Circular ecosystem innovation: An initial set of principles
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.
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