Abstract
This study analyses how startups implement circular business models supported by innovation and Industry 4.0, in which strategic stakeholders for value creation are to be found in this specific business ecosystem. The theoretical framework of circular business models supported by innovation was used for analysing the startups based on some assumptions of stakeholder theory. Fifty-one startups were selected, which correspond to the unit of analysis for this study on the improvement of supply chains through circular business models supported by innovation aimed at sustainability in organizations. We conducted a multiple case study whose results suggest that: (i) circularity is strategic for the business to assume its commitment to a sustainable development agenda, especially regarding pollution prevention and proactive action; (ii) visionary entrepreneurs are actively engaged with circular economy practices and technological innovation to promote a circular flow for their business ecosystem; (iii) Industry 4.0 is still incipient, but it is synergistic and beneficial for a successful circular economy in startups; and (iv) primary stakeholders are the activators of circular cycles in the startups surveyed. The present study contributes to the literature in four ways by: (i) presenting a framework which brings together exploratory theoretical propositions on strategic stakeholders for startups, innovative capabilities and assumptions of circular business models; (ii) validating exploratory theoretical propositions with 51 startups; (iii) providing lessons learned so far by the startups which are in line with the assumptions of circular business models for triggering their innovation capabilities and promoting Industry 4.0; (iv) providing an original typology of circular economy assumptions and technological innovations adopted by startups. The originality of this study lies in presenting useful insights for motivating managers to: (i) invest in circular business to become one of the first entrants and earn extra profits; (ii) make investments in circular business and technological innovations to obtain efficiency, practicality and process optimization; (iii) internalize Industry 4.0 technologies concomitantly with technological innovations and circular economy to generate systemic effects; (iv) integrate relevant stakeholders of the business ecosystem to generate a synergistic and effective effect for sustainable development.
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1 Introduction
In this study we address the excellence in innovation interfaces and circular business models (Sehnem et al., 2021a). Research reveals that emerging companies, called startups (Rok & Kulik, 2021), whose business models are based on acceleration and rapid growth, are already more likely to adhere to sustainable practices as well as to disruptive and radical innovations, including engagement of the different stakeholders of supply chain in this form of action (Sehnem et al., 2021b). Circular business models (Bocken & Ritala, 2022) have gained scientific and social notoriety in recent years (Pavan et al., 2021). They are a relatively young field of research, but they encompass a set of elements already present in organizations for a long time, such as regeneration of materials through technical and biological cycles, circularity, optimization, and more recently, sharing, virtualization, multiple actors and collaborative environments and exchanges (Boldrini & Antheaume, 2021). This collection of practices contributes to the creation of innovative companies closely aligned with suppliers and customers (Huynh, 2022). In this perspective, other elements of the society such as social inclusion, respect for diversity, environmental causes, climate movements and global health crisis can also affect the practices inserted in the daily lives of companies.
The structuring of companies becomes emblematic at a time when we are beset by climate crisis, pandemic and issues related to finitude of natural resources. These pressing imbalance issues demand innovative business models to make it possible to produce and offer more sustainable products and services which can be manufactured with less emission of waste throughout the production process and also after their consumption. Circular business models can greatly contribute to organizational excellence and generation of sustainable supply chains (De Angelis, 2021), especially if their assumptions are based on innovative alternatives and digital transformations provided by Industry 4.0 (Belhadi et al., 2022). Such movements greatly contribute to the companies' strategic stakeholders to act in synergy (Rok & Kulik, 2021), communicate frequently by using shared channels, establish shared strategies and develop resources and strategic capabilities important for the success of the business and consumer satisfaction (Brown et al., 2021).
Considering the above, this article focuses on circular business models supported by Industry 4.0 innovations from the perspective of the stakeholder theory. The justification for carrying out the study is associated with the urgent need to manage the impacts and externalities generated by companies (Salnikova et al., 2021), in addition to the need to act by respecting diversity and inclusion, valuing people and providing well-being at work. Finally, cost management with an emphasis on process improvement, optimization, production efficiency and establishment of synergies in the value chain becomes relevant to society in the current moment. In this context, circular economy can provide managers with a concept for optimizing resources and contributing to managing carbon emissions, thus minimizing externalities. Therefore, circular economy practices and business models are widely explored topics (Guerra et al., 2021; Dahmani et al., 2021; Nag et al., 2021; Wralsen et al., 2021).
