organising various acts, including sales, advertising, IT, investment and customer assistance across organisations and industry groups, as shown in Table 3. The objective is to minimise material and energy flow, narrow it down, intensify, dematerialise, reduce reserve stored and avoid waste and discharge outflow from the method. This approach can enhance operational efficiency and effectiveness while creating competitive advantages (Fasan et al. 2021).

Table 3 Comparison of SCM, CSCM and CSCM for sustainable innovation (SI)
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Considering the value chain’s significance to the corporate standard and the necessity of aligning all aspects of the corporate brand for optimum sustainability, it is plausible to argue that CSCM, which strives to foster sustainable development, should encompass SBM traits (Cetinkaya 2010). Hence, CSCM for organic growth ought to contain the generation of further economic and non-economic value, proactive management of multiple stakeholders and a prolonged-term outlook, as shown in Fig. 2.

Fig. 2
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A value-based view on sustainable circular business models

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Methodology

The research study utilised a literary analysis to establish a theoretical basis for the case studies that were carried out. This methodology was selected due to the study’s exploratory nature, and case studies were deemed appropriate for examining current trends and obtaining a comprehensive understanding of unique scenarios applied to the present research.

After conducting a literature review and establishing the necessary background information, the researchers selected companies to participate in the study. Since the methodology involved case studies, the researchers opted for a theoretical sampling approach instead of a statistically representative one. The selection criteria required the companies’ business models to align with the circular economy framework’s closing, slowing, intensifying, narrowing and dematerialising loops, as shown in Fig. 3.

Fig. 3
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Components of a circular business model (CBM) template

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The study identified four companies that met these criteria: alpha, which manufactured remanufactured office furniture; beta, which focused on producing flat-rolled aluminium with a high percentage of recycled material; gamma, which made high-end fashion accessories from fire hoses and delta, which offered a bike-sharing service (Bäckstrand and Fredriksson 2020). The first three companies were based in the UK, while the fourth was Brazilian. Beta was the only large corporation, while the others were medium- and small-sized businesses with fewer than fifty employees. Despite their industry and business model differences, each selected company provided valuable insights into the factors and functions contributing to the circular economy.

The researchers gathered data for their study by conducting semi-structured interviews with key individuals from the selected companies as their primary method. To address the potential for interviewee biases, the researchers used publicly available documents and information from the companies’ websites to supplement the interview data. The researchers asked for specific examples to support the interviewees’ general statements throughout the interviews. Key informants were selected based on their involvement and overall understanding of each company’s circular business model, including CEOs and founders from alpha, gamma and delta and the corporate sustainability manager from beta. The interviews focused on each company’s economic, environmental and social value proposition; creation and delivery systems and the value captured by various stakeholders in each case study. The data collected was analysed qualitatively, considering factors related to sustainable development and the circular economy.

To put it simply, CSCM for sustainable innovation builds on the goals and methods of traditional SCM and CSCM but with added focus on achieving social, environmental and economic goals, proactively managing multiple stakeholders, taking a long-term perspective and implementing measures to reduce, restrict and slow down the use of resources in supply chain activities.

Economical, environmental and social goals

To start analysing the case studies, we discussed the organisation’s economic, environmental and social objectives. We used a triangulated approach, combining information from the companies’ mission and vision statements posted on their corporate websites with insights gained from interviews. To protect the confidentiality of the companies, we did not provide direct quotes from the websites. All four organisations are profit-driven and intend to cover costs and generate revenue by selling products or services. Three organisations have explicitly stated their objective of reducing landfill waste on their websites.

The case study analyses showed that the companies had varying levels of explicit connection to social goals. The study aimed to create local jobs through remanufacturing, while delta aimed to promote cycling as an alternative mode of transportation in urban areas. Beta declared its commitment to customers, co-workers and local communities but did not specify any goals for these stakeholders. However, the interviews and the company’s website showed that beta contributed to society through technological innovation and development related to the production process of sheets from recycled aluminium and the application and usage of aluminium sheets with high recycled content. Gamma’s statement was unclear and referred to the intangible value of preventing materials from going to landfills or incineration. All companies supported the market for recycled and remanufactured goods, and delta believed that promoting cycling could offset their emissions, although they had not yet quantified their environmental impact.

Taking a proactive approach to managing multiple stakeholders

Effective management of multiple stakeholders is critical to circular supply chain management (CSCM) and circular business models (CBM). It involves providing value to various internal and external stakeholders proactively. The companies examined had a proactive approach towards their shareholders and other stakeholders, as shown in Table 4. For example, alpha and gamma aimed to lead by example and encourage innovation and partnerships to make circular business practices feasible while contributing to the circular economy. Beta identified an opportunity to decrease dependence on imported, commodity-priced materials with high carbon emissions and invested significantly in new technology to manufacture high-quality aluminium sheets with a significant proportion of recycled materials. An overview of the stakeholders and the benefits they receive indicates that the companies were proactive in managing their stakeholders.

