Unpacking the value conversion in a circular business model: exploring the effect of competitive criteria

Abstract

PurposeThis research aims to investigate the influence of the implementation of technical cycles on both captured value and shared value in the circular economy context. Moreover, it analyses the moderating effect of competitive criteria on the relationship between technical cycles and captured value. Finally, it examines the relationship between the captured value and the shared value.Design/methodology/approachThis research follows survey-based research with data gathered from 50 countries and 16 sectors, whose final sample represented 233 organisations. In order to validate the structural and measurement model, the authors applied the partial least squares structural equation modelling technique in the strict rigour of the confirmatory algorithm.FindingsThe validated research model demonstrates the value flow through technical cycles. Moreover, it shows the crucial role of the competitive criteria in the value stream through direct, moderate and indirect effects by influencing the relationship between technical cycles and captured and shared values. Finally, the study fills the gap for quantitative studies in the circular economy field.Practical implicationsFrom a practical perspective, this study contributes to structuring circular business models more robustly, by understanding the influence of competitive criteria (cost, quality, flexibility and delivery) on the conversion of operation strategy in the implementation of the technical cycles in the circular economy context. It contributes to decision-makers, in deciding on which competitive criteria to invest more, which brings more consistent results for technical cycle implementation. It also confirms the importance of partnerships, demonstrating how value cascades from the company through the value network.Originality/valueAs far as is known to date, this is the first study investigating the influence of competitive criteria in the circular economy context. Furthermore, it sheds light on the direct and indirect effects of the technical cycles on value captured by organisations and flow shared value with other players.