However, the role played by stakeholders for circular economy to thrive in continuous, integrated and balanced flows between the different links of a production chain remains unexplored. In line with this, organizational managers and leaders are also discovering the importance and complexity of dealing with circular economy on a daily basis, whether due to lack of organizational culture to work with the assumptions of circular economy, fragile infrastructure or even regulatory frameworks not yet available or still being structured. All these do not provide the ideal legal support necessary for success and excellence in sustainable and circular operations.
Furthermore, innovation capabilities focused on sustainability are essential to create value for companies, thus increasing efficiency, improving resilience and reducing ecological impact (Sehnem et al., 2021b). Circular economy, currently a buzzword, includes sustainable practices (Kanda et al., 2021) through innovative business models (Moggi & Dameri, 2021) and which are internalized in supply chains according to the consumption logic. Innovation and digital transformation are important items (Pereira & Vence, 2021) supporting the assumptions of circular economy in different business models (Rok & Kulik, 2021). Hence, concerns on design and planning of circular products, life cycle analysis, life cycle extension, remanufacturing, redistribution, reuse, recycling, sustainable consumption, attitude and purpose, culture for purchasing remanufactured products, among others were irrelevant until then (Sehnem et al., 2019a, b). In order to achieve such goals, companies need to engage with different internal and external stakeholders to generate innovative strategies capable of delivering value. This stakeholder engagement creates an ecosystem for efficiently activating circular flows of materials and resources. This is often due to stakeholder pressure, the technological evolution fueling the Industry 4.0, and the digital transformation (Bocken & Ritala, 2021).
This study seeks to offer an analysis using emerging companies, that is, startups, which are organizations having a potential of accelerated growth and capable of becoming strategic players in their industry. These are companies with resilience to pivot and adaptability and agility to reposition themselves in the market. In the Brazilian context, startups have gained notoriety due to several national programs and movements aimed at stimulating their creation, such as legal frameworks for startups to generate innovative entrepreneurship, promotion of incubators, pre-incubators and innovation observatories, support to encourage the creation of these companies, hackathons, initiatives through collective disputes for emergence of ideas which can turn into business, among others. Considering the information presented so far, this study raises two research questions:
RQ1: How are startups implementing circular business models supported by innovation and Industry 4.0?
RQ2: Who are the relevant stakeholders for startups to work with circular business models that are leveraged via innovation and Industry 4.0?
In addition to this first section, Sect. 2 presents the theoretical foundation of this study, which alludes to circular economy, innovation, stakeholder theory and Industry 4.0. This results in a theoretical framework and exploratory theoretical propositions. Section 3 describes the methodological procedures. Section 4 presents analyses and discusses the results of the study. Lastly, Sect. 5 presents the final considerations regarding the search for information and correlations demonstrating the originality of this study, which proposes to present useful insights for motivating managers to: (i) invest in circular businesses to become one of the first entrants and obtain extra profits; (ii) make investments in circular business and technological innovations to obtain efficiency, practicality and process optimization; (iii) internalize industry 4.0 technologies concomitantly with technological innovations and circular economy to generate systemic effects; (iv) integrate the relevant stakeholders of the business ecosystem to generate a synergistic and effective effect for sustainable development.
2 Theoretical background on circular economy, industry 4.0 and innovation
Environmental problems, climate change and natural instabilities are raising concern over the environment (Sehnem et al., 2021a, 2021b). In addition to this uncertain environmental scenario, some serious social problems emerged and worsened during the COVID-19 pandemic due to a higher unemployment rates over the last two years. This social crisis is represented by informal work, which provides no protection for the worker, hostile work culture, asymmetries between rich and poor increasing every year, and increase in inequalities regarding different dimensions of life, in which the poor often have neither the right to have opportunities nor to dream of progressing in life (UN, 2021).
All these problems point to an imbalance which contrasts with the global purposes, such as eradication of poverty, proposed by the Sustainable Development Goals. Thus, the circular economy becomes a theoretical framework aimed at contributing to the redesign of production systems, including the dynamics of the society by placing it on a new level (Siderius & Poldner, 2021). This requires engagement, attitudes, significant behavioural changes and people's awareness and commitment to 10Rs of resource management (Reike et al., 2018). The perspective of managing scarce, finite and valuable resources leads us to an understanding of the people's role in the reusing, reducing, recycling, remanufacturing processes (Sehnem et al., 2019b). Adherence to less polluting energy sources capable of self-regeneration (Basile et al., 2021) and energy extraction from waste are mechanisms which are beginning to integrate the business agenda in order to reduce costs, optimize processes and create more sustainable operations (Palmié et al., 2021).
