Journal of Cleaner Production 223 (2019) 25e35

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

A framework for sustainable value propositions in product-service

systems
Heidi Simone Kristensen a, b, *, Arne Remmen b
a
HOLMRIS B8 Circular, Odinsvej 5, 8850 Bjerringbro, Denmark
b
Aalborg University, Department of Planning, Rendsburggade 14, 9000 Aalborg, Denmark

a r t i c l e i n f o a b s t r a c t

Article history: Product-service systems (PSS) have received attention as having the potential to meet customers’ needs
Received 8 January 2018 by combining products and services, decrease environmental impacts and provide business opportu-
Received in revised form nities for industry. PSS have the potential to facilitate sustainable production and consumption and
22 February 2019
support a transition towards a circular economy (CE). The environmental sustainability is often high-
Accepted 7 March 2019
Available online 11 March 2019
lighted as a driver for and a result of PSS. However, the social dimension and the shared value created by
PSS have not yet achieved the same attention. In this paper, a framework for sustainable value propo-
sitions in PSS is developed with the aim to map and understand the potential sustainable value prop-
Keywords:
Product-service system (PSS)
osition based on the three core elements of PSS: product, service and system and by investigating the
Sustainable value proposition economic, environmental and social value proposition and the type of interaction required for each
Value creation dimension. The framework thus provides insight into the enlargement of value, when focus shifts from
Circular economy product to service to system. The proposed framework is exemplified by a case study of school furniture
Learning environment and learning environments in Denmark, where the experiences highlight that an understanding of value
proposition in a system perspective provides a broader recognition of value for multiple stakeholders. In
a product perspective for school furniture, the sustainable value proposition entails price and invest-
ment; comfort and design; and narrowing resource loops. In a service perspective, the sustainable value
proposition entails a focus on reducing total cost of ownership; service employment; and slowing
resource loops. Lastly, a system perspective entails a sustainable value proposition of solutions to societal
problems through innovative design and economic savings via rental agreements; better work envi-
ronment and improved learning outcome; and closing resource loops. The type of interaction changes
from transactional to partnerships when moving from a product to a system focus.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction narrowing, slowing and closing resource loops (Bocken et al.,

The manufacturing and consumption of products and services
in industrial societies is responsible for significant impacts on the
environment and the society (UNEP, 2010). These unsustainable
production and consumption patterns make the foundation of
the current linear take-make-waste economy. The circular
economy (CE) is receiving increasing attention as a way to meet
the current challenges of unsustainable production and con-
sumption, increasing population, climate change etc. (The Ellen
MacArthur Foundation, 2012). CE is an economy that entails
* Corresponding author. HOLMRIS B8 Circular, Odinsvej 5, 8850 Bjerringbro,
Denmark.
E-mail addresses: hsk@plan.aau.dk (H.S. Kristensen), ar@plan.aau.dk
(A. Remmen).
2016), and aims at improving the balance between the econ-
omy, the environment and the society (Ghisellini et al., 2016;
Korhonen et al., 2018). CE is viewed as a driver for sustainable
development, and the concepts of sustainable and circular busi-
ness models are closely connected in literature (Antikainen and
Valkokari, 2016). New sustainable business models and product
design strategies are developed to support a transition from a
linear economy to a CE by decoupling economic growth from
environmental and social degradation (Bocken et al., 2014, 2016;
Ceschin and Gaziulusoy, 2016). Including CE considerations in
business model development requires rethinking the value cre-
ation logic (Nubholz, 2017). A key element to circular business
model innovation is thus to innovate the value proposition to
include circular strategies, e.g. product life extension, design for
durability and repair (Nubholz, 2017).

