Speeding up the transition to the circular economy: The role of niche innovations

Purpose Transitioning to the circular economy requires servitized organisations to achieve customer outcomes while reducing the environmental impact of the whole system. Digital servitization (DS), i.e., the uptake of new digital technologies for the purpose of expanding their service business through the provision of digital services embedded in a physical product (Gebauer et al., 2020), may greatly facilitate such changes. At the same time, the potential of DS is only limitedly leveraged and the transition to the circular economy (CE) is slow. A multi-level understanding of what factors inhibit or slow down this transition process, and how to tackle them, is imperative to realizing the CE. Methodology We view the transition to a CE as a sociotechnical change which takes place at various levels (Geels and Schot, 2007): niche innovations, sociotechnical regimes, and sociotechnical landscapes. Viewing digitalization as an element at the landscape level as it constitutes a long-term change to the backdrop that sustains society (Geels and Schot, 2007) we aim to address both the sociotechnical regime and the niche innovations level to understand their respective roles in enabling the transition to the CE. The current study focuses on understanding the role of niche innovations i.e. micro-level innovations “carried and developed by small networks of dedicated actors, often outsiders or fringe actors” (Geels and Schot, 2007; pp. 400)  in enabling the transition to the CE. The study uses the Netherlands as an empirical context to understand the transition to the CE and employs illustrative case studies of Dutch companies acting as niche innovators driving this transition bottom-up. Findings We propose a typology of niche innovations driving the CE and with digitalization as a landscape-level context outline their specific challenges in going from being small and unstable initiatives to large and stable socio-technical regimes. More specifically, for each type of niche innovation, we highlight the involved actors and their roles and activities, as well as outcomes produced and for whom (firm, buyer-supplier relationship, supply chain and industry level), as well as the role and nature of support networks. Practical Implications Our findings provide guidance on how different types of niche innovators can be better positioned to facilitate the transition to a CE. Relevance/ contribution Our intended contributions are twofold. First, it provides a typology of niche innovations in relation to CE, in the specific context of digitalization as a landscape-level transition. Second, for this specific context, we show the interconnections between the niche and the regime levels.