Only 25.7% of reviewed circular business model archetypes met criteria

A critical review of 272 configurations described as circular business models found that only 70, or 25.7%, could be positively identified as genuine business model innovations. The remaining set comprised 85 configurations classified as circular operations strategies and 117 placed in three intermediate or ambiguous categories. The study, published in the Journal of Industrial Ecology, reviewed models presented in 28 articles and developed a decision protocol intended to distinguish structural changes in how firms create, deliver and capture value from operational changes made within an existing value logic.

The findings suggest that the label “circular business model” is often applied too broadly in the research literature. A business model describes the logic through which an organization creates, delivers and captures value, whereas operations strategy concerns the long-term configuration of processes, capabilities and structural choices through which that logic is implemented. A firm can introduce repair, recycling, remanufacturing, traceability technology, more efficient sourcing or tighter supply-chain coordination without changing what it sells, who performs which role in the value chain or how it earns revenue. Such changes may advance circular objectives, but the study does not treat them as evidence that the firm has transformed its business model.

For the literature review, the researchers searched the Scopus database for English-language research and review articles published through January 2025. The search combined terms related to circular economies and business models with those referring to classification frameworks, including archetypes, taxonomies, typologies and patterns. It returned 232 records. After screening titles, abstracts and keywords for coherence, clarity and relevance, 38 papers were assessed through full-text reading, and 28 were retained for the final analysis. These included studies proposing or discussing circular business model classifications and several sector-specific or archetype-based contributions aligned with the research objective.

The researchers extracted 272 circular business model configurations from the selected articles and evaluated them using three dimensions drawn from established management literature: the unit of analysis and the boundaries around it, the elements that constitute the model, and the nature and level of interdependence among those elements. Each dimension was scored from 1, meaning the criterion was not met, to 3, meaning it was fully satisfied. The resulting composite scores ranged from 3 to 9 and were mapped onto five categories, from circular operations strategy through three ambiguous or intermediate classifications to circular business model.

Reliability checks were conducted before the full coding exercise. Five expert judges independently assessed 14 randomly selected archetypes, producing an intraclass correlation coefficient of 0.773 with a 95% confidence interval of 0.596 to 0.906. Two researchers then independently double-coded a random sample of 65 archetypes while blind to each other’s scores; their agreement on composite scores was 0.883, with a 95% confidence interval of 0.815 to 0.927. Disagreements were resolved through discussion, after which one author completed the classification of all 272 configurations. The study’s 25.7% estimate should nevertheless be read as a conservative lower bound rather than an exact measure of conceptual error.

That caution is important because published descriptions varied greatly in length and detail. Eighty-four of the 272 archetypes, roughly one third, were described in fewer than 15 words. Some brief entries may have represented genuinely simple operational interventions, but brevity could also conceal business model features that a fuller description would have revealed. Consequently, some configurations near the business model threshold may have been classified lower because information was missing rather than because a transformation was demonstrably absent. When the authors used a more permissive, symmetric threshold, 38.2% of the archetypes were classified as circular business models, 40.1% as circular operations strategies and 21.7% as ambiguous. The exact shares depend on where the thresholds are placed, but genuine business models remained no more numerous than configurations better described as operational strategies.

Four boundary conditions emerged from the review. First, a circular activity such as repair, reconditioning, design or remanufacturing is not sufficient to qualify as a business model. The same activity can support either a business model or an operations strategy depending on how it is integrated into the broader value logic. A firm that performs repair internally to extend product life, reduce costs or support manufacturing may be reconfiguring operations. A redistributor or resale platform, by contrast, may organize repair and regeneration around commissions, intermediation or platform revenues for sellers and buyers, making those activities constitutive of its business model. The adoption of technology alone is likewise insufficient unless it transforms how value is created, delivered and captured.

Second, interaction with a network does not by itself make an initiative a business model. Supply networks used to optimize procurement, material flows, coordination or costs can remain part of a circular operations strategy. The network becomes a constitutive element of the business model when it becomes a primary source of the value proposition or a revenue-generating strategic asset. Third, consumer engagement must move beyond the traditional buyer-owner relationship. Circular business models can redefine customers as users of access or performance services, or as active partners in direct and reverse value chains. In access models, performance contracts and battery leasing, for example, customers pay for use or outcomes rather than ownership, while online resale can make customers active participants in transactions involving used goods.

Fourth, a circular business model should redefine value capture. The decisive issue is not whether revenue comes from selling a product or charging a service fee, but whether the firm appropriates value through the market by delivering circular value to external customers. Cost savings, lower waste-management expenses and internal efficiency gains do not meet that condition by themselves. The authors’ eight-firm evaluation included a cooperative whose vermicomposting initiative transformed livestock waste into a resource for horticultural production. Its upstream network and processing capabilities were genuinely reconfigured, but the resulting value remained inside the production system as avoided disposal cost. The protocol therefore classified the initiative as a circular operations strategy rather than a business model.

The researchers converted the four propositions into the CBM Decision Protocol, a sequential decision tree that evaluates one circular initiative rather than an entire firm. Its first step asks whether the initiative is a systemic configuration rather than a set of unrelated or merely co-occurring activities. The revised protocol requires at least two of three subconditions: a coherent circular configuration, coordination or interdependence among multiple elements, and structural reconfiguration of the firm’s operating boundaries. Its second step assesses whether value creation has been structurally transformed through upstream reconfiguration, downstream changes to the consumer interface, or both. The final step asks whether the initiative captures circular value through market-facing revenue rather than retaining it internally as savings.

The protocol was developed and refined through two formative evaluation cycles involving eight purposively selected firms from different sectors, organizational forms, sizes and countries. Selection also required a substantive circular initiative, variety in the type of initiative, and access to company documentation and a representative with direct responsibility for the work. The first version was applied to five firms, revised after interpretive difficulties appeared, and the second version was tested on three further cases selected for greater contextual diversity. Company documents and semi-structured interviews supplied the evidence. An external researcher, working blind to the authors’ classifications, independently assessed the three second-cycle cases and reached the same terminal classification in all three, including agreement on the same stopping point for the case classified as a circular operations strategy.

The eight-case evaluation was exploratory and intended to refine the diagnostic artifact, not provide statistical validation or a population estimate. The protocol was mainly applied by the authors, while independent blind validation covered only three cases. The findings also depend on the authors’ coding of published descriptions rather than direct evidence about the underlying firms. The study nevertheless offers a way for researchers, companies and policymakers to distinguish initiatives requiring a new value logic from those that improve operations within an existing model, with potential consequences for resource allocation, performance measurement and policy design. The classification itself does not establish environmental effectiveness: an operations strategy can still reduce material use, waste or emissions, while a business model can remain environmentally weak if it is peripheral or merely added to linear activity. Assessing scale, displacement of linear activity, rebound effects, material flows and energy use therefore requires a separate analytical layer.

Subject of Research: Design-science study distinguishing circular business model innovation from circular operations strategy

Article Title: Don’t call it a circular business model: establishing boundary conditions to clarify conceptual ambiguity in circular economy research

Article References: Iannuzzi, T., Corsini, F., & Frey, M. (2026). Don’t call it a circular business model: establishing boundary conditions to clarify conceptual ambiguity in circular economy research. Journal of Industrial Ecology. https://doi.org/10.1007/s44498-026-00185-y

Image Credits: AI Generated

DOI: 10.1007/s44498-026-00185-y

Keywords: circular economy, business models, operations strategy, circular business models, value creation, value capture, design science, conceptual ambiguity, corporate sustainability, research methods, call, circular