Moreover, circular economy becomes a strategic agenda for organizations (Warwas et al., 2021) as it is associated with the status of being a provider of solutions and alternatives considered more adequate in the context in which humanity currently is (Bocken & Ritala, 2021). It is considered a significant agenda for a sustainable development, as it promotes productive ecosystems and reduces waste generation. Its implementation becomes more agile through the development of innovation capabilities (e.g. eco-innovations), that is, alternatives capable of reducing environmental risk, pollution, waste and negative impacts of the use of resources, in addition to reducing negative externalities emitted by productive processes (Pietro-Sandoval et al., 2018). Circular economy also encourages the use of clean energy, process virtualization, exchanges, sharing, optimization and continuous improvement. These practices are essential for improving the ecological performance of the companies (Agyemang et al., 2019).
Disruptive innovations, as generators of tools for leveraging the competitiveness of organizations, can be used to increase the circularity of resources, retain value in production cycles and increase the value of the product or service provided to the customer (Menelau et al, 2019; Sehnem et al, 2021b). These innovations are directly associated with cost reduction, increased productivity, mitigation of water consumption, reduced energy consumption, nutritious food supply and healthy living. They also contribute to the management of large volumes of data and microdata to increase productivity and efficiency in the organizations (Sehnem et al, 2021b). Industry 4.0 is to be found in this new business scenario, where it is possible to find the emergence and consolidation of several new technologies, namely, internet of things (IoT), cloud computing, additive manufacturing, cyber security, cyber-physical systems (CPS), blockchain, augmented reality, artificial intelligence (AI), big data, among others. These technologies can generate practical solutions to be applied to circular value chains (Chauhan & Singh, 2019; Yadav et al., 2020).
Industry 4.0 is characterized by data-based digital systems (Angelopoulos et.al. 2020) and operates in the transformation and digitization of manufacturing and business processes. Through the exploration of new advanced technologies, it aims to improve the traditional organizational processes with the implementation of automated and data-oriented processes (Alkhazaleh et al., 2022; Angelopoulos et al., 2020). Industry 4.0 connects machines, people and information technology systems intelligently, horizontally and vertically to create highly digitized and connected environments. Thus, it brings numerous advantages for the organizations, such as improved production processes, efficiency gains, flexibility, optimization of operational performance and improvements in the supply chain (Veile et al., 2019; Zheng et al., 2020).
Additionally, the study on circular economy and waste (Di Vaio et al., 2021) points out that disruptive innovations can be adopted together with circular economy to promote discounts and incentives for those who contribute to improvements in production cycles and to apply higher tariffs to those on the edge of the model through reliability and transparency driven by the accounting methods. This reliability must also be evidenced in the sustainability reports, so that they are credible, verifiable and irrefutably true in order to reflect the organization's commitment to sustainability and good practices (Di Vaio et al., 2023).
2.1 Stakeholder theory: an overview
Stakeholders are individuals who affect or are affected by the company's strategies and the achievement of the company's goals (Freeman, 1984). These individuals correspond to all stakeholders who are considered strategic in the field of business and business management (Mani et al., 2020). They have different behaviours, which can be cooperative, competitive or coercive, and consequently affect the organizational performance (Mani & Gunasekaran, 2018). Currently, emphasis is placed on the multi-stakeholder perspective (Ji et al., 2015).
Dependence and influence in the relationships among the stakeholders of an organization can vary (Roy et al., 2020), which implies heterogeneous relationships between these various stakeholders (Truong & Pinkse, 2019). Stakeholder integration has been proven to be a relevant and successful strategy (Venkatesh et al, 2021) as it provides unlimited possibilities for group connections with internal and external interests. According to Freitas et al. (2012), the levels of stakeholder engagement can be classified as the following: (i) primary, in which participation and support by individuals and groups are essential for the organization's survival, and (ii) secondary, in which stakeholders affect and are affected by the organization, but they are not engaged in its transactions, being considered less essential for its perpetuity (Clarkson, 1995).
