Circular ecosystem innovation: An initial set of principles

https://doi.org/10.1016/j.jclepro.2019.119942Get rights and content

Highlights

  • We present literature and a case on ‘circular ecosystem innovation’.

  • Circularity is argued to be a property of a system, rather than a single product.

  • Circular ecosystems widen the lens of product and business model innovation.

  • We propose a set of recommended principles for circular ecosystem innovation.

  • Principles can be grouped into experimentation, collaboration and platformization.

Abstract

A circular economy maximizes the value of material resources and minimizes greenhouse gas emissions, resource use, waste and pollution. We will posit that circularity needs to be understood as a property of a system (e.g., the mobility system of a city), rather than a property of an individual product or service (e.g., a car or a car-sharing service). Hence, there is a need for more knowledge on how to innovate towards ‘circular ecosystems’. This study proposes a set of principles for ‘circular ecosystem innovation’, based on: 1) a concise literature review to retrieve recommended principles on how to successfully innovate in ecosystems, 2) a mobility case of circular ecosystem innovation to investigate how relevant and useful these principles are for circular oriented innovation. The case data include 20 interviews, workshop data and internal background documents. The identified principles can be categorized in three groups: 1) collaboration (i.e., how firms can interact with other organizations in their ecosystem to innovate towards circularity), 2) experimentation (i.e., how firms can organize a structured trial-and-error process to implement greater circularity) and 3) platformization (i.e., how firms can organize social and economic interactions via online platforms to achieve greater circularity). Future research may focus on identifying opportunities and barriers to applying these principles in different contexts than in the one that is investigated in the present study.

Introduction

A circular economy maximizes the value of material resources and minimizes overall resource use, greenhouse gas emissions, waste and pollution (Geissdoerfer et al., 2017). Circularity – a situation in which this maximizing and minimizing occurs – is a property of a system (e.g., the mobility system of a city), rather than the property of an individual product or service (e.g., a car or a car-sharing service) (Adams et al., 2016, Ceschin and Gaziulusoy, 2016). Transitioning to a circular economy therefore requires product, business model and ecosystem innovation. Product innovation designs, makes and markets new products (Boer and During, 2001). Business model innovation changes the value proposition, value creation and delivery and value capture mechanisms of a firm (Bocken and Short, 2016). Ecosystem innovation changes how a set of actors – producers, suppliers, service providers, end users, regulators, civil society organizations – relate to each other to achieve a collective outcome (based on Jacobides et al., 2018, Talmar et al., 2018). The difference between a business model and an ecosystem perspective is that the latter views the business models of other relevant actors to be as important as the one of a focal firm (Adner, 2016).

Prior research on ecosystems and a circular economy hosts a variety of interpretations of the ecosystem concept. Some have, for example, used a ‘business ecosystem’ lens (Moore, 1993) to explore how manufacturing firms have orchestrated their ecosystems towards circularity (Parida et al., 2019), or how a leading glass-recycling firm in Taiwan has governed its ecosystem over time (Hsieh et al., 2017). Others have built analogies between natural (Holling and Gunderson, 2002) and business ecosystems, to explore possible circular ecosystem roles for firms (Tate et al., 2019). Yet others have used sectoral or cluster-based interpretations of ecosystems. This includes, for instance, research on how the ‘ecosystems of repair shops’ differ across locations (Türkeli et al., 2019), how innovation ecosystems can support the transition to a circular bio-economy for agricultural systems (Berthet et al., 2018), how a regional innovation ecosystem of relevant design actors can contribute to a circular economy in Scotland (Whicher et al., 2018), or how the aluminum beverage can industry in the UK can explore its circularity potential (Stewart et al., 2018). Another outlet has used a ‘platform ecosystem’ interpretation (Gawer, 2014) to explore the development of smart and circular cities in Indonesia (Mahesa et al., 2019). In this study, we contribute to the business and innovation ecosystem perspectives on a circular economy (Adner, 2016, Hsieh et al., 2017, Jacobides et al., 2018, Parida et al., 2019). To the best of our knowledge, no prior research – using the business and innovation ecosystem lenses – has explored how firms can innovate towards circular ecosystems; that is, what principles they might follow to change how a set of actors relate to each other to achieve circularity as a collective outcome.

