A Comparative Analysis of Servitization and Sharing
Economy Adoption by Thomas Linnenbank
The transition to circular systems requires more than recycling infrastructure. It demands fundamental business model innovations that rethink how value is created and captured. This article examines how firms in Portugal and Germany are adopting servitization (product-as-a- service models) and sharing economy platforms, exploring what these patterns reveal about the economic viability of circular transitions.
The Current State: Nascent but Growing
Both countries demonstrate that circular business model innovations remain in early stages, though adoption patterns differ markedly. In Germany, servitization appears primarily in specialized sectors such as commercial lighting, aviation, and office equipment leasing. Portuguese implementation remains more scattered, featuring digital recycling platforms, upcycling initiatives, and emerging rental systems, particularly through deposit return mechanisms in hospitality.
The investment landscape reveals these different maturity levels starkly. German private investment in circular economy sectors reached €39.5 billion by 2023, representing 164% growth since 2014. Portuguese investment reached €1.78 billion over the same period. This substantial gap signals divergent market development stages.
Economic Benefits and Resource Efficiency Gains
Where implemented successfully, these business models deliver tangible benefits. Servitization enables manufacturers to minimize material costs over extended timeframes by retaining product ownership and designing for durability and remanufacturing. As-a-service models achieve the highest resource productivity by aligning producer incentives with longevity rather than volume sales.
However, survey evidence from 293 respondents reveals moderate overall acceptance, with German public respondents scoring notably higher (62.23) than Portuguese counterparts (47.78) on the Business Model Acceptance Index. Portuguese experts demonstrated substantially higher acceptance (68.75) compared to their public, indicating expertise- dependent adoption patterns more pronounced in emerging contexts.
The Barriers: Why Adoption Remains Limited
Three categories of barriers constrain broader adoption. First, capital intensity creates
financial hurdles, as retaining product ownership imposes substantial upfront costs before
revenue generation begins. Transitioning from product sales to service leasing creates initial
revenue challenges that many firms struggle to navigate.
Second, consumer behavior challenges persist. Convenience expectations limit model viability, with consumers often preferring ownership despite environmental messaging. Survey analysis reveals a critical attitude-behavior gap: respondents recognize the relevance of circular business models but demonstrate limited willingness to pay premiums.
Third, operational complexities including reverse logistics requirements and quality control protocols for returned products demand capabilities many firms have not yet developed. These universal challenges transcend infrastructure development, suggesting that business model barriers differ fundamentally from the infrastructure deficits constraining waste management systems.
Economic Confidence: The Missing Link
Both Portuguese and German experts scored significantly higher than their publics on the Competitive and Economic Acceptance Index, demonstrating that confidence in circular economy’s economic value proposition concentrates among specialists. Survey respondents expressed considerable uncertainty regarding competitive advantages, with this index exhibiting the second-lowest scores and second-highest variability among all measured dimensions.
This perception gap suggests that economic benefits, while demonstrable in implemented cases, remain insufficiently communicated to broader audiences. Circular business models must not only deliver economic value but also visibly demonstrate that value to potential adopters and consumers.
Implications: Context Matters
The comparative analysis reveals that business model innovation adoption depends less on infrastructure maturity and more on financial mechanisms, cultural readiness, and demonstrated economic viability. Germany’s advantage stems from established financing structures, consumer familiarity with leasing models, and accumulated market evidence of economic benefits.
For policymakers, supporting circular business model adoption requires different tools than waste infrastructure development. Collaborative financing structures connecting research, regulatory, and banking communities prove effective. Public awareness campaigns must address both knowledge gaps and economic confidence deficits.
For businesses, the evidence demonstrates that circular business models can generate economic value through extended product lifetimes and reduced material costs. However, success requires addressing upfront capital barriers, managing reverse logistics complexity, and clearly communicating value propositions that overcome persistent attitude-behavior gaps.
The transition to circular business models proceeds unevenly across Europe, shaped by market readiness, financial innovation, and demonstrated economic viability. Both Portugal and Germany face similar fundamental challenges in scaling these innovations, suggesting that solutions may transfer more readily than infrastructure-dependent waste management practices.
This article was written by Thomas Linnenbank. As part of his academic work, Thomas conducted an interview with CEP and we invited him to share his findings in this article. The text is a short summary of Thomas’ master’s thesis in management at the Nova School of Business and Economics, that focused on the circular economy – a comparative analysis of business practices in Portugal and Germany.