Prioritizing key stakeholders (Glover et al., 2014a, b) and building solid relationships and commitment (Wanke et al., 2021) are essential to successfully manage and control a company (Hannibal & Kauppi, 2018). However, identifying and prioritizing stakeholders are not an easy task and gives rise to paradoxes (Erthal et al., 2020). In the context of circular economy, for instance, the engagement of multiple stakeholders is encouraged (Bai et al., 2021).
More importance will be given to the stakeholder when all the three attributes, namely, power, legitimacy and urgency, are perceived by the manager (Zhu et al., 2016). This is how the manager identifies stakeholders who are really essential for the organization (Wanke et al., 2021). At the same time, they establish relationships, reciprocity and a relationship of dependence among themselves (De Vries, 2009), in which interest and reciprocity between them occur due to the fact that they affect one another, leading to benefits or causing harm (Yang et al., 2020).
The role played by stakeholders is crucial for the development of production chains, as evidenced in the agri-food system by means of technological evolution, sustainable evolution or development of advanced management models capable of supporting the technological and technological food supply on a sustainable basis. The importance of promoting a sustainable development agenda, especially in startups who understand the stakeholders’ role as internal collaborators, supply chain partners, suppliers, customers and social organizations, allows these businesses and their surroundings to create new spaces aimed at bringing together innovative, responsible and sustainable solutions (Di Vaio et al., 2020).
The theoretical framework of this study was developed on the basis of the stakeholder theory, circular economy, Industry 4.0 and technological innovations, as shown in Fig. 1.
3 Methodological procedures
This study aims to analyse how startups implement circular business models supported by innovation and industry 4.0. To make this proposal viable, a database containing around 400 startups associated with Liga Ventures (2021) was accessed. Next, an invitation was made to a random sample of startups to participate in the study. One-hundred 100 companies were invited, corresponding to one-quarter of the total of startups, but only 51 accepted the invitation to participate and be interviewed.
This study presents an original integration between the stakeholder theory’s assumptions and business models stemming from circular economy, technological innovations and industry 4.0. Startups are organizations representing sustainable entrepreneurship initiatives in the Brazilian context and they were used as unit of analysis. The search for articles on the present subject reveals that a few studies have a similar scope, namely, building of competitive advantage with sustainable products by using the stakeholder theory (Kahupi et al., 2021), innovative business models, circular economy and sustainable performance in organizations (Jabbour et al., 2020) and innovation strategies geared towards circular economy in the organic olive oil industry (Galati et al., 2018). This shows that there is still an opportunity to carry out further exploratory, qualitative studies with this scope. Based on the multiple case-study strategy and cross-comparison units, we developed the present study. Figure 2 presents the theoretical propositions of this study.
A case study protocol was followed, which contained questions on business profile, innovations and sustainable practices aligned with the assumptions of circular economy. To conduct the investigation, the case study assumptions presented by Yin (2010) were followed. As shown in Fig. 1, based on a review of the theoretical framework, four exploratory theoretical propositions were identified for use in the data analysis. They were validated by the empirical evidence of the study. Considering that this is a qualitative exploratory study, we do not intend to generate analytical generalizations. Our work is based on assumptions which were previously adopted by Campos and Vazquez-Brust (2016), Sehnem et al (2019a), Sehnem et al (2019b), and Sehnem et al., (2021a, 2021b). The study's unit of analysis is represented by startups growing exponentially which have gained notoriety in their operating segments. They were renamed from FT01 to FT51 to maintain their anonymity. They are startups operating in the food, agriculture, livestock, health, well-being, agribusiness, textile, furniture, information technology and biotechnology segments. Interviews lasting 31 min and 54 s were recorded and gathered, totaling 293 transcribed pages. After a fluctuating reading, analytical encoding was performed according to theoretical premises adopted to conduct this study. Categories of analysis were created a posteriori by considering the basic theoretical framework of the study on the following themes: circular economy, stakeholder theory, technological innovations and industry 4.0. These categories of analysis were based on Yin (2010), who proposed empirically based patterns of combinational logic and compared it to a predicted pattern (or several alternative predictions). When the patterns match, the results help in strengthening the internal validity of the case study. The principles of triangulation of different data collection sources were also followed, namely, interview content, secondary data from websites, leaflets, flyers and interviews and videos on the companies available on YouTube. With regard to the interview script, it involved questions on the profile of the companies, operating segment, operating time, circular economy practices, strategic stakeholders, innovation practices and industry 4.0 technologies. Data were collected by conducting online meetings, such as Zoom, Teams and Google Meet. Therefore, information was obtained face-to-face from key informants of the startups analysed. The justification for choosing one respondent per unit of analysis is that startups are small, usually composed only of the entrepreneur who outsources and hires temporary service providers, in addition to being the decider, planner and main executor of the action plan.
