Building innovation ecosystems for circularity: Start-up business models in the food and construction sectors in the Netherlands

Abstract

The circular economy is a resource-efficient production model that is believed by many policymakers, business leaders, and academics to promote sustainability. Academic literature suggests that circularity is achievable across business scales and types, from multinational corporations to start-ups. One condition for circular transition is the presence of a thriving market and a policy context that supports development and uptake of circular innovations. This study is among the first to analyze the business models of circular-focused start-ups from a systems-based perspective on technological innovation. Examining the Dutch food and construction sectors, the study compares business activities that foster innovation ecosystems. Based on 53 interviews with start-up founders and actors, we examine how firms respond to financial, cultural, and market drivers based on their respective industries' market structures, cultural norms, and growth histories. The results also indicate variability in the practical impacts of circular strategies. While there is some evidence of strategic impact among food start-ups, impacts among construction start-ups are potentially undermined by power imbalances between start-ups and incumbents and by the sector's relatively conservative culture. This comparison is used to develop recommendations for start-ups and policymakers to accelerate circular transition through the development of innovation ecosystems.