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A Definition and Theoretical Review of the Circular Economy, Value Creation, and Sustainable Business Models: Where Are We Now and Where Should Research Move in the Future?

Author

Listed:
  • Tom Lahti

    (Department of Management and Organisation, Hanken School of Economics, 65101 Vaasa, Finland)

  • Joakim Wincent

    (Department of Management and Organisation, Hanken School of Economics, 00101 Helsinki, Finland
    Department of Business Administration, Technology and Social Sciences, Luleå University of Technology, 97187 Luleå, Sweden
    Institute of Technology Management, Global Center for Entrepreneurship & Innovation, University of St. Gallen, 9000 St. Gallen, Switzerland)

  • Vinit Parida

    (Department of Business Administration, Technology and Social Sciences, Luleå University of Technology, 97187 Luleå, Sweden
    Department of Management, University of Vaasa, 65200 Vaasa, Finland)

Abstract

This paper contains a theory review of value creation and the implementation of next-generation sustainable business models to profit in the circular economy. While previous research has pointed to the influence of society and regulatory policy on companies’ ability to address larger sustainability concerns and to change their ways of working, the field suffers from little theoretical guidance outlining how undertake circular business mode transformation in practice. By reviewing the field’s main theories, we illustrate significant implications for how future research can study profitability and competitiveness in the circular economy. This paper introduces the central components of circular business models and discusses links to contingency theory, transaction cost theory, resource-based theory, theory on networks and industrial economics, and agency theory. Understanding the circular economy and the ways companies can compete in the circular economy based on these theories is important for establishing important new research directions for scholars of sustainable business and circular business models.

Suggested Citation

  • Tom Lahti & Joakim Wincent & Vinit Parida, 2018. "A Definition and Theoretical Review of the Circular Economy, Value Creation, and Sustainable Business Models: Where Are We Now and Where Should Research Move in the Future?," Sustainability, MDPI, vol. 10(8), pages 1-19, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2799-:d:162413
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