Transitioning to a Circular Economy: Paradoxical Tensions of the Circular Business Model

Abstract

The circular economy is seen as a way to replace the dominant linear business models, which are based solely on increasing economic value. However, organisations transitioning to a circular business model usually face multiple tensions arising from the paradoxical relationship between achieving circularity and creating economic value. Therefore, we combine the literature on circular business models and paradox theory to systematise knowledge on paradoxical tensions that occur while transitioning to circular business model. Following an abductive approach, the research methodology employs semi-structured interviews and observation in the cross-sectorial manufacturing context. The research results allow us to identify novel insights into organisational-level tensions, namely, goal setting, performance orientation, compliance, in-network collaboration, and innovation adoption. In addition, we define the concept of a strategic paradox in the circular economy, which acknowledges the tension between true circular products and products as usual.