Abstract

The current planetary crisis and the perceived urgency necessitates more sustainable production and consumption patterns. Businesses, particularly the multinationals, play a key role in transitioning to a circular economy, which provides a promising approach to achieving the UN Sustainable Development Goals. Industry 4.0 technologies can theoretically support this transition and enable circular economy through, for example, data-driven and smart business processes. However, merging these new technologies with a circular economy is not a straightforward and well-established process and it fundamentally changes the business value chain. Therefore, this paper provides a systematic overview to help better understand the transition process to circular business models and the enabling role of industry 4.0. Merging these concepts underlines that many factors are interrelated and should be investigated in a holistic way instead of siloes. The findings imply that changes transcend business boundaries, including new value chain characteristics and operation models and indicate the interconnected nature of certain factors along the product lifecycle, including service-based models, circular design, reverse flows, consumers and users, and collaborations. This paper proposes a conceptual transition framework to address how new circular business models can integrate digitally adaptive transformations and proposals for future research are reflected upon.

Introduction

Our world is currently facing numerous environmental, social and economic challenges and the consequences of these challenges can be seen in climate change, pollution, biodiversity loss and resource degradation (Okorie et al., 2018). We have reached a tipping point in what our Earth can sustain and the current living standards are not sustainable in the long-term. The problem can be tied back to the first industrial revolution and the logic our economy is built on. 91% of the world still follows this traditional, linear economic ‘take-make-use-dispose’ system, which is a driver of our production and consumption patterns (Nobre and Tavares, 2020). While innovations of the industrial revolutions have induced growth, with the growing population and the throwaway consumption patterns, products remain underutilized, are prematurely wasted, and their end-of-life is not generally considered (Rosa et al., 2020).

Therefore, it has become inevitable for production to transition to a more sustainable system and the search for solutions a priority for the social and political agenda globally (Ajwani-Ramchandani et al., 2021b; Bjørnbet et al., 2021). The United Nations Member States have summarized an action plan in the 2030 Agenda for Sustainable Development, articulating 17 transformative Sustainable Development Goals (SDGs) (United Nations, 2015). This initiative shows that there is an interest in finding a balance between human and nature to support the more efficient use of our resources and encourages us to do more and better with less (Tunn et al., 2019). Multinationals are particularly well-positioned to tackle this issue due to their overarching footprint (Ajwani-Ramchandani et al., 2021a).

Conclusion and limitations

This SLR has conceptualized the CE–I4.0 epistemology through current literature, synthesizing and providing an overview of the CE transition process through a business model lens. Our framework depicts which directions businesses should innovate to and it pinpoints specific I4.0 tools that enable the elements of service-based models, circular design, reverse flows, consumers and users, collaborations and product lifecycle management.

This framework contributes by bringing together relevant sciential and business factors into a single study. Although there has been an increasing number of studies in the field of CE–I4.0 (Bjørnbet et al., 2021), investigating the interconnected nature of elements along the business transition process to a CE has not yet been fully understood and conceptualized. The framework shows the transition to a CE as a paradigm shift (Campbell-Johnston et al., 2019), which transcends siloed solutions and requires a holistic, ‘embracing all’ approach and consideration of different stakeholder interest and expectations (Awan et al., 2021). With the proposed conceptual framework, we embrace a holistic approach, demonstrate which business elements influence each other and how within the same ‘circular system’, and we underline the role of specific I4.0 tools along this transition.