Which innovations for Circular Business Models? A product life-cycle categorisation

Circular Economy has emerged to face current unsustainable economic trends. Clarifying and promoting tools for embedding circularity in firms’ business models is becoming crucial. Notwithstanding Eco-Innovation has been recognised as a fundamental link to connect Circular Economy with business models restructuring, still little consensus exists on the interlinkages among the concepts of Eco-Innovation, Circular Economy and Circular Business Models. This research aims to understand which innovations can favour the transition from linear to closed-loop processes, and to identify circular business models using the lens of Eco-Innovation practices. We recognise three groups of innovations that are expected to drive firms’ business towards circularity, leading to the identification of an original Product Life-Cycle Categorisation. An exploratory empirical analysis is finally developed on the basis of Italian Small and Medium Enterprises’ data, in order to show the ability of our categorisation to distinguish across eco-innovative practices that are driven by (partly) heterogeneous determinants. Designing new ways of creating value in accordance with circular economy strategies is becoming crucialThe lack of theoretical guidance around the role of Eco-Innovation for circular economy may hinder firms’ ability to put in practice circular business modelsA categorisation of eco-innovative practices desirable for circular economy can support firms to put forward business models changesHeterogeneous drivers are involved in the adoption of different typologies of circular innovations