The goal of the present study is to develop and propose an initial set of principles for circular ecosystem innovation. Our first research question is: what principles does the (business) literature recommend to successfully innovate in ecosystems? To develop a first set of principles, we use pattern matching, a qualitative analysis method that compares a predicted theoretical with an observed empirical pattern (Sinkovics, 2018). An initial pattern matching template of recommended principles is derived from a review of the literature on ecosystems – with a focus on the innovation, service and platform ecosystem concepts – to understand what principles it recommends to successfully innovate in ecosystems. Following the review, we match the initial template with case study data to address a second question: how relevant and useful are these principles for circular oriented innovation? The case is at the intersection of the mobility, energy and information technology industries; it has set out to develop a “zero-emissions e-mobility system for cities” (ACM, 2018). The case study reveals how relevant and useful the recommended principles are for circular oriented innovation.

Based on the literature review and the case data, we identify and describe three main groups of principles for circular ecosystem innovation: 1) collaboration (i.e., how firms can interact with other organizations in their ecosystem to innovate towards circularity), 2) experimentation (i.e., how firms can organize a structured and action-oriented trial-and-error process to implement greater circularity) and 3) platformization (i.e., how firms can organize social and economic interactions via online platforms to achieve greater circularity). We describe the principles within each of these groups and highlight if and how the practitioners in the case have used them to implement circularity in their project. The principles proposed in this study need to be further developed and empirically tested through future (action and design) research on circular ecosystem innovation in different contexts.

Section snippets

A circular economy and circularity as a systemic property

A circular economy maximizes the value of material resources and minimizes greenhouse gas emissions, resource use, waste and pollution (adapted from Geissdoerfer et al., 2017). One of its main assumptions is that we currently live in a linear economy: we take resources, make products, use them, and then throw them away (Blomsma and Brennan, 2017, EMF, 2012, Ghisellini et al., 2016). To become ‘circular’, firms need to implement new ways of doing business (Linder and Williander, 2015): they need

Method

This study uses flexible pattern matching to identify and develop principles for circular ecosystem innovation (Sinkovics, 2018). Pattern matching compares a given theoretical pattern with an observed empirical pattern. Flexible pattern matching allows for an open matching of patterns that is suitable for exploratory research, like the one in this study. An initial pattern matching template provides guidance on how to analyze a set of empirical data (Sinkovics, 2018).

The patterns in this study

Findings

This study proposes three main groups of principles for circular ecosystem innovation: collaboration, experimentation and platformization. Collaboration refers to how firms can interact with other organizations in their ecosystem to innovate towards circularity. This group of principles has by far the most sources and references from the case data, indicating its importance for circular ecosystem innovation. Experimentation refers to how firms can organize a structured trial-and-error process

Discussion and conclusion

This study proposes a set of principles for circular ecosystem innovation. This is motivated by the need for more systemic innovation approaches for a circular economy, and the fact that business and innovation ecosystems have rarely been framed around circular economy or sustainability issues. Based on a matching of principles for ecosystem innovation from the literature with data from a circular ecosystem case study, we have developed an initial set of principles for circular ecosystem

Author contributions

Jan Konietzko: Conceptualization; Data curation; Formal analysis; Investigation; Methodology; Resources; Visualization; Roles/Writing - original draft; Writing - review & editing

Nancy Bocken: Conceptualization; Funding acquisition; Methodology; Validation

Erik Jan Hultink: Supervision; Writing - review & editing

Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgements

This work was made possible by the Marie-Sklodowska-Curie Innovative Training Network “Circ€uit” - Circular European Economy Innovative Training Network, within the Horizon 2020 Program of the European Commission (grant agreement number: 721909). The authors gratefully acknowledge the support of the European Commission and the contributions of partners in this project.

References (111)

  • S.L. Vargo et al.

    Service-dominant logic 2025

    Int. J. Res. Mark.

    (2017)
  • A. Abella et al.

    A model for the analysis of data-driven innovation and value generation in smart cities’ ecosystems

  • ACM

    Adaptive City Mobility Website

    (2018)
  • R. Adams et al.

    Sustainability-oriented innovation: a systematic review

    Int. J. Manag. Rev.

    (2016)
  • R. Adner

    Ecosystem as structure: an actionable construct for strategy

    J. Manag.

    (2016)
  • R. Adner

    The wide lens

    (2012)
  • R. Adner

    Match your innovation strategy to your innovation ecosystem

    Harv. Bus. Rev.

    (2006)
  • R. Adner et al.

    Innovation ecosystems and the pace of substitution: Re-examining technology S-curves

    Strateg. Manag. J.

