Exploring business model diversification and circular value creation in digital platforms for circular economy: insights from Chinese preowned electronics industry
Abstract
Purpose
Circular economy firms, unlike those in a linear economy, encounter significant challenges due to the nature of nonstandardized products, such as asymmetric information on product specifications and highly dispersed supply and demand. Consequently, achieving large-scale operations becomes inherently difficult for them. However, when digital platform-based circular firms adopt diversified business models, their value creation has the potential to achieve significant scale. This study aims to answer “How do digital platform-based circular firms scale up value creation through business model diversification?”.
Design/methodology/approach
The authors use a qualitative case study design with a longitudinal (2011–2023) analysis of the various business models developed by ATRenew, a leading firm in the Chinese preowned electronics industry.
Findings
The authors find that the recycling business model can act as a “cornerstone” business model for a circular firm to integrate the business model portfolio by leveraging the most synergies (or complementarities) with other business models. Besides, digital platform-based circular firms can effectively scale up value creation by leveraging capability complementary on the supply side, through establishing industrial infrastructure shared with the platform ecosystem; and by leveraging customer complementary on the demand side, through activating the dual role played by platform users as suppliers and consumers.
Originality/value
The authors contribute to the circular business models literature with three mechanisms to scale up circular value creation through business model diversification and advance a set of propositions to be tested in future research. This also has important practical implications for circular economy platform businesses.
Keywords
Acknowledgements
The authors are very grateful to the anonymous reviewers and editors for significant comments, which have greatly improved the quality of this paper.
Funding: This study was supported by Soft science research program of Zhejiang Province(2024C35069).
Citation
Chen, X., Shen, C. and Zheng, W. (2024), "Exploring business model diversification and circular value creation in digital platforms for circular economy: insights from Chinese preowned electronics industry", Chinese Management Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CMS-01-2024-0081
Publisher
:Emerald Publishing Limited
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