Analytical categorization was used according to the pattern combination recommended by Yin (2010). We adapted the typology of circular economy assumptions and technological innovations described by Kristoffersen et al. (2021) taxonomically:
Restore, reduce and avoid the impact on virgin materials and supply.
Recirculate parts and products by extending the existing cycle of use.
Recirculate materials by extending the material use cycle.
Reinvent the paradigm (i.e. virtualization, digitization, separation of data from physical resources, making data available for easier use, digital supply chains and digital manufacturing).
Rethink and reconfigure the business model.
Purpose (organizations acting with the purpose of generating significant impact and contributions to society).
With regard to circular economy business models, the typology of Kalmykova et al. (2018) consists of:
-
(a)
Circular supply of renewable energy, fuel and bio-based products.
-
(b)
Waste as a resource with emphasis on recovering useful resources and resource energy by making use of industrial symbiosis.
-
(c)
Second life by extending the life of products through repair, modernization, resale and durable, modular design.
-
(d)
Sharing platform by retaining the producer's property and offering the product as a service, thus contributing to the product-dematerialization process and strengthening the circular design.
With regard to the categories of analysis related to innovations, the premises set by Baptista (1999) for incremental innovation and by Christensen (1997) for disruptive or sustaining innovation were followed, namely:
Disruptive or sustaining innovation: it is the innovation aimed at creating a new market, that is, a disruption for generating a transformation in society.
Incremental innovation: it generates small improvements in products and processes capable of providing increments to something already existing.
Relevant stakeholders: people interested in the company's processes and results who act as individuals or organizations who are affected by the actions of a company (Freeman, 1984).
The resulting data are summarized in the tables below. The existence of mapped practices was signalled with a smiley (☺). In this way, it is possible to carry out a cross-analysis by verifying the existence of practices in each of the cases analysed.
The practices related to the typologies by Kristoffersen et al. (2021) and Kalmykova et. al. (2018) were classified from CE1 to CE10, as shown in Fig. 2. Likewise, the practices by Baptista (1999) and Christensen (1997) were classified, respectively, as TI01 and TI02. Their mapping resulted in Table 1.
The stakeholders (Freeman, 1984) were labeled from ST1 to ST18 (Fig. 2), which originated Table 2. In turn, industry 4.0 technologies (Belhadi et al., 2022) were classified from IN01 to IN 20 and are mapped in Table 3.
The startups surveyed have an average age of 6.7 years and most managers have bachelor's degree (29 respondents), postgraduate degree (12 respondents), master's degree (two respondents), PhD degree (five respondents), post-doctoral degree (one respondent) or high school degree (2 respondents). This evidence indicates that this type of company has managers with a higher level of education, which can benefit business management.
We followed the criteria by Gaskel and Bauer (2002) to attest to the validity and reliability of the qualitative study. Thus, data from different sources and different units of analysis were triangulated to reduce the inconsistency and contradictions, which contributed to the generation of convergence (Patton, 2002). The reflexivity process to attest the reliability of the qualitative study was adopted. Clarity in the procedures was used for replicability of the protocol of this case study with multiple units of analysis. The construction of the research corpus through observation, reflection and criticality of multiple players involved, including the use of more than one researcher in the process, was also adopted in this study. Rich, informed description was provided and feedback from the informants (communicative validation) was obtained to enable a valid and reliable process for conducting a qualitative study. Figure 3 summarizes the study design.
4 Data presentation and analysis
Table 1 presents the circular economy typologies and innovations mapped in the surveyed startups. Stakeholder theory is well positioned to connect to innovation, Industry 4.0 and circular economy. Since innovation, Industry 4.0 and circular economy are major concepts which are both directly and indirectly relevant to resource-based view, technology diffusion and triple bottom line theories, it is understandable that this basic theoretical framework produces guidelines supporting stakeholder management strategies for a successful sustainability performance. Critical success factors are overcome by a set of elements favouring the management of relevant and strategic stakeholders for successful sustainable management. Therefore, the parsimony of the theory can be determined in the midst of these relevant and intertwined concepts.
