Circular economy: outlining circular businesses

The concept of CE, which has arisen as a sustainable alternative to linear production systems, is prompting more and more interest in the scientific debate, as well as in everyday business realities and governments around the world (European Commission, Directorate-General for Environment, 2020a; Hina, Chauhan, Sharma, & Dhir, Reference Hina, Chauhan, Sharma and Dhir2023; Murray, Skene, & Haynes, Reference Murray, Skene and Haynes2017; United Nations, 2021). CE offers a response to the limitations and negative impacts of the traditional linear economy, commonly described by reference to the sequence ‘take, make, use, and dispose,’ which emphasizes raw materials collection and transformation into marketable products meant to be ultimately discarded as waste. In contrast, a CE involves an imperative transition toward a new production and consumption paradigm in favor of environmental preservation and people’s well-being (Bocken et al., Reference Bocken, De Pauw, Bakker and Van Der Grinten2016; Centobelli, Cerchione, Esposito, & Passaro, Reference Centobelli, Cerchione, Esposito and Passaro2021; Circle Economy, 2023; Franzò, Urbinati, Chiaroni, & Chiesa, Reference Franzò, Urbinati, Chiaroni and Chiesa2021). CE provides insights into a business strategy that companies can implement to promote corporate sustainability as a specific set of practices intended to address resource efficiency and waste reduction. The understanding of sustainability intuitively refers to the interpretation advanced by Elkington and Rowlands (Reference Elkington and Rowlands1999) of the ‘triple bottom line,’ consisting of economic, social, and environmental perspectives. In a nutshell, this sustainable approach is based on a restorative and regenerative system where resources, energy consumption, and waste are minimized throughout the production and consumption stages (Antikainen & Valkokari, Reference Antikainen and Valkokari2016; De Bernardi, Bertello, & Forliano, Reference De Bernardi, Bertello and Forliano2023; Ellen MacArthur Foundation, 2013; Geissdoerfer et al., Reference Geissdoerfer, Pieroni, Pigosso and Soufani2020; Hopkinson, Zils, Hawkins, & Roper, Reference Hopkinson, Zils, Hawkins and Roper2018).

A CE approach is based on sustainable opportunities, where forward-looking businesses undertake a circular transition pursuing sustainable value creation, delivery, and capture (Averina, Frishammar, & Parida, Reference Averina, Frishammar and Parida2022; Centobelli et al., Reference Centobelli, Cerchione, Chiaroni, Del Vecchio and Urbinati2020; Khan, Daddi, & Iraldo, Reference Khan, Daddi and Iraldo2020). Taking an idea or hunch about the redefinition of a product, practice or process, sustainability-sensitive companies implement business strategies designed to redefine their business model. According to CE principles, an increasing number of companies are reshaping their business models with processes and outputs based on common initiatives. Drawing on Bocken et al. (Reference Bocken, De Pauw, Bakker and Van Der Grinten2016) and Geissdoerfer, Morioka, de Carvalho, and Evans (Reference Geissdoerfer, Morioka, de Carvalho and Evans2018), CBMs can be defined as specific sustainability-driven business models predicated on slowing, closing, and narrowing resource and energy flows (Salvador et al., Reference Salvador, Barros, da Luz, Piekarski and de Francisco2020). A circular approach complies with the ‘cradle-to-cradle’ economy advanced by McDonough and Braungart (Reference McDonough and Braungart2010), where materials and resources are included in a circular process of reemployment within a closed loop system (Franzò et al., Reference Franzò, Urbinati, Chiaroni and Chiesa2021; Lüdeke-Freund, Gold, & Bocken, Reference Lüdeke‐Freund, Gold and Bocken2019; Stahel, Reference Stahel2010). Thus, a circular business is firstly characterized by its effort in extending or intensifying its products’ fruition period through long-lasting design, reuse, repair, or remanufacturing practices aimed at slowing down the flow of resources (e.g., Hopkinson et al., Reference Hopkinson, Zils, Hawkins and Roper2018; Khan et al., Reference Khan, Razzaq, Yu and Miller2021). Geissdoerfer et al. (Reference Geissdoerfer, Morioka, de Carvalho and Evans2018) further emphasized the role of slowing practices in a circular business such as intensifying the use of products or dematerializing physical assets thanks to digital technologies and services. When the lifespan of a product comes to an end, as in the case of waste from the production process, the resource loop needs to be closed, aligning post-use scraps with a new production cycle. Consequently, CBMs involve recycling practices to minimize waste and enhance material and resource recovery in a regenerative cycle of production and consumption (e.g., Chaudhuri, Subramanian, & Dora, Reference Chaudhuri, Subramanian and Dora2022; Wilts, Garcia, Garlito, Gómez, & Prieto, Reference Wilts, Garcia, Garlito, Gómez and Prieto2021). A third typical strategic approach that identifies circular-committed companies also concerns the reduction of resources’ flow in production processes to promote energy and material efficiency by virtue of a responsible allocation of production inputs (e.g., Dantas et al., Reference Dantas, De-souza, Destro, Hammes, Rodriguez and Soares2021; Franzò et al., Reference Franzò, Urbinati, Chiaroni and Chiesa2021). As Bocken et al. (Reference Bocken, De Pauw, Bakker and Van Der Grinten2016, p. 310) point out, the latest approach differs from slowing and closing strategies ‘as it does not influence the speed of the flow of products and does not involve any service loops,’ yet narrowing the resource loop plays a fundamental role in circular businesses. Although it was already in place in some realities’ linear systems, recent studies reveal how this component is further emphasized and has acquired a fundamental role in pursuing input optimization for cleaner production and consumption (Gallego-Schmid, Chen, Sharmina, & Mendoza, Reference Gallego-Schmid, Chen, Sharmina and Mendoza2020; Ranta, Aarikka-Stenroos, & Väisänen, Reference Ranta, Aarikka-Stenroos and Väisänen2021). Overall, these circular approaches allow organizations to undertake a closed-loop system through the rethinking of products and processes to maximize the life of goods, enhance waste recycling, and make efficient use of resources (Antikainen & Valkokari, Reference Antikainen and Valkokari2016; Ellen MacArthur Foundation, 2013; Geissdoerfer et al., Reference Geissdoerfer, Morioka, de Carvalho and Evans2018). Specifically, common practices in CBMs involve activities such as reducing resource input or waste generation, durable product design and repair, reusing goods for the same original purpose, recovering materials or energy, remanufacturing products and components for new use, and recycling to convert waste into new resources (Ellen MacArthur Foundation, 2013; Geissdoerfer, Savaget, Bocken & Hultink, Reference Geissdoerfer, Savaget, Bocken and Hultink2017; Lüdeke‐Freund et al., Reference Lüdeke‐Freund, Gold and Bocken2019).