https://doi.org/10.1016/j.jclepro.2019.03.074
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
26 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
Product-service systems (PSS) is highlighted as a business
model having potential to facilitate a societal transition towards CE
and sustainability (Beuren et al., 2013; Kuijken et al., 2017; Vezzoli
et al., 2015). PSS is defined as systems that ‘consists of a mix of
tangible products and intangible services designed and combined so
that they jointly are capable of fulfilling final customer needs’ (Tukker
and Tischner, 2006, p. 1552). PSS holds a potential to support a
transition towards CE by shifting incentives for companies to pro-
long the service life of products, which make them more cost- and
resource-effective (Tukker, 2015). PSS is also a potential instrument
for supporting a sustainable development in society (Reim et al.,
2015), thereby expanding the benefits from CE (i.e. economic and
environmental) to include the last pillar of sustainability, i.e. the
social dimension. CE does not put attention to social aspects in itself
(Geissdoerfer et al., 2017), but to achieve a successful CE, consid-
erations to all three pillars of sustainability must be included
(Korhonen et al., 2018; Murray et al., 2015). Zacho et al. (2018) point
towards the importance of including a broader conceptualization of
value when applying CE principles to ensure that CE aims at sus-
tainable development and not economic gain only. Transforming
society towards more sustainable production and consumption
patterns require radical changes and cannot be solved purely by
“technological fixes” (Evans et al., 2017). Business model innovation
and experimentation is one of the tools necessary to support this
transformation, and business model innovation should conse-
quently be ambitious and aim to maximize environmental and
societal benefits and not just economic gains (Evans et al., 2017).
While the concept of PSS is well described in academic literature
(e.g. Annarelli et al., 2016; Boehm and Thomas, 2013; Reim et al.,
2015), the sustainable value proposition in a system perspective
is not yet widely investigated and understood (Annarelli et al.,
2016; Bocken et al., 2014; Kuijken et al., 2017). In order to link CE
and sustainability, the value proposition of CE has to be further
explored (Bocken et al., 2016; Moreno et al., 2016). This paper ex-
plores the sustainable and circular value proposition of PSS, as this
has not been the focal point of previous research. We aim at
introducing a focus on sustainable value creation (Hart and
Milstein, 2003; Porter and Kramer, 2011) and give attention to
the system perspective as more than a collection of products and
services, but as a sustainable transition of society (Ceschin, 2014).
Hence, the research question guiding this study is: What can
sustainable value propositions offer using product, service and
system as a key framework?
The purpose is thus to provide a conceptual framework for
mapping and understanding the sustainable value proposition in
PSS and use that framework to explore the different values
depending on the focal point of the business model (i.e. product,
service or system). The framework is applied to a case study of
school furniture in Denmark with three different conceptual busi-
ness models tested; from the traditional perception of table and
chairs as the interior design of classrooms towards innovative
learning environments encompassing the different learning styles
and needs of students. This paper is a contribution to the research
field of sustainable business models in CE by providing a system
perspective on value propositions within PSS.
The paper is structured as follows. Section 2 covers the back-
ground for this study by presenting the concept of PSS in scientific
literature. The research design and methodology for developing
and testing the framework is presented in section 3. A brief
literature review on sustainable value creation in section 4 pro-
vides the foundation for the proposed framework, which is pre-
sented in section 5. The framework is then applied to a practical
case of school furniture and learning environments in Denmark in
section 6. Finally, we discuss and conclude this paper in section 7
and 8.
2. Product-service systems
This section provides a brief introduction to the concept of PSS
by defining the concept, analyzing existing research streams, and
identifying research gaps.
2.1. Defining PSS
Many definitions of PSS have been introduced since the end of
1990’s where one of most cited definitions was presented by
Goedkoop et al. (1999). Table 1 provides an overview of twelve
different definitions of PSS as well as a mapping of relevant aspects
covered by the definitions. The aspects are concept of system,
customer needs, effect on environment, social aspects and partner-
ships and networks and infrastructure as brought forth by Annarelli
et al. (2016) as main ideas in existing PSS definitions. The system
perspective in Table 1 represents a traditional PSS view of system as
the combination of tangible products and intangible services
(Annarelli et al., 2016; Tukker, 2004). Value creation is added to
investigate to which extent the current definitions of PSS include
this, since the aim is to investigate the sustainable value proposi-
tion in PSS.
From Table 1, evidence is provided that PSS is focused on
delivering a combination (concept of system) of products and ser-
vices that is able to fulfill customer’s needs. Sustainability (effect on
environment and social aspects and partnerships) is rarely included
as key aspects, despite the original intended link between PSS and
sustainability (Annarelli et al., 2016).
Only the most recent definitions, e.g. Vezzoli et al. (2015) and
Annarelli et al. (2016) include all dimensions of sustainability,
which indicate a renewed focus on the original potential of
achieving sustainable development through PSS. In addition, value
creation is rarely included in the definitions of PSS. Some authors
touch upon a broader notion of value for multiple stakeholders, and
the notion of value is highlighted by several authors as an impor-
tant part of a successful PSS (e.g. Baines et al., 2007; Kuijken et al.,
2017; Lee et al., 2015). However, the current understanding of value
creation is mainly related to customers and not society as such.
Tukker (2004) discusses the concept of economic value added in
relation to PSS, which also includes intangible value as a subjective
value for the consumer. This can best be described as ‘turning or-
dinary products into extraordinary experiences’ (Tukker, 2004, p.
251). Also, Kuijken et al. (2017) argue that for PSS to function
effectively, added value for customers must be provided by
ensuring that the PSS deliver greater customer benefit and value
than if the products and services were available separately. The
value aspect of PSS is often presented as the fulfillment of customer
needs and does not aim at creating value in a societal perspective.
In order for PSS to support a shift towards a sustainable and circular
economy, a broader understanding of value should be applied.
PSS consists of three key elements, which is defined by
Goedkoop et al. (1999) as:
1) Product: a tangible commodity manufactured to be sold. It is
capable of falling on your toes and of fulfilling a user’s needs
2) Service: an activity (work) done for others with an economic
value
3) System: a collection of elements including their relations
This definition of system above as a “collection” is however a
narrow understanding of the system perspective in CE, as it does
not include the value generated by broader solutions to societal
problems. CE requires changes in all levels of society (Preston,
2012), and solutions should move from operational optimization
that focuses on reducing harm towards systems building focusing on
 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35 27