Table 2 shows the predominance of incremental innovations in startups, probably because they are less costly, easier to be implemented and cheaper viability. Waste is also notorious as a resource and as a second life one according to the practices adopted by the startups, in addition to the use of sharing platforms in business environment, which optimizes, dilute costs and are quickly implemented. However, there is great unexplored potential alluding to the assumptions of circular economy, which can serve as source of differentiation for business by promoting competitiveness and providing companies with a sustainability status. Thus, Table 2 presents the relevant stakeholders for the startups surveyed.
Table 2 shows that, according to the startups analysed, the most relevant stakeholders are suppliers, customers, shareholders and owners. In general, there is a culture of not naming relevant stakeholders emphatically in documents, reports and on the website. Below, Table 3 presents the technologies and design principles of Industry 4.0 identified in the startups.
Table 3 clearly demonstrates that industry 4.0 technologies are incipient and adopted in isolation. But there is a variety of technologies being used in conjunction with business models of circular economy, which shows the potential this synergy can provide in the construction of sustainable production chains with potential to promote closed cycles, reverse cycles, shorter cycles, circularity of materials and generation of data to encourage dematerialization of products. Table 4 presents the assumptions of circular economy and innovations according to the startups investigated.
4.1 Discussion of results
In this section, the four above-mentioned research propositions will be discussed along with the relevant study results. The results for Proposition 1 (companies with a proactive circularity approach use technological innovation to support pollution control initiatives) and Proposition 2 (companies with a proactive circularity approach use technological innovation to support pollution prevention initiatives) were validated through research evidence. The statements by FT 07, 11, 32, 35, 41, 42, 43 and 44 show the entrepreneurs’ concern in creating businesses with profitable and sustainable potential simultaneously while making use of innovation artefacts (i.e., specific technologies) for the sector in which they operate. Therefore, there is evidence of a synergy between circularity, proactivity, technological innovation and pollution prevention potential. This finding is relevant and is in line with the COP-26 debates, which called for the urgency and need for organizations to be more proactive in preventing pollution. In this sense, the stakeholders, especially the most relevant ones (i.e., those who are strategic and active in the value chain), play a unique and valuable role for the sustainability of natural resources. A startup who is a newborn company, who is still conquering its space and customers in the market and who makes such a compromise already signals a differentiated positioning which can captivate enlightened, selected customers purchasing products in a responsible and conscious way. It is well known that sustainability is increasingly occupying a space in the consumer market. And for this to become possible, production needs to adapt to generate a synergy throughout the entire productive chain.
Furthermore, it is notorious that digitization, traceability, use of sensors and generation of a database to control production chains become strategic elements for food safety, health, well-being, prevention and proactivity, which shows that the environmental dimension is not the only one addressed. We have noticed a strong emphasis on social aspects, especially focused on the individual, individuality, well-being and, to a larger extent, on the economic dimension, predominantly regarding efficiency, process optimization, continuous improvement and generation of high production performance. Disruption and proactivity are notorious with the creation of new markets (FT14), sensors in agricultural cultivation (FT29), digital agricultural notebooks (FT29), and shelf life extension of fruits and vegetables through technology for absorption of ethylene gas emitted by them.
Proposition 3 (companies with a proactive circularity approach use technological innovation to support product management initiatives) and Proposition 4 (companies with a proactive circularity approach use technological innovation to support sustainable development initiatives) were validated by the cases analysed herein, as there are elements supporting both propositions. For example, according to FT 43, “all waste from our production undergoes a rigorous recycling process and our raw material is just reforestation wood from sustainable forests”, FT 32 “Our on-farm bio-inputs production technology allows producers to reduce their costs by up to 40% in soy, corn, wheat, cotton, sugarcane, coffee and fruit crops”, FT 35 “For animal protein producers throughout Brazil, Kayros offers biotechnological solutions that improve the efficiency in the production of animal protein from both terrestrial and aquatic species”; and FT 17 “Internal project ‘adopt a mug’ = avoid wasting plastic cups and highlight the culture of conscientious consumption; planting of native species = environmental preservation and sustainable development”.
