Aligning servitization and circularity : The role of institutional confluence in sustainable business models

Abstract

This conceptual study explores the alignment between servitization—a shift from selling products to offering services—and circularity principles. The study introduces institutional confluence—a configuration of institutional pressures that enhance business model legitimacy to stakeholders and facilitate operational success— which can serve as a driver aligning servitization with circular principles. Institutional confluence has the capacity to trigger novel business models, shape resources and processes, enhance value capture, and inhibit unsustainable business models. The study develops the concept and underscores the role of institutional confluence in promoting this alignment and subsequent environmental sustainability. The article utilizes illustrative case examples from servitization and circular business models to develop the concept of institutional confluence serving sustainable servitization. The study offers strategic insights for managers and policymakers, emphasizing the need for a holistic approach that integrates servitization and circularity from the outset of business model design. It advocates for policies that leverage regulatory, normative, and mimetic pressures to foster sustainable business practices. The article contributes to the servitization literature by delineating the mechanisms through which institutional forces facilitate or hinder the integration of servitization and circularity, offering directions for future research to explore these dynamics across different contexts and industries.