Sustainable Business Models in the Circular Economy Framework: Innovation, Value Creation, and Systemic Transformation

Abstract

The circular economy has emerged as a systemic alternative to linear take-make-dispose models, requiring fundamental changes in how businesses create, deliver, and capture value. Sustainable business models within this framework integrate resource efficiency, closed-loop material flows, and extended product life cycles into core strategy. This review examines the evolution of such models, grounded in circular economy principles, business model innovation theory, and industrial ecology perspectives. Recognition of planetary boundaries and resource constraints has driven transformations from linear value propositions to circular ones, from product ownership to product-as-a-service arrangements, and from firm-centric operations to collaborative ecosystem models. Specific mechanisms—including modular design, remanufacturing, sharing platforms, and product-service systems—enable value retention and new revenue streams. Applications in manufacturing, consumer goods, and service sectors demonstrate measurable improvements in resource productivity and customer relationships. Challenges of rebound effects, high upfront investment, consumer behavior change, and coordination across value chains persist. Prospects center on policy support for circular infrastructure, digital enablers such as material passports, and integration of regenerative principles beyond efficiency. The analysis concludes that circular business models represent not incremental sustainability improvements but a strategic reconfiguration of value creation that aligns economic performance with long-term ecological and social resilience.