Digital technologies and Industry 4.0 for business circularity

Given that considerable number of studies have offered a conceptualization of CE practices within CBMs (e.g., Antikainen & Valkokari, Reference Antikainen and Valkokari2016; Bocken et al., Reference Bocken, De Pauw, Bakker and Van Der Grinten2016; Geissdoerfer et al., Reference Geissdoerfer, Morioka, de Carvalho and Evans2018; Lüdeke‐Freund et al., Reference Lüdeke‐Freund, Gold and Bocken2019), in recent years, researchers and practitioners have demonstrated a growing interest in the adoption of digital technologies alongside these peculiar sustainable business models (e.g., Chauhan, Parida, & Dhir, Reference Chauhan, Parida and Dhir2022; Dantas et al., Reference Dantas, De-souza, Destro, Hammes, Rodriguez and Soares2021; Gebhardt et al., Reference Gebhardt, Kopyto, Birkel and Hartmann2022; Hina et al., Reference Hina, Chauhan, Kaur, Kraus and Dhir2022; Khan et al., Reference Khan, Razzaq, Yu and Miller2021; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Neri et al., Reference Neri, Negri, Cagno, Franzò, Kumar, Lampertico and Bassani2023; Ranta, Aarikka-Stenroos, & Väisänen, Reference Ranta, Aarikka-Stenroos and Väisänen2021). We refer to digital transformation as a groundbreaking process that involves the integration of digital supports into various aspects of an organization to redefine business processes, deliver value to customers, and create new business models (Fernandez-Vidal et al., Reference Fernandez-Vidal, Perotti, Gonzalez and Gasco2022; Vial, Reference Vial2019). More specifically, we also identify Industry 4.0 as a digital revolution of manufacturing processes, wherein digital technologies, such as cyber-physical systems, IoT, AI, and big data analytics are employed to create highly connected and automated production environments (Gebhardt et al., Reference Gebhardt, Kopyto, Birkel and Hartmann2022; Kerin & Pham, Reference Kerin and Pham2019). Indeed, the wave of Industry 4.0 and digitalization represent a radical change for every business (Bresciani, Ferraris, Romano & Santoro, Reference Bresciani, Ferraris, Romano and Santoro2021; Ranta, Aarikka-Stenroos, & Väisänen, Reference Ranta, Aarikka-Stenroos and Väisänen2021), including CBMs. In this vein, digital technologies support the translation of CE principles into feasible activities that optimize and empower circular practices by improving their positive impact or reducing their negative externalities (Gebhardt et al., Reference Gebhardt, Kopyto, Birkel and Hartmann2022; Ghobakhloo, Reference Ghobakhloo2020; Kristoffersen et al., Reference Kristoffersen, Blomsma, Mikalef and Li2020; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Pizzi, Leopizzi, & Caputo, Reference Pizzi, Leopizzi and Caputo2021). Chauhan, Parida, and Dhir (Reference Chauhan, Parida and Dhir2022) inspected the link between CE and digital technologies in their literature review, highlighting how AI, blockchain, and big data can support management decisions in circular businesses and the establishment of a CE ecosystem. The study advance by Liu et al. (Reference Liu, Trevisan, Yang and Mascarenhas2022) also strengthened the relationship between these two spheres, outlining seven main mechanisms of digital functions based on automation, data analysis, data collection, and integration, which can enhance CE strategies. Rusch, Schöggl, and Baumgartner (Reference Rusch, Schöggl and Baumgartner2022) confirmed the role played by IoT, AI, big data analytics, and blockchain technologies in enabling CE strategies alongside sustainable product management activities. AI in association with digital systems can provide support to implement CE practices, for instance, by allowing recycling and remanufacturing through automatic waste recognition as described by Wilts et al. (Reference Wilts, Garcia, Garlito, Gómez and Prieto2021). Drawing from earlier studies about digital technologies’ impact on circular practices, Kerin and Pham (Reference Kerin and Pham2019) observed how IoT, virtual reality, and augmented reality support the remanufacturing process in economic organizations. Utilizing a case study investigation, Gupta, Chen, Hazen, Kaur, and Gonzalez (Reference Gupta, Chen, Hazen, Kaur and Gonzalez2019) questioned big data analytics in data-driven decision-making in supply chain networks, where the improved interaction of members was shown to positively affect CE implementation. Jabbour, Jabbour, Sarkis, and Godinho Filho (Reference Jabbour, Jabbour, Sarkis and Godinho Filho2019) also supported digital technologies’ virtue of leveraging large-scale data to enhance stakeholders’ management of circular businesses. Industry 4.0 technologies thus enable collaboration in circular supply chains and circular ecosystems by fostering mechanisms, such as information sharing, joint planning, and decision-making thanks to IoT technologies, cloud systems, and the blockchain (Gebhardt et al., Reference Gebhardt, Kopyto, Birkel and Hartmann2022). Coherently, Khan et al. (Reference Khan, Razzaq, Yu and Miller2021) deepened the understanding of Industry 4.0-related blockchain technologies adoption in circular businesses, demonstrating a positive effect on the circular practices of smart contracts and transparent information sharing with stakeholders along the supply chain. Besides, even organizational performance has been shown to be enhanced by reinforced circular practices. In SMEs, digital platforms have been observed as valuable tools to establish entrepreneurial ecosystems and enable the transition to a CE (Chaudhuri, Subramanian, & Dora, Reference Chaudhuri, Subramanian and Dora2022; Pizzi, Leopizzi, & Caputo, Reference Pizzi, Leopizzi and Caputo2021). In terms of business model innovation, Ranta, Aarikka-Stenroos, and Väisänen et al. (Reference Ranta, Aarikka-Stenroos and Väisänen2021) explored resource flow reviewing alongside value creation and capture improvements catalyzed by digitalization. The value of data is emphasized through data collection, integration, and analysis processes considered radical or incremental business model changes by virtue of the adoption of CE strategies. For instance, digitalized sectors such as fintech also show a close connection between Industry 4.0 technologies and SMEs’ circular transition, which has resulted in the improvement of CE practices and processes through the integration of fintech technologies (Pizzi, Corbo, & Caputo, Reference Pizzi, Corbo and Caputo2021).

