When is a firm deemed circular?
In order to evaluate the relationship between the circular transformation of a business model and the value creation in a firm, we have to understand the nature of the circular transformation and its impact on the economic value creation.
We can assess the increase of the economic value with the improvement of the firms’ profitability (multiple measures), competitiveness, level of internationalization and the total factor productivity. However, to evaluate the degree of circularity, we the apply Circularity assessment model.
Unlike the economy as a whole, for a firm to be considered circular, that is, to practice a circular business model, it does not need to maximise its capability to recover and regenerate resources deployed within its own value-creating processes. Circularity as a firm’s strategic orientation, exercised through the functioning of an organization according to circular business models, is manifested by a set of capabilities to contribute to the circular economy.
That means we have to establish a practical, yet universally representative measurement of the ability to closing, narrowing or slowing the loops. Such ability is manifested by a consistent set of competencies, relations, organizational and management practices, aiming at such a desired effect.
On one hand, these competencies and practices can be consistently evaluated across the firm’s value chain in a degree of their full exploitable potential (circular business model potential). On the other hand, their actual level depends on the managerial abilities and overall organizational practices to seize the business model potential (commitment). Here is why the Circularity assessment model figures as a useful measurement construct (or a tool) of the firm’s circularity, considered its composite characteristic, represented by a score, which is a result of this measurement, focused on the evaluation of a firm’s business model.
Here we invite you to fill in a Circularity Assessment and obtain your Circularity Assessment Score 2.0 (CAS2.0), which serves as the first indication of a firm’s degree of circularity.