Table 4 Sustainable value captured by stakeholders
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Long-term perspective within short-term action

The case study evaluated four companies: alpha, beta, gamma, and delta, each with their distinct approach to circular business. These companies adopt a long-term perspective, recognising the importance of considering future generations in their present decisions. The interviews conducted revealed the positive contributions each company is making in the long run. Alpha and gamma strive to create economically viable businesses that promote the principles of circular economy. Alpha focuses on remanufacturing office furniture, requiring infrastructure support from logistics and production organisations to enable other circular companies. Gamma emphasises materials with high potential for usage and aims to create products that can last virtually forever, including luxury accessories made from fire hoses, leather waste and parachute silk. Beta’s primary goal is to lessen reliance on imported commodity-priced materials with high carbon emissions by investing in new technology to manufacture high-quality flat aluminium sheets with a high percentage of recycled materials. Delta’s goal is to promote the integration of bike sharing into everyday life, going beyond leisure activities and encouraging adoption among various users, such as adults and children and private and public organisations, which can also see it as a potential business opportunity.

Circular resource loops and guidelines for sustainable business models

During the study, researchers gathered fascinating observations about the resource loops of companies. The circular business models that were presented by the case studies were found to be consistent with the Butterfly diagram. Alpha is focused on the refurbish/remanufacture cycle, while beta and gamma employ recycling business models. On the other hand, delta emphasises the maintenance cycle by designing and manufacturing durable and easy-to-repair products, thereby extending the use of their bicycles. The study also evaluated the value proposition of the circular business models and the requirements of circular supply chain management (CSCM), as shown in Table 5.

Table 5 Towards circular business model and circular supply chain in the case studies
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Results and discussions

The study suggests a framework that combines the concepts of circular economy, sustainable development, circular supply chain management and circular business models as in Fig. 3. This framework is developed by analysing case studies and literature and aims to illustrate how these ideas are interconnected. The left side of the framework emphasises the relationship between a specific circular business model, an organisation and its value network functioning as a circular supply chain. The study reinforces previous claims about the significance of CSCM in closing, narrowing and slowing the loop and goes further by introducing strategies to intensify and dematerialise the loop also represented in Table 5.

Delta acknowledged the importance of using durable and easy-to-maintain bicycles, influencing their decision to build their bikes instead of purchasing them. The proposed framework highlights the significance of economic, environmental and social goals; proactive stakeholder management and a long-term perspective in achieving circularity and sustainability also discussed in literature. The case studies presented in “Economical, environmental and social goals,” “Taking a proactive approach to managing multiple stakeholders” and “Long-term perspective within short-term action” offer empirical evidence to support the relevance of these conditions. Although the triple bottom line approach, which focuses on economic, environmental and social pillars, is necessary, it is insufficient for CBMs and SBMs. Successful sustainable businesses require a proactive approach to stakeholders and a long-term perspective that complements short-term goals, as shown in Fig. 4.

Fig. 4
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A framework represents the condition for sustainability

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This paper contributes to prior research by presenting empirical evidence and arguing that the three conditions for CBMs address challenges for both circular economy and sustainable development. While the connection between these perspectives is debatable, this research demonstrates an overlap between them and recognises the need for further and more extensive discussions. The paper suggests that while circular economy is one way to achieve sustainable development, sustainable development is a broad and abstract concept that may lose meaning. At the same time, circular economy offers a more concrete way to organise society and the economy.

Conclusion

This study contributes to the literature by proposing a theory- and practice-based integrated framework of CBM and CSCM, discussing their interrelationships and contributions to the sustainability dimension. We present four case studies to address this question: alpha, an office furniture remanufacturer; beta, a producer of high recycled content aluminium panels; gamma, a manufacturer of recycled luxury accessories and delta, a bike-sharing company.

All four case studies incorporated circularity into their business models and supply chains. These findings corroborate previous research on SBM derived from value creation and found evidence for elements of CBM and CSCM. It includes products designed and manufactured from waste materials, reverse logistics partnerships, and efforts to inspire systemic change through communication and collaboration in the circular economy. It reinforces previous theoretical studies showing that technological innovations (e.g. in terms of material flows) and social innovations (e.g., changes in consumer behaviour) are required.

However, the studied cases still face the challenge of shifting the paradigm from linear to circular, especially concerning the required adjustments in the company’s supply chain and customer procurement processes. Empirical data show alignment between CBM and CSCM to address sustainability challenges. As shown in the framework shown in Fig. 2, coalbed methane combined with circular supply chains can contribute to sustainable development by promoting economic, environmental and social objectives; proactively managing stakeholders, including a long-term perspective and closing, slowing, intensifying, shrinking and dematerialising resource loops. The literature has previously indicated circular resource cycling. Our framework complements this perspective by explicitly adding circular economy strengthening and dematerialising initiatives.

This paper sheds light on practice by introducing different CBMs and discussing the main challenges. The cases studied present similarities and contrasts. For example, alpha is a small company that acts locally, is inherently circular and is committed to contributing to sustainable development. At the same time, beta is a large global organisation that increases the amount of recycled materials in its products, mainly to compensate for the uncertainty of resource procurement. Despite these differences, the business models of all case companies depend on changing consumer and supplier behaviour, as CBM and CSCM require a systemic paradigm shift. For example, product quality perceptions of remanufactured or recycled materials by corporate customers are often lower than conventional products, resulting in lower achievable prices. Although the product quality requirements are very high, the advantage in cost structure is relatively small.

Our study’s main limitations include the limited number of case studies, and the data collection was mainly based on one interview per case study. However, discussions were triangulated from public documents to mitigate this. Complementing data collection with interviews with other stakeholders in the supply chain could be an interesting future follow-up study to complete the current study. The research is a first step in assessing whether “circularity” makes businesses and their supply chains more sustainable. A more systematic assessment of their contribution to the SDGs is needed to confirm and complement these initial steps.