Overall, our literature review highlights how digital technologies have been recognized for their importance in driving CE adoption in businesses. Big data analytics, AI and machine learning, process automation, blockchain technology, additive manufacturing, IoT, and digital platforms are some examples of the rich set of tools that revolve around data collection and processing to allow more automated and efficient practices according to a renewable production and consumption system (Chauhan, Parida, & Dhir, Reference Chauhan, Parida and Dhir2022; Khan et al., Reference Khan, Razzaq, Yu and Miller2021; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Rejeb, Suhaiza, Rejeb, Seuring & Treiblmaier, Reference Rejeb, Suhaiza, Rejeb, Seuring and Treiblmaier2022). The relationship between these two spheres (i.e., CE and digital transformation) collides with economic organizations’ reality by facilitating their circular transition. However, only a few studies have empirically addressed the effective role of digital technologies in circular businesses, leaving a significant gap regarding their actual adoption and consequences (Chauhan, Parida, & Dhir, Reference Chauhan, Parida and Dhir2022; Hina et al., Reference Hina, Chauhan, Kaur, Kraus and Dhir2022; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Neri et al., Reference Neri, Negri, Cagno, Franzò, Kumar, Lampertico and Bassani2023). In particular, what is missing in the CE literature is a closer and more critical look at the way companies make use of digital tools during the planning, establishment, and growth of circular businesses.

Explaining circular transition through institutional theory

Through the lenses offered by institutional theory, it is possible to explain companies’ isomorphism in adopting CE principles based on sociological and economic mechanisms (DiMaggio & Powell, Reference DiMaggio and Powell1983; Haunschild & Miner, Reference Haunschild and Miner1997; Meyer & Rowan, Reference Meyer and Rowan1977). Previous studies have supported how organizations’ conversion toward a circular business can be understood as a reasonable reaction to deal with uncertainties by adapting themselves in the manner of counterparts perceived as rational, legitimate, or successful (e.g., Do et al., Reference Do, Mishra, Colicchia, Creazza and Ramudhin2022; Jain, Panda & Choudhary, Reference Jain, Panda and Choudhary2020; Meherishi, Narayana, & Ranjani, Reference Meherishi, Narayana and Ranjani2019; Ranta, Aarikka-Stenroos, Ritala & Mäkinen, Reference Ranta, Aarikka-Stenroos, Ritala and Mäkinen2018). According to the extended institutional theory, companies’ practices and decision-making are affected by external sociological and economic variants that involve some mechanisms for legitimacy and efficiency-seeking to cope with uncertainty. Drawing on DiMaggio and Powell (Reference DiMaggio and Powell1983, pp. 150–151) and Meyer and Rowan (Reference Meyer and Rowan1977), businesses’ adaptive processes toward legitimacy achievement involve three mechanisms: (a) the ‘formal and informal pressures exerted on organizations by other organizations upon which they are dependent and by cultural expectations in the society within which organizations function’ (i.e., coercive pressure); (b) the isomorphism deriving from companies’ attempts to ‘model themselves on other organizations’ to deal with uncertainties or due to ambiguous objectives (i.e., mimetic pressure); and (c) the pressure on professionals’ homogeneity across organizations based on social norms and cultural characteristics (i.e., normative pressure). Therefore, the exploitation of sustainable opportunities by economic organizations may be observed as an isomorphic attempt to deal with uncertainties while facing the same environmental conditions (Averina, Frishammar, & Parida, Reference Averina, Frishammar and Parida2022; Do et al., Reference Do, Mishra, Colicchia, Creazza and Ramudhin2022; Eller et al., Reference Eller, Gielnik, Wimmer, Thölke, Holzapfel, Tegtmeier and Halberstadt2020; Hopkinson et al., Reference Hopkinson, Zils, Hawkins and Roper2018). For instance, more and more companies are transforming their business model into a renewable one based on CE principles due to restrictions or incentives advanced by policymakers. Economic organizations can also seek legitimation by imitating other companies’ approaches to renewable production systems to deal with uncertainties, while meeting new consumers’ needs or stakeholders’ requirements (Camilleri, Reference Camilleri2020; Camoletto, Corazza, Pizzi & Santini, Reference Camoletto, Corazza, Pizzi and Santini2022; Centobelli et al., Reference Centobelli, Cerchione, Esposito and Passaro2021; Fischer & Pascucci, Reference Fischer and Pascucci2017; Tunn, Bocken, van den Hende & Schoormans, Reference Tunn, Bocken, van den Hende and Schoormans2019).

In addition, companies’ isomorphism has been shown to be triggered as a consequence of their attempt to cope with uncertainties while pursuing efficiency (Do et al., Reference Do, Mishra, Colicchia, Creazza and Ramudhin2022; Haunschild & Miner, Reference Haunschild and Miner1997). The extended institutional theory integrates the economic variant into the previous sociological one, introducing three more mechanisms that drive companies to adopt similar practices and processes. Researchers have outlined how economic entities tend to (a) imitate practices adopted by a considerable number of organizations when they reach a critical mass of adopters (i.e., frequency-based imitation); (b) implement practices legitimized by a smaller group of other companies deemed successful or with higher status (i.e., trait-based imitation); and (c) become inclined through the observation of other businesses’ outcomes following a managerial decision or implemented practice to resemble successful realities by mimicking the same practices (i.e., outcome-based imitation) (DiMaggio & Powell, Reference DiMaggio and Powell1983; Haunschild & Miner, Reference Haunschild and Miner1997; Zucker, Reference Zucker1987). In this vein, companies may aim at translating circular purposes into their business model to tackle uncertainties, taking inspiration from widely adopted practices or successful circular processes traced back to a virtuous set of sustainability-sensitive actors (Carmona-Márquez et al., Reference Carmona-Márquez, Leal-Rodríguez, Leal-Millán and Vázquez-Sánchez2022; Hopkinson et al., Reference Hopkinson, Zils, Hawkins and Roper2018).

Overall, institutional theory suggests that the more firms adopt CE practices and embrace circular businesses, the more the legitimacy of converging business models toward a renewable production system is consolidated to cope with uncertainties (DiMaggio & Powell, Reference DiMaggio and Powell1983; Ranta, Aarikka-Stenroos, & Mäkinen, Reference Ranta, Aarikka-Stenroos and Mäkinen2018). Both sociological and economic external variants offer six plausible mechanisms that can explain businesses’ assonant approach in converging toward a more sustainable business model. Considering specifically the frequency-based and the trait-based imitation mechanisms in inducing isomorphism in companies, this convergence has also been associated with technological factors (Do et al., Reference Do, Mishra, Colicchia, Creazza and Ramudhin2022; Haunschild & Miner, Reference Haunschild and Miner1997). In the CE domain, it means circular businesses’ isomorphism can be accessed via the adoption of digital technologies to support the circular transition, as a consequence of the environmental conditioning imposed by other actors’ legitimized conduct (Bag et al., Reference Bag, Pretorius, Gupta and Dwivedi2021; Gupta et al., Reference Gupta, Chen, Hazen, Kaur and Gonzalez2019; Pizzi, Corbo, & Caputo, Reference Pizzi, Corbo and Caputo2021). Through the mechanisms offered by these theoretical lenses, this study thus aims at investigating companies’ tendency to employ digital supports in new products or revised processes to achieve a higher degree of circularity and, in general, promote sustainability in enterprises.

