Theoretical Framework of Circular Business Model Innovation for Building Contractors

The construction industry’s traditional linear business models of “take, make, and dispose” are being challenged in practice due to the increased market demands and the political agenda that points towards sustainable and circular practices. The majority of existing research within sustainable and circular business models is limited to short-term consumer products, but the research is poorly matching the conditions of buildings as capital-intensive goods with significantly longer life cycles. The data collection builds on an integrative literature review that will synthesize current findings on sustainable and circular business models by assessing the four major business model dimensions of value proposition, value delivery, value creation, and value capture. The aim of this paper is to identify and discuss important shortcomings in the general framework of sustainable business models with regard to application in the construction and real estate sector and more specifically larger contractor firms. The main findings conclude there is a research gap in terms of developing new business models that both capture the distinctive characteristics of the construction industry and innovate building contractors’ traditional practices towards the sustainable and circular transition. This paper points out that future circular business models of larger contractor firms will probably include elements of the business models “Orchestrator” and “inclusive value creation” due to the increased need for coordination and early project involvement with multiple stakeholders in the value chain for the co-creation of long-term and valuable partnering agreements as well as participation in new types of procurement.