These findings show us that circular economy and innovation play a strategic role in the production management, including conception, design and re-signification of the products. At the same time, Industry 4.0 offers an entire strategic arsenal to monitor, track, follow up and reintegrate obsolete products into new production flows useful and relevant to society. This logic of production and consumption has a decisive role for sustainable development and success of commitments globally assumed at the COP-26. Finally, green product design is an effective way to reach out to circular economy (Li et al., 2021) and can be considered a disruptive innovation for the productive sector. The circular economy impacts the structure and relationships of the supply chain and requires integration and interaction with the business ecosystem. Coordination and sharing of information (Li et al., 2021) are required for the success of circular economy, especially when associated with the buyer–supplier relationship (Lee et al., 2020) based on the following aspects: exchange of information, development of operational links, establishment of legal links, specific adaptations to the relationship, and standard cooperation (Centobelli et al., 2021). Moreover, the startups investigated are committed to implementing business models (Kristoffersen et al., 2021) which can represent the contemporaneity valued by the society.
4.2 Lessons learned
The present study indicates some strategic lessons for business:
Lesson 1: Turbulent environmental and institutional scenarios can be conducive to creating innovative businesses to surprise customers. This is what happened with several startups analysed herein, such as those created a few months ago, as they bring innovative business proposals which generate value for the customer while incorporating elements of sustainability into their business dynamics.
Lesson 2: Entrepreneurship is risky and those who carry it out need to create a plan allied to trends and potential market disruptions. Industry 4.0, combined with technological innovation and circular economy, offers a series of possibilities to break boundaries, create new markets and generate new commercial transactions.
Lesson 3: Sustainable development cannot be a global discourse only. It should start as a homework assignment for an enterprise starting in the backyard, in a university classroom or in a hackathon team. All these spaces should serve as potential environments for creating and stimulating sustainable movements and businesses.
Lesson 4: The unexpected often surprises and captivates the customer. Combining elements and joining technological artefacts towards simplicity can generate something innovative and capable of attracting a legion of customers. Therefore, creativity is essential to articulate a circular business.
5 Final remarks
The startups surveyed are implementing circular business models with the help of primary stakeholders, namely, suppliers, customers, shareholders, owners, social networks and media, and by using incremental technological innovations and some artefacts from Industry 4.0.
The main practical contribution of the study is the empirical validation of four theoretical propositions of the framework proposed herein. It presents an original typology of circular economy assumptions adopted by the startups as well as by Industry 4.0 technologies. In addition, a brief overview of the profile of entrepreneurs located in an emerging country shows the entrepreneurial behaviour of Brazilians in situations of external pressure, climate change and extremisms caused by the current global situation, such as forest fires, excessive rain, antagonism associated with Amazon, absence of government policy for sustainability, need to develop entrepreneurship for survival, and role of innovation to generate solutions for plural situations arising locally.
The theoretical contribution is associated with the evidence of synergy between circular economy, innovation and industry 4.0 to achieve sustainable development. Orchestrating these concepts synergistically can produce fruitful results in the most diverse sectors and contribute to having a healthier, more sustainable and more circular society. Stakeholder theory plays an important role for the strategic management of relevant stakeholders, that is, engagement of all to obtain superior performance in the business ecosystem.
The results of the study can be useful for managers by contributing to their perception of the relevance of investing in circular business models and by making use of industry 4.0 technologies concomitantly with technological innovations. Investments in circular businesses supported by innovation are a tendency to create new markets while generating greater efficiency, practicality and optimization of organizational processes, thus producing extra profits. The study reveals to managers the importance of integrating relevant stakeholders of the business ecosystem, especially the primary ones, to build a synergistic and effective effect for sustainable development.
Study limitations are associated with the access of only one respondent per unit of analysis, since multiple respondents would have complemented the data. For future research, we suggest to increase the number of respondents per unit of analysis and also to re-read the data from the perspective of systems theory. Another opportunity for future research is to carry out studies to validate the theoretical propositions from a quantitative perspective. Studies on the perspective of networks, synergy and integration of strategic players are also welcome to understand sustainability between systems. Finally, we suggest that similar studies should analyse medium-sized organizations.
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Sehnem, S., Lara, A.C., Benetti, K. et al. Improving startups through excellence initiatives: addressing circular economy and innovation. Environ Dev Sustain 26, 15237–15283 (2024). https://doi.org/10.1007/s10668-023-03247-4
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DOI: https://doi.org/10.1007/s10668-023-03247-4