Case selection and data collection

In their intention to examine the establishment of newly developed or converted circular businesses while focusing on the role of digital technologies, the authors have chosen to investigate business realities characterized by distinct operational agility and flexibility, specifically SMEs (Centobelli et al., Reference Centobelli, Cerchione, Esposito and Passaro2021; Pereira et al., Reference Pereira, Nandakumar, Sahasranamam, Bamel, Malik and Temouri2022; Pizzi, Corbo, & Caputo, Reference Pizzi, Corbo and Caputo2021). Small and medium companies are generally considered agile organizations due to their size and structure, which confers on them the ability to quickly respond to changing environments, adapt to new circumstances, and implement prompt changes accordingly (De Angelis, Howard, & Miemczyk, Reference De Angelis, Howard and Miemczyk2018; Troise et al., Reference Troise, Corvello, Ghobadian and O’Regan2022). In this manner, the agile and flexible nature of SMEs can be a significant advantage in a CBM establishment, as it allows businesses to quickly adapt, engage stakeholders, and collaborate, experiment, and optimize resource utilization according to CE principles. These characteristics enable SMEs to effectively implement circular practices, creating value from waste and minimizing resource consumption, thus promoting sustainable and responsible business practices (Dey et al., Reference Dey, Malesios, Chowdhury, Saha, Budhwar and De2022; Mura, Longo, & Zanni, Reference Mura, Longo and Zanni2020). Accordingly, purposeful sampling has been administered as an effective means to identify those cases that can offer the most coherent and representative information to achieve the study’s objectives (Marshall & Rossman, Reference Marshall and Rossman2014; Ranta, Aarikka-Stenroos, & Mäkinen, Reference Ranta, Aarikka-Stenroos and Mäkinen2018). Hence, the sample selection was based on small and medium businesses established in Italy that operate in sectors with the potential for engaging with CE, such as manufacturing, construction, chemical, fashion, food, and beverage (see Table 1). In line with the European Union definition of SMEs (European Commission, 2020b), we only involved companies with fewer than 250 employees and an annual turnover of less than €50 million (or less than a €43 million annual total balance sheet; e.g., Dey et al., Reference Dey, Malesios, Chowdhury, Saha, Budhwar and De2022; Scuotto, Santoro, Bresciani & Del Giudice, Reference Scuotto, Santoro, Bresciani and Del Giudice2017). Both threshold values were verified through Aida, a Bureau Van Dijk database that collects accounting data on Italian companies, alongside companies’ information on LinkedIn and data collected during interviews. This selection of cases represents a critical point in our study due to their significance on national and international productive systems, as SMEs represent 99.8% of European enterprises and 53% of the added value in the eurozone (Bertello, De Bernardi, Santoro & Quaglia, Reference Bertello, De Bernardi, Santoro and Quaglia2022; European Commission, 2021; Zhu et al., Reference Zhu, Nguyen, Siri and Malik2022). Moreover, SMEs provide a remarkable research context as they are characterized by a high level of agility and sustainable orientation (Caputo, Schiocchet & Troise, Reference Caputo, Schiocchet and Troise2022; Chaudhuri, Subramanian, & Dora, Reference Chaudhuri, Subramanian and Dora2022; Dey et al., Reference Dey, Malesios, Chowdhury, Saha, Budhwar and De2022; Pizzi, Corbo, & Caputo, Reference Pizzi, Corbo and Caputo2021).

Table 1.

Descriptive information of the case studies

Source: Authors’ elaboration.

The study adopts a qualitative approach in the form of 16 case studies of circular businesses (Eisenhardt, Reference Eisenhardt1989; Yin, Reference Yin2003) whose information was mainly collected from managers and employees through semi-structured interviews (e.g., Franzò et al., Reference Franzò, Urbinati, Chiaroni and Chiesa2021; Hofmann & Zu Knyphausen‐aufseß, Reference Hofmann and Zu Knyphausen‐aufseß2022). This approach provides the opportunity for researchers to gather information about a business by keeping the conversation within chosen boundaries while leaving participants open to explore relevant aspects and experiences (Kvale, Reference Kvale1996; Timmermans & Tavory, Reference Timmermans and Tavory2012). Thus, data take shape from the interactions between the interviewer and the interviewee, undergoing a coding process based on the high level of reflexivity and the extensive knowledge possessed by the researcher (Silverman, Reference Silverman2015). Table 1 indicates the interviewees’ roles in the sampled companies. In practice, the interview guide addressed the research questions in the form of a structured conversation and included the questions listed in Table 2. Overall, 23 face-to-face interviews were conducted, either in person, by telephone, or through virtual meetings held between May and November 2022. The interviews lasted 53 minutes on average and were recorded with the companies’ permission while interviewers were taking notes. Thereafter, the researchers listened to the recordings and complemented their notes to enable the subsequent process of decoding and analysis while keeping interviewer-related errors to a minimum (Eisenhardt & Graebner, Reference Eisenhardt and Graebner2007; Silverman, Reference Silverman2015; Timmermans & Tavory, Reference Timmermans and Tavory2012; Yin, Reference Yin2003).

Table 2.

Interview guide

Source: Authors’ elaboration.

