Unleashing economic growth through circular business models and innovation networks: a configurational analysis
The article “Unleashing economic growth through circular business models and innovation networks: a configurational analysis” published in Industry and Innovation – by Silvia Rita Sedita and Ambra Galeazzo of University of Padova and Silvia Blasi of University of Verona – investigates the relationship between circular economy practices and innovation networks and how they influence economic growth. The study aimed to answer the research question: "How can circular economy practices and innovation networks be orchestrated to ensure economic growth?".
The research specifically analyses data collected in 2017 from 47 Italian manufacturing firms that had implemented at least one circular economy practice. This data was gathered as part of a joint project by the Scientific Office of Legambiente and the University of Padova, lead by the Digital Manufacturing Lab, dSEA, and carried out by a research group composed of Eleonora Di Maria, Valentina De Marchi, Silvia Blasi, and Silvia Rita Sedita (“Manufacturing activities and value creation: redesigning firm’s competitiveness through digital manufacturing in a circular economy framework” – grant n. BIRD161248/16).
What are the main insights of the paper?
The research showed that multiple different configurations of conditions can lead to high economic growth for firms engaged in Circular Economy (CE). The study identified five such configurations that led to the identification of four distinct profiles of firms successfully achieving high economic growth through CE:
- Micro and Small Networked Circular Innovators: Smaller firms needing extensive and deep innovation networks to compensate for limitations.
- Established and Networked Circular Leaders: Firms (any size) with long-term focus on resource recovery/recycling benefiting from broad innovation networks.
- Specialised Circular Pioneers: Smaller, newer firms succeeding through internal innovation without extensive external networks, focusing on specific CE practices like recovery/recycling or providing circular inputs.
- Integrated Circular Leaders: Large enterprises with a long-term commitment to resource recovery/recycling who can innovate independently due to their size and resources
In essence, the study reveals that there isn't a single path to achieving economic growth through the circular economy. Success depends on how CE practices are combined with innovation strategies, firm size, and experience, with external networks playing a varied, and not always dominant, role.
What are the implications of this research?
Overall, this research makes an innovative contribution by moving beyond static or idealized views of the circular economy. It provides actionable recommendations for businesses and stakeholders.
For managers, it underscores the heterogeneity in CE adoption, the importance of external relationships (especially for smaller firms), and the value of a long-term commitment to CE practices. Each firm must assess its specific operations and industry context to develop customized circular strategies that align with its goals and capabilities. Choosing between closed and open innovation should be informed by a firm’s ability to collaborate. Managers are encouraged to pursue strong external partnerships, including resource and knowledge-sharing initiatives, which can significantly enhance innovation and efficiency in CE efforts. Circularity should be viewed as a strategic, long-term investment. Managers must commit to sustained efforts, understanding that economic benefits often accrue gradually. Focusing on incremental improvements and long-term integration will yield more robust and lasting outcomes.
For policymakers, the findings encourage the creation of collaborative platforms that bring together firms, academia, government entities, and intermediary innovation agents (like innovation hubs, business incubators, or knowledge intensive business service firms) and the design of tailored incentives to support inter-organizational collaborations (also through public-private partnerships) that aim to reduce waste, increase material efficiency, or share resources, with a special focus on micro and small enterprises.
