| Title |
Financing solutions for circular business models: Exploring the role of business ecosystems and artificial intelligence |
| ID_Doc |
21752 |
| Authors |
Fallahi, S; Mellquist, AC; Mogren, O; Zec, EL; Alguren, P; Hallquist, L |
| Title |
Financing solutions for circular business models: Exploring the role of business ecosystems and artificial intelligence |
| Year |
2023 |
| Published |
Business Strategy And The Environment, 32.0, 6 |
| DOI |
10.1002/bse.3297 |
| Abstract |
The circular economy promotes a transition away from linear modes of production and consumption to systems with circular material flows that can significantly improve resource productivity. However, transforming linear business models to circular business models posits a number of financial consequences for product companies as they need to secure more capital in a stock of products that will be rented out over time and therefore will encounter a slower, more volatile cash flow in the short term compared to linear direct sales of products. This paper discusses the role of financial actors in circular business ecosystems and alternative financing solutions when moving from product-dominant business models to Product-as-a-Service (PaaS) or function-based business models. Furthermore, the paper demonstrates a solution where state-of-the-art artificial intelligence (AI) modeling can be incorporated for financial risk assessment. We provide an open implementation and a thorough empirical evaluation of an AI-model, which learns to predict residual value of stocks of used items. Furthermore, the paper highlights solutions, managerial implications, and potentials for financing circular business models, argues the importance of different forms of data in future business ecosystems, and offers recommendations for how AI can help mitigate some of the challenges businesses face as they transition to circular business models. |
| Author Keywords |
artificial intelligence; circular business models; circular economy; digital technologies; finance; product-as-a-service |
| Index Keywords |
Index Keywords |
| Document Type |
Other |
| Open Access |
Open Access |
| Source |
Social Science Citation Index (SSCI) |
| EID |
WOS:000888132100001 |
| WoS Category |
Business; Environmental Studies; Management |
| Research Area |
Business & Economics; Environmental Sciences & Ecology |
| PDF |
https://onlinelibrary.wiley.com/doi/pdfdirect/10.1002/bse.3297
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