In line with the positivist tradition of this study, the case researchers sought new theoretical insights favoring replication toward a multiple case study design so as to strengthen the data analysis in providing analytical generalization (Piekkari, Welch, & Paavilainen, Reference Piekkari, Welch and Paavilainen2009; Welch et al., Reference Welch, Paavilainen-Mäntymäki, Piekkari and Plakoyiannaki2022). According to Eisenhardt (Reference Eisenhardt1989), a multiple case study can be considered reliable when it is based on 4–8 empirical cases. However, the case researchers ensured robust results by persisting with data collection until theoretical saturation was reached, that is, when additional data no longer provided any new insight in terms of refining the properties of the coding categories or the context of analysis (Corbin & Strauss, Reference Corbin and Strauss2007; Marshall & Rossman, Reference Marshall and Rossman2014; O’Reilly, Paper, & Marx, Reference O’Reilly, Paper and Marx2012). The coding process was carried out with the intention of ensuring the stability of the results over time, context, and research tools so as to represent the objective phenomenon coherently with the study’s positivist interpretation (Bauer, Gaskell, & Allum, Reference Bauer, Gaskell, Allum, Bauer and Gaskell2000; O’Connor & Joffe, Reference O’Connor and Joffe2020). Thus, the authors envisaged an intercoder comparison and discussion in order to assess the accurate interpretation of the information gathered from the interviews. Intercoder reliability has been ensured through the convergence of case researchers toward an unambiguous interpretation of the data as suggested by Potter and Levine‐Donnerstein (Reference Potter and Levine‐Donnerstein1999) and echoed by O’Connor and Joffe (Reference O’Connor and Joffe2020) (e.g., Schwanholz & Leipold, Reference Schwanholz and Leipold2020). Furthermore, we decided to take some supplementary precautions from previous studies’ recommendations to ensure the validity and reliability of our study (Corbin & Strauss, Reference Corbin and Strauss2007; Gibbert, Ruigrok, & Wicki, Reference Gibbert, Ruigrok and Wicki2008; Marshall & Rossman, Reference Marshall and Rossman2014). First, the interview guide has been structured by rephrasing questionnaires formulated in similar qualitative empirical analyses in the CE domain (i.e., Aranda-Usón et al., Reference Aranda-Usón, Portillo-Tarragona, Scarpellini and Llena-Macarulla2020; Franzò et al., Reference Franzò, Urbinati, Chiaroni and Chiesa2021; Hofmann & Zu Knyphausen‐aufseß, Reference Hofmann and Zu Knyphausen‐aufseß2022). Secondly, participants in the research project were involved in validating the themes and interpretations during the interviews. Then, the overall process of data collection comprised a triangulation phase where empirical observations from participants were combined with various sources of information (i.e., company websites, sustainability reports, newsletters, and databases) to allow a better comprehension of the circular business development and increase trustworthiness (Gibbert, Ruigrok, & Wicki, Reference Gibbert, Ruigrok and Wicki2008; Marshall & Rossman, Reference Marshall and Rossman2014; Yin, Reference Yin2003). Finally, we employed pattern matching by comparing our results with previous research observations (Eisenhardt, Reference Eisenhardt1989; Eisenhardt & Graebner, Reference Eisenhardt and Graebner2007).

Data analysis

In social sciences, the grounded theory refers to a systematic research methodology that involves data collection and analysis to build new theoretical insights ‘grounded in empirical observations of words, actions, and behavior of the study’s participants’ (Corbin & Strauss, Reference Corbin and Strauss2007; Glaser, Reference Glaser2007; Gligor, Esmark, & Gölgeci, Reference Gligor, Esmark and Gölgeci2016, p. 97). Accordingly, the case researchers attempted to answer the research question by processing information from empirical cases to provide a theoretical contribution to digital technologies applied in the CE domain. Thus, the data analysis has been carried out by drawing on the information gathered from interviewees, combining researcher notes with the transcribed interviews, and referencing supplementary data. The collation of different data sources was performed by the authors to elaborate converging lines of inquiry toward a single explanation in accordance with a positivist approach (Eisenhardt, Reference Eisenhardt1989; Piekkari, Welch, & Paavilainen, Reference Piekkari, Welch and Paavilainen2009; Thomas, Reference Thomas2021; Yin, Reference Yin2003). As the perspective of this study is to understand how and why digital technologies are applied in circular businesses, the data analysis process was shaped accordingly. Relying on the grounded theory framework to build new theoretical concepts from empirical observations (Corbin & Strauss, Reference Corbin and Strauss2007; Glaser & Strauss, Reference Glaser and Strauss2017; O’Reilly, Paper, & Marx, Reference O’Reilly, Paper and Marx2012; Timmermans & Tavory, Reference Timmermans and Tavory2012), the authors performed a cross-case analysis to uncover generalizable constructs in a two-step procedure, where the translation of circular principles into feasible activities has been observed through the support of digital technologies in establishing the circular process. In the first place, the case researchers examined the development of each circular business observed. Thanks to the information on the progressive evolution of each sampled company, it has been possible to carry out a retrospective and prospective investigation aimed at capturing the entire development process of circular-inspired practices and processes within companies (e.g., Wamba, Akter, Edwards, Chopin, & Gnanzou, Reference Wamba, Akter, Edwards, Chopin and Gnanzou2015; Zucchella, Previtali, & Strange, Reference Zucchella, Previtali and Strange2022). A longitudinal observation offered an understanding of circular business establishment and growth, as changing elements were observed from a holistic perspective (Eller et al., Reference Eller, Gielnik, Wimmer, Thölke, Holzapfel, Tegtmeier and Halberstadt2020). It allowed the case researchers to capture the dynamic responses to sustainable opportunities by circular businesses unfolding under different conditions, in terms of digital technologies adoption. Therefore, an in-depth investigation of cases was performed to provide an evolutionary framework, a common development path within which digital tools and systems found common purpose lines in supporting CE principles adoption in business processes. Complementarily, in the second step we rationalized the actual use of digital technologies in the identified circular processes and products thanks to the Gioia methodology (e.g., Bocken & Konietzko, Reference Bocken and Konietzko2022; Troise, Reference Troise2021; Zucchella, Previtali, & Strange, Reference Zucchella, Previtali and Strange2022). This approach builds upon the grounded theory and ensures methodological accuracy in qualitative studies through a precise and validated data structure (Gioia, Reference Gioia2021; Gioia, Corley, & Hamilton, Reference Gioia, Corley and Hamilton2013). Indeed, it has been developed as a complementary instrument of qualitative research to support procedural rigor in data analysis (Mees-Buss, Welch, & Piekkari, Reference Mees-Buss, Welch and Piekkari2022). From the empirical investigation, the data have been analyzed and systematized into several first-order concepts by the case researchers, whose role is akin to a ‘glorified reporter’ that collects information in an unbiased manner, departing from the risk of ‘going native’ (Gioia, Corley, & Hamilton, Reference Gioia, Corley and Hamilton2013, p. 17–19). Then, these field facts are evaluated for similarities and differences to elevate them toward a theoretical understanding thanks to the experience and the researchers, who act as ‘knowledgeable agents’ (Gioia, Corley, & Hamilton, Reference Gioia, Corley and Hamilton2013, p. 17; Mees-Buss, Welch, & Piekkari, Reference Mees-Buss, Welch and Piekkari2022). The structured theorizing process offered by the Gioia methodology thus outlines two different phases, where the researchers’ role changes considerably from actors in charge of representing reality as truthfully as possible to expert analysts of the field capable of bringing the empirical evidence found in the case studies together. The development of second-order themes represents the processing of facts into constructs belonging to the theoretical realm (Corbin & Strauss, Reference Corbin and Strauss2007; Glaser & Strauss, Reference Glaser and Strauss2017; Gligor, Esmark, & Gölgeci, Reference Gligor, Esmark and Gölgeci2016; O’Reilly, Paper, & Marx, Reference O’Reilly, Paper and Marx2012), which can be further refined in new aggregate dimensions (Gioia, Reference Gioia2021; Gioia, Corley, & Hamilton, Reference Gioia, Corley and Hamilton2013). Therefore, the data structure realized by drawing on the Gioia methodology outlines the theorizing process’ output in terms of results provided by the case researchers’ ability to find assonances in the case studies and create logical relationships among categories from factual scenarios through grounded theory.

