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Circular Economy Business Models with a Focus on Servitization

Author

Listed:
  • Junghee Han

    (Department of Software Communication, Engineering, Hongik University, Room 306-2, Sejong ro, Jochiwon-eup, Sejong City P.O. Box 30016, Korea)

  • Almas Heshmati

    (Jönköping International Business School, Jönköping University, Room B5017, P.O. Box 1026, SE-551-11 Jönköping, Sweden)

  • Masoomeh Rashidghalam

    (Jönköping International Business School, University of Tabriz and Centre for Entrepreneurship and Spatial Economics (CEnSE), Box 1026, SE-551-11 Jönköping, Sweden)

Abstract

During the fourth industrial revolution, based on information and communication technology (ICT), service-led growth has been an increasingly important development area. This paper focuses on service-led growth as an innovative business model in the circular economy and offers the ‘product as service model’. A business model needs to be flexibly adjustable for changes in the market in response to changes in technology, the economy, and the environment. For firms facing increasing scarcity of resources, the right business model for using resources is becoming crucial for their growth. In a circular economy, a new method of business modelling is essential. This paper introduces the ‘product as a service model’ using a conceptualized and case study methodology. We illustrate this innovative circular business model through product servitization at the Hyundai Automotive Enterprise in Korea. This business model can be effective because of emerging new ‘smart connected products’ such as the ‘internet of things’ and ‘fifth generation’ network technologies. Cost, convenience, and the circular economy for firms, consumers, and the environment are critical factors in this new business model.

Suggested Citation

  • Junghee Han & Almas Heshmati & Masoomeh Rashidghalam, 2020. "Circular Economy Business Models with a Focus on Servitization," Sustainability, MDPI, vol. 12(21), pages 1-17, October.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:21:p:8799-:d:433410
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    References listed on IDEAS

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    Cited by:

    1. Bogdan Wit & Piotr Dresler & Anna Surma-Syta, 2021. "Innovation in Start-Up Business Model in Energy-Saving Solutions for Sustainable Development," Energies, MDPI, vol. 14(12), pages 1-24, June.
    2. Ingvild Reine Assmann & Francesco Rosati & Sandra Naomi Morioka, 2023. "Determinants of circular business model adoption—A systematic literature review," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 6008-6028, December.
    3. Mendoza, Joan Manuel F. & Gallego-Schmid, Alejandro & Velenturf, Anne P.M. & Jensen, Paul D. & Ibarra, Dorleta, 2022. "Circular economy business models and technology management strategies in the wind industry: Sustainability potential, industrial challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 163(C).
    4. Marco Vacchi & Cristina Siligardi & Erika Iveth Cedillo-González & Anna Maria Ferrari & Davide Settembre-Blundo, 2021. "Industry 4.0 and Smart Data as Enablers of the Circular Economy in Manufacturing: Product Re-Engineering with Circular Eco-Design," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    5. Sehrish Atif, 2023. "Mapping circular economy principles and servitisation approach in business model canvas: an integrated literature review," Future Business Journal, Springer, vol. 9(1), pages 1-21, December.
    6. Chauhan, Chetna & Parida, Vinit & Dhir, Amandeep, 2022. "Linking circular economy and digitalisation technologies: A systematic literature review of past achievements and future promises," Technological Forecasting and Social Change, Elsevier, vol. 177(C).
    7. Xiao Han & Jiayun Zhang, 2022. "Business Model Innovation Paths of Manufacturing Oriented towards Green Development in Digital Economy," IJERPH, MDPI, vol. 19(24), pages 1-34, December.
    8. Junghee Han, 2023. "Servitization Process Analysis: A Case Study of Automotive Headrest Manufacturing," Sustainability, MDPI, vol. 15(20), pages 1-17, October.
    9. Yana K. Ramsheva & Rikke M. Moalem & Leonidas Milios, 2020. "Realizing a Circular Concrete Industry in Denmark through an Integrated Product, Service and System Perspective," Sustainability, MDPI, vol. 12(22), pages 1-19, November.
    10. Marek Jóźwiak & Patrycja Sieg, 2021. "Tourism Development in Post-Industrial Facilities as a Regional Business Model," Sustainability, MDPI, vol. 13(4), pages 1-16, February.
    11. Elena Kazakova & Joosung Lee, 2022. "Sustainable Manufacturing for a Circular Economy," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    12. Rainer Alt, 2020. "Electronic Markets on sustainability," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(4), pages 667-674, December.
    13. Weng Marc Lim & Gaurav Gupta & Baidyanath Biswas & Rohit Gupta, 2022. "Collaborative consumption continuance: a mixed-methods analysis of the service quality-loyalty relationship in ride-sharing services," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1463-1484, September.

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