Institutional Confluence Drives Sustainable Servitization and Circularity

Why It Matters

Designers and strategists can leverage institutional confluence—the combined effect of regulatory, normative, and mimetic pressures—to legitimize and operationalize business models that integrate servitization and circularity. This approach fosters innovation by shaping resources, processes, and value capture, while simultaneously discouraging unsustainable practices.

Key Finding

A combination of regulatory, social, and competitive pressures can create an environment where businesses find it easier and more beneficial to adopt service-based models that also incorporate circular economy principles, leading to greater legitimacy and success.

Key Findings

• Institutional confluence can act as a key driver for aligning servitization with circular principles.
• This confluence enhances the legitimacy of sustainable business models to stakeholders.
• It shapes resources, processes, and value capture mechanisms to support sustainability.
• It can inhibit the adoption of unsustainable business models.

Research Evidence

Aim: How can institutional confluence facilitate the alignment of servitization and circular economy principles within business models to promote environmental sustainability?

Method: Conceptual study with illustrative case examples

Procedure: The study develops the concept of institutional confluence by analyzing how various institutional pressures (regulatory, normative, mimetic) interact to support business models that combine servitization (product-as-a-service) with circular economy principles. Case examples from existing sustainable servitization and circular business models are used to illustrate the concept.

Context: Business model innovation, sustainable business practices, servitization, circular economy

Design Principle

Design for institutional confluence to foster sustainable business model innovation.

How to Apply

When developing a new product-service system, research the existing and potential regulatory requirements, industry standards, and competitor practices to identify opportunities for creating institutional confluence that supports circularity.

Limitations

The study is conceptual and relies on illustrative case examples, requiring further empirical validation across diverse contexts.

Student Guide (IB Design Technology)

Simple Explanation: Think about how rules, what people expect, and what competitors are doing can all work together to make it easier for a company to offer services instead of just products, and to make those services environmentally friendly.

Why This Matters: Understanding institutional confluence helps you design solutions that are not only innovative but also practical and likely to be adopted because they fit within the broader societal and market context.

Critical Thinking: To what extent can designers actively 'create' institutional confluence, rather than simply reacting to it, to drive sustainable innovation?

IA-Ready Paragraph: The proposed design for a [product/service] aims to integrate servitization with circular economy principles. This approach is further strengthened by the concept of 'institutional confluence,' where regulatory, normative, and mimetic pressures can collectively enhance the legitimacy and operational viability of such a sustainable business model. By aligning with [mention specific regulations, industry standards, or competitor actions], this design seeks to leverage these external forces to foster adoption and discourage unsustainable alternatives.

Project Tips

• When proposing a new design or business model, analyze the 'institutional environment' it will operate in.
• Consider how you can make your design more appealing by aligning it with existing or emerging regulations, industry norms, and successful competitor strategies.

How to Use in IA

• Use the concept of institutional confluence to justify the strategic direction of your design project, explaining how external pressures can support your proposed sustainable business model.

Examiner Tips

• Demonstrate an understanding of how external forces (regulations, social expectations, market trends) can influence the success and adoption of design solutions, particularly those aiming for sustainability.

Independent Variable: Institutional confluence (configuration of regulatory, normative, and mimetic pressures)

Dependent Variable: Alignment of servitization and circularity principles in business models; Business model legitimacy and operational success; Environmental sustainability outcomes

Strengths

• Provides a novel conceptual framework (institutional confluence) for understanding sustainable business model innovation.
• Connects two important but often separate concepts: servitization and circularity.

Critical Questions

• What are the specific mechanisms through which different types of institutional pressures (regulatory, normative, mimetic) interact to drive or hinder sustainable servitization?
• How can this framework be applied and tested empirically across different industries and geographical contexts?

Extended Essay Application

• An Extended Essay could investigate the specific institutional pressures present in a chosen industry and analyze how they could be leveraged to support the development of a circular servitized business model for a particular product or service.

Source

Aligning servitization and circularity: The role of institutional confluence in sustainable business models · Journal of Cleaner Production · 2024 · 10.1016/j.jclepro.2024.142666