Outlining the going circular path

At first, the longitudinal observation allowed us to gather information on the CBMs from a retrospective and perspective point of view, uncovering some common development patterns. It has been possible to observe how, over time, businesses acquire an increasing degree of circularity by taking into consideration: (a) the origin of resources fed into the production process (raw materials or recovered/remanufactured secondary raw materials); (b) the externalities deriving from the transformation process and auxiliary activities; and (c) the properties of production outputs in terms of recyclability, lifespan, and reutilization. Thanks to an accurate description of each circular process or product development, a recurring series of evolutionary stages have been identified as a going circular path. The authors identified four distinct phases of evolution in relation to the aforementioned degree of circularity of companies. In order, they are idea generation, first steps, circular climbing, and circular maturity (Table 3).

In the idea generation phase, the case researchers identified a preparatory process of developing a circular product or process, wherein a company attempts to apply concrete CE principles to create an economically sustainable business. Company L offers an example of this step through the preliminary definition of a take-back process for their products. In this case, the circular process design has started by considering the materials employed in their furniture to make circular product components that can be easily recycled and remanufactured. A similar condition has been found in company N, where the collection process of spent products is being developed and transformed by evaluating possible opportunities to remanufacture end-of-life products. Relatedly, company P was also observed in the very first step of their circular product development. The chief executive officer and the R&D director explained how their effort is actually related to the identification of what raw materials, in the form of nutrients, could be employed in the production of food supplements. Overall, it has been possible to outline a preliminary condition of idea generation where the management recognizes a circular opportunity and endeavors to design the circular initiative according to the firm’s conditions.

Next, a circular business takes its first steps through the marketing of a finished circular product or service, behind which there is a structured process that incorporates the most common circular practices. The current situation of company A offers a practical example of this second step. After having accurately identified and set up the circular process it wants to put in place, the firm is concretely proposing an initiative to collect unused raw construction materials and demolition scrap from other stakeholders to activate the reuse and recovery process. Analogously, company C has identified a circular opportunity and realized mechanical support for circular businesses in its first step, and, at the time of the interview, the chief executive officer was actually considering the first industrial application of their machine for recycling processes and reducing waste. Meanwhile, the management of company I, after defining a circular cosmetic product based on nutrients derived from the agro-food industry, is dealing with the definition of the marketing mix and first commercialization of its circular product. Company J has also already designed the upcycling process through which they can extract resources from exhausted cereals previously used in brewing. Thus, it was possible to observe this company in the second step of its going circular path dealing with the employment of secondary raw materials in circular products (i.e., snacks and beverages) and their placement on the market. Based on these circular business experiences, the case researchers outlined this second step, where the circular process or product has been designed and developed by the company, and it is facing its first implementation or introduction onto the market. This first steps stage seems to be characterized by a slow increase of the circularity degree recognized in enterprises that can be substantially raised thereafter.

Indeed, the next step involves an increase in the adoption of the circular product, which corresponds to the greater breadth of a circular process by involving new stakeholders. In this third step, identified as circular climbing, the degree of recovered or remanufactured raw materials employed in circular businesses increases significantly, alongside the reduction of externalities from production and the utilization of a circular product. Expanding the production process of environmentally sustainable tableware goods made from recycled plastic, company E offers an example of circular business scaling through the launch of an entire line dedicated to circular products. This example shows how they went from defining a circular opportunity to prototyping an initial model of a home accessory made from recycled plastic materials to expanding the range of circular products sold. In this way, it was possible to observe the sudden rise in the degree of circularity of the company, which was associated with an increased recovery of waste in addition to the material and energy reduction inputs in the production of its table accessories. Similarly, companies G and F approached the circular climbing phase through the massive expansion of suppliers capable of providing them with the exhausted garments needed to enable the recovery of fabric filaments used to produce new clothes. After the design of the circular process and the circular business’ first step into garments remanufacturing, the degree of circularity of both companies has seen exponential growth in terms of the amount of recovered waste from the fashion industry and the reduction of new materials used in their garments. Company K is also experiencing circular climbing through the considerable growth of unsold bread suppliers and the subsequent expansion of their yeast extraction process to produce craft beer.

Finally, the case researchers also observed how circular businesses tend to reach a state of circular maturity, where the circular degree growth slows down and stabilizes. Such is the case with company B, where the circular climbing step, represented by the intensification of leather recovery from food industry scraps, has been followed by an attempt to refine the circular business. In other words, B’s chief executive officer testified that they are committed to further reducing material and energy inputs, as well as production externalities, to achieve a higher level of business sustainability. The special project manager at company F agreed with this circular strategy. In fact, company F’s circular maturity can be observed in its commitment to further reduce its production process’ environmental impact by avoiding chemicals and drastically reducing the employment of water and energy in garment thread recovery and garments manufacturing. Similarly, company O was attempting to perfect the circularity criteria of their business by increasing the amount of secondary raw material recovered for the production of sustainable sneakers along with reducing production-negative externalities. Thus, this last step of the going circular path provides the opportunity to refine a circular business by improving the environmental, social, and economic benefits of a renewable production and consumption system.

Four roles for digital technologies in circular businesses

Overall, our in-depth longitudinal investigation provided an evolutionary framework of circular business development, where digital tools and systems found common purpose lines. Thus, the empirical investigation was complemented by a cross-case analysis based on a transparent data structure, represented in Fig. 1. The results revealed four main roles of digital technologies in circular businesses that agile organizations pursue through the adoption of digital tools: shaper, enabler, enhancer, and refiner. Each aggregate dimension is supported by two second-order themes and several first-order concepts found in the case studies.

Figure 1.

Data structure.

Source: Authors’ elaboration.

The four roles of digital technologies within circular businesses satisfactorily fit within the evolution described through the going circular path. During the idea generation step, digital technologies, such as IoT and tracking systems, or the possibility of recurring to AI, machine learning, and IoT, shape the definition of the circular practices themselves. This role is supported by the chief sustainability officers of company L, who stated ‘considering available technologies, we intend to activate a take-back process using digital support to ensure traceability, as well as include intelligent elements within the blend that dialogue with our machine once they have to be disassembled.’ Indeed, L’s take-back, circular process is being designed according to the tracking properties offered by digital tools. In this way, their smart furniture would integrate a QR code or near-field communication chip that returns information to the end consumer about how to contact the company to initiate the end-of-life take-back process of the product. Furthermore, it would be possible for L to have intelligent end-of-life products that can communicate to an AI about an item’s material composition and how to disassemble it. The chief executive officer and the sales account of company N concurred with this role of digital technologies as their circular process for acquiring and remanufacturing end-of-life food-protecting cloth is being designed according to the opportunities afforded by digital technologies. Among the alternatives being considered is the use of a QR code alongside a digital platform to put the company in contact with the customer to arrange the collection of used items. In this vein, circular products tend to be shaped according to digital technologies implementation in circular businesses. As the chief executive officer of company H confirms, ‘AI, machine learning, and IoT actively shape circular processes and product development in terms of productivity increasing, trend analysis, and obsolescence prevention.’ Through these examples, it was possible to outline the shaper role of digital technologies in terms of circular process planning and product designing oriented by the opportunities offered by business digitalization.

