With the increasing focus of literature and research consolidating a positive relationship between circular business models and digital technologies, this chapter proposes a literature review on the ReSOLVE framework as a key factor to enable the development of new business models oriented towards the circular economy, in particular circular business models (CBM). For this purpose, topics such as sustainability and sustainable business models work as starting points to contextualize the urgency of rethinking alternatives to patterns of linear production and consumption in industries. In a more specific approach, the authors also seek to understand the potential of virtualization pillar under the ReSOLVE framework to implement circular economy principles in business models, as their catalysts and enablers to a sustainable industry through digitalization.
TopIntroduction
Although economic growth has come to be considered the primary engine of prosperity in recent decades (WCED, 1987), it is associated with the depletion of natural resources, disturbance of ecosystems, and both direct and indirect impacts on social inequalities, especially between poor and rich countries. Furthermore, it has harmful effects on people's quality of life, both today and for future generations (WCED, 1987; Maddison, 2008; Rist, 2008; Lele, 2013). This collective consciousness began to gain public awareness in the 1980s when the Brundtland Report was published. The report defines sustainable development as “development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs” (WCED, 1987, p. 43).
However, it is worth acknowledging that sustainable development is a popular yet ambiguous term. Many authors have highlighted that the term has been interpreted differently by various stakeholders due to its broad and nonspecific meaning. Different worldviews and attitudes may lead to varying goals and strategies, particularly in policymaking (Hopwood et al., 2005; Davidson, 2014). One might argue that the prevailing worldview does not promise a sustainable future, and systemic transformation is necessary (Hopwood et al., 2005). The path to sustainability necessitates a stakeholder approach in which businesses play a crucial role in innovating business models for shared value creation towards sustainability (WCED, 1987; UN, 2015; Guinot, 2020). Companies must embrace the overarching goal of avoiding negative impacts on the environment while simultaneously promoting the recovery of ecosystems and natural resources within their business strategies (Guinot, 2020). On the other hand, sustainability must also be a global priority in societal and political agendas to establish a more balanced relationship between human and natural resources (Tunn et al., cit. Toth-Peter et al., 2023).
While in the literature, Circular Economy (CE) prioritizes economic value creation (Antikainen & Valkokari, 2016) and focuses on adjacent improvements in environmental performance, implying an intentional system design (U.S. Chamber of Commerce, 2023), sustainability presents a holistic view encompassing three distinct dimensions: social, economic, and environmental (Geissdoerfer et al., 2017), along with the creation of value for a wider range of stakeholders (Antikainen & Valkokari, 2016). In this context, sustainable business models (SBMs) and circular business models (CBMs) are closely related in research and can be considered subcategories of business models (Antikainen & Valkokari, 2016), even though boundaries and synergies are still being explored in a nascent manner (Awan & Sroufe, 2022).
However, for both interlinked concepts, one might agree that information technologies (IT) serve as enablers of sustainable and circular business models in multiple ways. Digital transformation and its exponential growth leverage the implementation of digital technologies (DT) to maximize both industry and business growth, preventing the underutilization of products and their premature disposal, while rethinking their end-of-life (Rosa et al., cited in Toth-Peter et al., 2023). The increasing focus of literature and research activities establishes a positive connection between IT and CE (Chauchan et al., 2022), while mapping the strategic capacities of digitalization as a facilitator of CE principles (Seles et al., 2021) also enables exploration of new ways to create value through digital functions applied to new business models (Liu, 2022).