Circular start-ups realizing the circular economy through digital solutions : A platform-based example from the Finnish construction industry

Abstract

Today, economies worldwide are following a mostly linear economic model, which is problematic in a planet with limited resources and capacity to recover from waste. Circular economy is an alternative economic model promising decoupling between economic growth and resource consumption is increasingly viewed as a promising approach to tackle the global sustainability pressures. Realizing the circular economy depends largely on companies introducing circularity into their business models, and especially start-up companies are seen as particularly interesting sources of innovative circular solutions. Recently, technological advancements have generated new kinds of business models that focus on digital platforms, enabled by digitalization and Industry 4.0 technologies that build visibility and intelligence into assets and services.

The aim of this study is to find out how platform-based circular start-ups can contribute into realizing the circular economy in business networks by introducing a digital B2B platform. The Interaction and Networks approach (IMP, Industrial Marketing and Purchasing School) is adopted as the main theoretical lenses through which the topic and chosen case are explored. The applied research approach is qualitative, and the empirical data was collected through five semi-structured interviews. The case chosen for this study, the development and deployment of the eRENT digital platform for tracking and renting construction equipment, represents an example of a platform-based circular start-up.

The results of this study suggest that digital B2B platforms for realizing the circular economy can be portrayed as a combination of three interconnected elements: circular economy strategies, Industry 4.0 technology and platform-based business model. Combining these elements creates opportunities for business actors to move towards a more circular, sustainable state through digital platforms. Moreover, this study concludes that introducing a digital B2B platform to the business networks requires interaction that takes into account not just technical factors but also social factors, such as early user involvement, the interplay between perception and action as well as the tensions between and within customer organizations. Based on the theoretical framework and empirical data, six steps are proposed for circular start-ups who aim at embedding into a business network and its pre-existing structures that may not always change easily towards realizing the circular economy.