Secondly, companies in the first step stage have confirmed that the use of digital technologies enables them to initiate circular practices. As the chief executive officer of company A clearly explained, ‘an interconnected system of exchange and sale of raw materials between players in the construction industry would not be possible without adequate technological support. Digital technologies offer interconnectivity, geographic identification, and information on raw materials (such as certifications) so that a company can directly acquire resources from the warehouse of someone else who does not use them, instead of buying a new one.’

In company C meanwhile, AI and machine learning enable object detection and, with the support of automated systems, immediate action to be taken to remove or sort items with different densities. Deep learning software recognizes different materials based on their composition, enabling a circular processes aimed at reducing food wastage or recycling mixed waste. Likewise, the chief executive officer and the production manager of company J observed that ‘certain circular processes need a digital component to enable stakeholders’ coordination and information flow among the actors of a circular ecosystem.’ A similar function of digital technologies can be found in company I, where digital communication systems enable stakeholder coordination and waste material recovery to provide secondary raw materials used in cosmetics production. Overall, grounded observation of these economic realities has made it possible to outline the enabling role of digital technologies in circular businesses based on product and process innovation and knowledge transfer and communication among stakeholders.

In the expectation of accentuating the growth of their circular business, according to the circular climbing stage, the role of technologies becomes that of an enhancer that can further optimize and streamline the circular processes in place. As the special project manager of company F declared, ‘we have enhanced waste recovery through a digital system, connecting our company with customers. Without digital technologies, we would not succeed in building the circular business we have today.’ From this experience, it was possible for company F to notice how sometimes digital technologies also work to enhance the circularity degree of a firm. Thanks to digital platforms and IoT systems, F’s circular business entered the circular climbing stage through the engagement of several stakeholders and the enlargement of the circular process. In fact, both companies F and G have set up online collection systems for exhausted textiles directly aimed at end consumers, providing an incentive to recycle their garments. Furthermore, the critical enhancing role of digital technologies has been observed in the digital infrastructure built by organization G to organize garment collection from upstream stakeholders and optimize it by sharing information on the fabrics being processed. As such, the case researchers came to define enhancer as the third role of digital technologies, supporting the expansion of a CBM toward a circular climb.

Finally, in more mature circular businesses, digital technologies have been applied to optimize circular processes and further advance the degree of circularity. In this way, product development can be refined to become even more efficient, emphasizing the characteristics that tend to close the loop. As the chief executive officer of company F clearly stated, ‘We aim to be a zero-waste company; we try to optimize each stage of the production process to use only natural products, reduce the use of energy and raw materials, and limit production waste as much as possible. In doing so, [company F] is pursuing to be 100% circular.’ This statement expresses company F’s aspiration to constantly achieve a greater degree of circularity by reducing waste as much as possible and closing the loop. This goal requires aiming at the circular process optimization of renewable production and consumption systems in the fashion domain. Correspondingly, it was possible to investigate digital technologies implementation in company O in terms of data collection and analysis to support the monitoring of emissions and the carbon footprint of its sustainable sneakers. At the same time, in company M, circular maturity has been achieved through the employment of big data, AI, and machine learning technologies to make production processes more efficient and optimize business circularity, with IoT supporting partner interaction and circular product development by connecting actors in a circular value chain. The communication element of a CE strategy has also been observed in company B as a tool to optimize the value generated from a CBM. In this case, the employment of digital systems allows supply chain tracking and certified circular product identification from clients and suppliers, while AR delivers product information as a replacement for analog media. Company B’s chief executive officer also mentioned their use of big data and AI to optimize the waste reduction of energy and resources during product development. In their circular maturity, the firm is still struggling to reduce water input in leather production and impurities released by the transformation process, along with the reduction of cutting waste through the use of precision technologies. As a result of these observations, we have therefore identified the role of refiner based on the needs and respective use of digital technologies by circular businesses facing circular maturity.

To summarize, we obtained a newly developed model that represents circular business development by parsing the different roles that digital technologies may assume to support each step of the going circular path (Fig. 2). Finally, we would like to point out that the going circular path is meant to be an explanatory model of the evolution of a circular business, where the various functions of digital technologies (i.e., shaper, enabler, enhancer, refiner) are embedded. Although these steps could overlap, for instance by pursuing an optimization strategy while a circular climbing process is in progress, they represent an attempt to model reality and are therefore subject to the heterogeneity of companies, the context in which they are located, and the complexity of CBMs.

Figure 2.

The going circular path and digital technology’s role in circular businesses.

Source: Authors’ elaboration.

