Exploring a circular business model: Insights from the institutional theory perspective and the business model lens

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Abstract

Circular entrepreneurship is becoming a new, promising reality, in the manner of needed radical paradigmatic change in the era of Anthropocene. Circular entrepreneurs intend to create social and environmental value while they build financially viable businesses. They are embedded in multiple institutionalised value systems that they are expected to adhere to. Those institutionalised systems provide circular entrepreneurs with different, in many cases, contradictory norms, values and guiding principles. Substantial amount of research has been done to date to examine the impact of institutions on entrepreneurial endeavours. And yet, research lacks sufficient insights into how circular entrepreneurs engage with the institutional structures in designing business models on a financially feasible ground while creating social and environmental value. To address this, this paper investigates how circular entrepreneurs respond to the value systems of surrounding institutions in business modelling and how two fundamental aspects of embeddedness, namely resource integration and value cocreation, are achieved within a circular business model that is coherent in itself and with the entrepreneur's ambitions. Both the institutional context and the institutional logics surrounding entrepreneurs are examined to comprehend the surrounding institutional systems more in-depth and extensively. By analysing a longitudinal in-depth case study, this article aims to develop better insights into circular business modelling and underlying mechanisms of embeddedness. The case is a born-circular small cidermaker in Cornwall (UK), namely Wasted Apple. The findings show that the circular entrepreneur is surrounded by dominant normative institutions forming the principles of business model design. circular entrepreneurs mark fidelity to the institutional norms to obtain a range of microcompetencies and to manage integrated hybrid tensions within the value creation system. And therefore, a circular business model is a more holistic and inclusive structure as compared to a typical conventional linear business model. And yet, paradoxically embeddedness facilitates business survival but hinders strategic business planning as well as business profitability and growth.
Original languageEnglish
Pages (from-to)146575032110555
Number of pages12
JournalThe International Journal of Entrepreneurship and Innovation
Early online date24 Nov 2021
DOIs
Publication statusPublished - 24 Nov 2021

Keywords

  • circular entrepreneurship
  • business model design
  • embeddedness
  • institutional context

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