Better understanding of the relation between circular strategies and startups
In cooperation with Start it @KBC and Circular Flanders, VITO set up a survey to sound out startups in the circular economy about obstacles and levers. This survey ran from autumn 2021 to spring 2022. The results were published in the Journal of Clear Production.
The survey on circular startups is the first that allows for multivariate statistical analyses, analyzing perspectives on multiple implementation levels of 10 circular strategies while controlling for personal and company characteristics. With a better understanding of the relationship between startups and circular economy, we aim to better help stakeholder organisations and governments in supporting and encouraging circularity among young and starting companies.
Why focus on startups and their circular strategies?
As the implementation of circular economy principles requires new visions and strategies, startups are increasingly recognized as a powerful engine for the innovation processes needed to support a circular transition. For startups, it is relatively easy to adopt principles of the circular economy, as the company culture develops from scratch. Startups can disrupt existing institutions, and may motivate existing firms to react to their sustainable innovations.
Conversely, startups may be motivated to opt for circular business models to meet increasing expectations of customers, employees, and investors who consider environmental, sustainability, and governance (ESG) criteria increasingly important. Likewise, startups could aim for customers segments willing to pay a circular premium, reflecting a higher willingness to pay for circular goods.
Startups may also opt for circular solutions to limit their dependence on international supply chains, resulting in an enhanced resilience in cases of systemic shocks.
No such thing as 'the' circular startup
So, what do the survey results tell us about the relationship between startups, their characteristics and circular strategies?
- With respect to personal characteristics, we find that younger startup entrepreneurs tend to focus on inner circle strategies (such as redesign or repair), while older startup entrepreneurs have a tendency to opt for outer circle strategies (e.g. recycling) or implementing no circular strategies at all.
- Our results suggest no gender differences on the choice of circular strategies but do suggest a lower inclination among female startup entrepreneurs to report the combined use of multiple circular strategies.
- Company characteristics reveal that business-to-business and business-to-government markets can be considered as frontrunner markets for circular business models and supporting services for the circular economy.
- Circular startups mostly consider sustainability and circularity as a comparative advantage, while activities like maintenance and repair, and sharing production means are less often explicitly considered as circular economy activities.
- Also, our results suggest that startup entrepreneurs with a migrant background are more optimistic to start a profitable circular business.
- With respect to barriers and enablers, our study suggests that there is no such thing as 'the' circular startup. Barriers and enablers vary significantly depending on the circular strategies that are applied, and policy makers should take this diversity into account.