Theoretical contributions

In summary, it is possible to identify some major contributions to theory as a result of the abductive abstraction of the information grounded in our case studies. First, the present study enriches the CE literature by advancing a going circular path that outlines four evolutionally stages of circular businesses according to their degree of circularity. Based on the origin of resources employed, the externalities deriving from production and auxiliary activities, and the properties of circular products and services, a common path has been outlined that systematizes the adoption of CE principles in agile organizations (Bocken et al., Reference Bocken, De Pauw, Bakker and Van Der Grinten2016; Franzò et al., Reference Franzò, Urbinati, Chiaroni and Chiesa2021; Hopkinson et al., Reference Hopkinson, Zils, Hawkins and Roper2018; Lüdeke‐Freund, Gold, & Bocken, Reference Lüdeke‐Freund, Gold and Bocken2019; Santa‐Maria, Vermeulen, & Baumgartner, Reference Santa‐Maria, Vermeulen and Baumgartner2022). As a second contribution, this research unveils four functions fulfilled by digital technologies in undertaking a CE transition to achieve a higher degree of circularity. Building on assimilable circular strategies involving digital tools identified in previous studies (e.g., Bag et al., Reference Bag, Pretorius, Gupta and Dwivedi2021; Jabbour et al., Reference Jabbour, Jabbour, Godinho Filho and Roubaud2018; Khan et al., Reference Khan, Razzaq, Yu and Miller2021; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Pizzi, Leopizzi, & Caputo, Reference Pizzi, Leopizzi and Caputo2021; Ranta, Aarikka-Stenroos, & Väisänen, Reference Ranta, Aarikka-Stenroos and Väisänen2021), the authors improved digital technologies adoption awareness in circular businesses through the association of a specific role with each step of the going circular path (Chauhan, Parida, & Dhir, Reference Chauhan, Parida and Dhir2022; Kristoffersen et al., Reference Kristoffersen, Blomsma, Mikalef and Li2020; Liu et al., Reference Liu, Trevisan, Yang and Mascarenhas2022; Pizzi, Leopizzi, & Caputo, Reference Pizzi, Leopizzi and Caputo2021). Third, we deliver some important considerations regarding how SMEs transition toward a renewable production and consumption paradigm (Centobelli et al., Reference Centobelli, Cerchione, Esposito and Passaro2021; Darmandieu et al., Reference Darmandieu, Garcés‐Ayerbe, Renucci and Rivera‐Torres2022; Dey et al., Reference Dey, Malesios, Chowdhury, Saha, Budhwar and De2022; Mura, Longo, & Zanni, Reference Mura, Longo and Zanni2020; Zhu et al., Reference Zhu, Nguyen, Siri and Malik2022). More precisely, this article unveils SMEs strategies for translating CE principles into circular processes and products thanks to the support of digital technologies and Industry 4.0 structures (Chaudhuri, Subramanian, & Dora, Reference Chaudhuri, Subramanian and Dora2022; Pizzi, Corbo, & Caputo, Reference Pizzi, Leopizzi and Caputo2021; Troise et al., Reference Troise, Corvello, Ghobadian and O’Regan2022). Although this study took into consideration SMEs due to their agile and flexible condition in approaching CE, we believe our findings can also be applied to ambidextrous organizations due to their similar traits (Bresciani, Ferraris, & Del Giudice, Reference Bresciani, Ferraris and Del Giudice2018; Chaudhuri, Subramanian, & Dora, Reference Chaudhuri, Subramanian and Dora2022; Jain et al., Reference Jain, Panda and Choudhary2020; Marrucci, Rialti, & Balzano, Reference Marrucci, Rialti and Balzano2023; Scuotto et al., Reference Scuotto, Santoro, Bresciani and Del Giudice2017). In conclusion, the fourth contribution of the study is addressed toward the enrichment of the extended institutional theory in the CE domain (DiMaggio & Powell, Reference DiMaggio and Powell1983; Haunschild & Miner, Reference Haunschild and Miner1997; Meyer & Rowan, Reference Meyer and Rowan1977). We contribute to earlier studies in depicting circular businesses isomorphism (e.g., Do et al., Reference Do, Mishra, Colicchia, Creazza and Ramudhin2022; Jain et al., Reference Jain, Panda and Choudhary2020; Meherishi, Narayana, & Ranjani, Reference Meherishi, Narayana and Ranjani2019; Ranta, Aarikka-Stenroos, & Mäkinen, Reference Ranta, Aarikka-Stenroos and Mäkinen2018) by advancing the perspective of CBMs’ legitimation of business digitalization. More specifically, the present research succeeds in furthering circular businesses isomorphism’s appreciation of implementing digital technologies by offering four different perspectives of the basis of digital tools integration.

Managerial implications

Furthermore, our results generate remarkable implications for chief executive officers, chief sustainability officers, and sustainability specialists who are attempting to translate their businesses according to CE principles. In the form of best practices and guidelines, this study provides a going circular path for organizations yearning to embrace CE and suggests how the application of digital technologies can improve their circularity degree. Thus, practitioners can rely on an evolutionary roadmap to plan a circular business transition or to improve the circularity degree of their organization. Accordingly, managerial figures committed to sustainability may take advantage of the advanced conceptual model while considering which digital tool or support best fits their business’ available resources and technological facilities. In the long run, we hope to inspire the implementation of CE practices among sustainability-sensitive companies to increase the widespread adoption of circularity in the world and close the Circularity Gap.

Future research avenues

The present research highly encourages future studies to expand the awareness of each step of the going circular path and focus on the advanced roles of digital technologies in supporting the circular transition. From now on, in fact, it might be worthwhile to unpack the circularity transition of sustainability-sensitive organizations. Doing so would offer a better conceptualization and support to the chief sustainability officers and sustainability specialists, providing a compass capable of navigating these managers through the circular business transition. Furthermore, this research is also intended to highlight the need for further quantitative studies on the subject, particularly ones aimed at assessing the relationship between the adoption of digital technologies and the success of circular businesses. Other aspects, such as agility or the presence of organizational flexibility, could in turn improve the starting conditions of businesses and facilitate their approach to a renewable system (Dey et al., Reference Dey, Malesios, Chowdhury, Saha, Budhwar and De2022; Jain et al., Reference Jain, Panda and Choudhary2020; Troise et al., Reference Troise, Corvello, Ghobadian and O’Regan2022). In addition, future studies could consider the difference between circular businesses that operate according to a B2B or B2C approach, as well as considering the approach of native circular companies versus adopters that approached a circular transition from the linear economy (Rovanto & Bask, Reference Rovanto and Bask2021).

Such a fascinating research stream can also find new research opportunities in the incorporation of the serendipitous dimension in the advanced model (Balzano, Reference Balzano2022; Dew, Reference Dew2009). Since luck has often been acknowledged as a relevant factor in explaining organizational phenomena, some types of luck, such as serendipity, can be included as an external factor in the strategic formulation and managerial processes of circular businesses. Due to the rapid approach to business model innovation required while dealing with sustainability and digitization, the serendipitous dimension could yield interesting insights offering an agile and flexible strategy exploiting sustainable opportunities (Averina, Frishammar, & Parida, Reference Averina, Frishammar and Parida2022; Mirvahedi & Morrish, Reference Mirvahedi and Morrish2017). In this vein, future scholars could implement the going circular path with a serendipitous dimension, for instance by exploring the serendipitous effects related to the adoption of digital technologies in effectively fostering business circularity in SMEs.

On the other hand, the CE and digital transformation fall into the naturalized constructs belonging to the management field, which has been typically framed as positive in nature (Adler, Forbes, & Willmott, Reference Adler, Forbes and Willmott2007, p. 126). Thus, the majority of the authors dealing with these topics are nearly always concerned with the positive behavior, conditions, and outcomes of digitalization and sustainability in businesses. Future studies could investigate the counter side of the coin by challenging such normalized assumptions to uncover conditions under which digital technologies and circularity in businesses lead to a series of undesired outcomes. For instance, we encourage exploring the potential challenges and risks associated with the adoption of digital technologies in circular businesses, such as data security, privacy concerns, technological complexity and skills gaps, change management and organizational culture issues, the digital divide among SMEs, and so on.