    (2016)
  • R. Adner et al.

    Value creation in innovation ecosystems: how the structure of technological interdependence affects firm performance in new technology generations

    Strateg. Manag. J.

    (2010)
  • C. Bakker et al.

    Products that go round: exploring product life extension through design

    J. Clean. Prod.

    (2014)
  • C.Y. Baldwin et al.

    Design Rules: the Power of Modularity Volume 1, Academy of Management the Academy of Management Review

    (2000)
  • P. Bansal

    Evolving sustainably: a longitudinal study of corporate sustainable development

    Strateg. Manag. J.

    (2005)
  • M. Barrett et al.

    Service innovation in the digital age: key contributions and future directions

    MIS Q.

    (2015)
  • E.T. Berthet et al.

    Opening design and innovation processes in agriculture: insights from design and management sciences and future directions

    Agric. Syst.

    (2018)
  • F. Blomsma et al.

    The emergence of circular economy: a new framing around prolonging resource productivity

    J. Ind. Ecol.

    (2017)
  • N.M.P. Bocken et al.

    Development of a tool for rapidly assessing the implementation difficulty and emissions benefits of innovations

    Technovation

    (2012)
  • N.M.P. Bocken et al.

    Product design and business model strategies for a circular economy

    J. Ind. Prod. Eng.

    (2016)
  • N.M.P. Bocken et al.

    Experimenting with a circular business model: lessons from eight cases

    Environ. Innov. Soc. Transitions

    (2018)
  • H. Boer et al.

    Innovation, what innovation? a comparison between product, process and organizational innovation

    Int. J. Technol. Manag.

    (2001)
  • F. Boons et al.

    Assessing the sharing economy: analyzing ecologies of business models

  • P.M. Bosch-Sijtsema et al.

    Aligning innovation ecosystem strategies with internal R&D

  • K. Boudreau

    Open platform strategies and innovation: granting access vs. Devolving control

    Manag. Sci.

    (2010)
  • P. Brown et al.

    Why do companies pursue collaborative circular oriented innovation?

    Sustainability

    (2019)
  • E.G. Carayannis et al.

    “Mode 3” and “Quadruple Helix”: toward a 21st century fractal innovation ecosystem

    Int. J. Technol. Manag.

    (2009)
  • Forman Ceccagnoli et al.

    Cocreation of value in a platform ecosystem! The case of enterprise software

    MIS Q.

    (2012)
  • J.D. Chandler et al.

    How does innovation emerge in a service ecosystem?

    J. Serv. Res.

    (2019)
  • J.D. Chandler et al.

    Contextualization and value-in-context: how context frames exchange

    Mark. Theory

    (2011)
  • H. Chesbrough et al.

    Chez panisse: building an open innovation ecosystem

    Calif. Manag. Rev.

    (2014)
  • C. Christensen

    How will you measure your life? clay christensen at TEDxBoston

  • J.P. Davis

    The group dynamics of interorganizational relationships: collaborating with multiple partners in innovation ecosystems

    Adm. Sci. Q.

    (2016)
  • D. Denyer et al.

    Developing design propositions through research synthesis

    Organ. Stud.

    (2008)
  • J.T. Eckhardt et al.

    Open innovation, information, and entrepreneurship within platform ecosystems

    Strateg. Entrep. J.

    (2018)
  • K. Emerson et al.

    An integrative framework for collaborative governance

    J. Public Adm. Res. Theory

    (2011)
  • EMF
    (2015)
  • EMF

    Towards a circular economy - economic and business rationale for an accelerated transition

    Greener Manag. Int.

    (2012)
  • S. Evans et al.

    Business model innovation for sustainability: towards a unified perspective for creation of sustainable business models

    Bus. Strateg. Environ.

    (2017)
  • A. Gawer

    Bridging differing perspectives on technological platforms: toward an integrative framework

    Res. Policy

    (2014)
  • A. Gawer et al.

    Industry platforms and ecosystem innovation

    J. Prod. Innov. Manag.

    (2014)
  • P. Ghisellini et al.

    A review on circular economy: the expected transition to a balanced interplay of environmental and economic systems

    J. Clean. Prod.

    (2016)
  • L.A. de V. Gomes et al.

    Unpacking the innovation ecosystem construct: evolution, gaps and trends

    Technol. Forecast. Soc. Chang.

    (2018)
  • Cited by (221)

    View all citing articles on Scopus
    View full text