A new study by Johannes Kepler University Linz (JKU), Austria explores how companies are using smart, connected technologies to push the circular economy from theory into practice. The research, based on interviews with 43 experts across 27 industrial organizations, shows that digitalization—especially the Internet of Things (IoT)—is becoming a powerful enabler of longer-lasting products, improved resource efficiency, and new service-based business models.
The circular economy aims to keep products and materials in use for as long as possible through strategies such as maintenance, repair, reuse, remanufacturing, and recycling. But companies often lack the information needed to make these strategies work. Products move through complex supply chains, data sits in separate systems, and firms struggle to coordinate actions with customers and partners. According to the authors, smart technologies can close these information gaps and create “smart circular systems.”
The study identifies 20 concrete activities companies can adopt, organized into a “funnel” of five interconnected layers. At the foundation are cross-strategy activities—the digital backbone that links products, firms, and customers. These include building strong product lifecycle management systems, developing condition-monitoring tools, and feeding real-world use data back into product design.
The next layer, smart use activities, focuses on improving how customers operate products. Through apps, remote control, performance benchmarking, and safety tools, companies can better understand user behavior while offering a smoother customer experience. These insights often form the starting point for deeper circular initiatives.
The heart of smart circularity lies in four strategy-specific activity sets. Smart maintenance and repair helps firms predict failures, guide users through do-it-yourself fixes, and manage warranties or spare parts more efficiently. Smart reuse uses tracking technologies to boost transparency, streamline logistics, and encourage customers to treat products with care—essential for rental and sharing systems. Smart remanufacturing relies on digital data to secure timely product returns, assess wear, and even trigger upgrades during refurbishment. Finally, although less developed, smart recycling uses data to improve take-back and quantify material flows.
The authors argue that these activities are most effective when combined into a coherent system. Companies typically start with smart use or maintenance and gradually progress toward more advanced circular strategies. Service-based business models—where companies retain ownership of products—create especially strong incentives to adopt the full funnel.
Overall, the study offers managers a practical roadmap to build smarter, more circular business models by combining digital tools with sustainability goals.
Reference
- Alcayaga, A., & Hansen, E. G. (2025). Smart circular economy as a service business model: an activity system framework and research agenda. R&D Management, 55(2), 508–530. https://doi.org/10.1111/radm.12707
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Full Professor and Head of the Institute of Integrated Quality Design (IQD) at Johannes Kepler University (JKU) Linz, Austria and Visiting Fellow at the Centre for Sustainability Management (CSM), Leuphana University of Lüneburg, Germany and Cambridge University, Institute for Manufacturing (IfM). His research focuses on managing circular, greentech, and sustainability-oriented innovations at the level of products, product-service systems, and business models, including the supporting role of standards and digitalisation.
With +14k Google Scholar citations and several Clarivate Highly Cited Papers, he is ranked in the world’s Top 2% Scientists by Elsevier/Stanford University. He is a Member of the Editorial Boards of the prime sustainability management journals Organization & Environment and Business Strategy and the Environment.
Erik is Founder and Scientific Programme Manager of the MBA Sustainable Business & Circular Economy at LIMAK Austrian Business School. He is also a frequent keynote speaker in events for industrial, political, and societal decision makers. As part of acatech – National Academy of Science and Engineering, Erik was appointed Member of the Steering Committee of Circular Economy Initiative Deutschland and Scientific Head of the Working Group on “Circular Business Models”. He is member of the circular economy advisory board of DIN German Institute for Standardization. He served as a mentor in the Schmidt-MacArthur Fellowship programme of the Ellen MacArthur Foundation (EMF)
Independent consultant and researcher with over 15 years of international experience spanning Europe and Latin America. He bridges research, policy and practice to accelerate systemic transformation towards a sustainable and digital future. He specialises in the circular economy, digital technologies and business model innovation, combining strategic, technological and policy-driven perspectives to guide organisations through the twin transition. With experience across research institutions and companies, Andres has driven high-impact projects on digital product passports, smart products and circular value chains. His cross-sector expertise, from manufacturing and textiles to services, enables him to design governance systems, tools and strategies that foster data-driven circular business models. He has contributed to European and internationally funded projects, authored influential publications and lectured at universities.