Table 1
Overview of PSS definitions and their main aspects (modified and expanded from Annarelli et al., 2016).

Author(s) Definition Aspects in definition

Concept Customer Effect on Social aspects Networks and Value

of needs environment and infrastructures creation
system partnership

Goedkoop A marketable set of product and services capable of jointly fulfilling a user’s need. x x
et al. The PS system is provided either by a single company or by an alliance of
(1999) companies. It can enclose products (or just one) plus additional services. It can
enclose a service plus an additional product. Product and service can be equally
important for the function fulfilment.
Manzini A business innovation strategy offering a marketable mix of products and x x x
et al. services jointly capable of fulfilling clients’ needs and/or wants - with higher
(2001) added value and a smaller environmental impact as compared to an existing
system or product.
Mont (2002) PSS should be defined as a system of products, services, supporting networks and x x x x
infrastructure that is designed to be: competitive, satisfy customer needs and
have a lower environmental impact than traditional business models.
Tukker A system consisting of tangible products and intangible services designed and x x
(2004) combined so that they jointly are capable of fulfilling specific customer needs.
Morelli A PSS is a social construction, based on ‘‘attraction forces’’ (such as goals, x x
(2006) expected results and problem-solving criteria) which catalyse the participation
of several partners. A PSS is the result of a value co-production process within
such a partnership. Its effectiveness is based on a shared vision of possible and
desirable scenarios.
Baines et al. A PSS can be thought of as a market proposition that extends the traditional x
(2007) functionality of a product by incorporating additional services. Here the
emphasis is on the ‘sale of use’ rather than the ‘sale of product’.
Neely A Product-Service System is an integrated product and service offering that x
(2008) delivers value in use.
Geng and Products and services are integrated and provided as whole set to fulfill x x
Chu customer’s requirements, and the product/service ratio can vary in different
(2012) customer using contexts.
Boehm and A Product-Service System (PSS) is an integrated bundle of products and service x x (x)
Thomas which aims at creating customer utility and generating value.
(2013)
Reim et al. PSS are defined as a marketable set of products and services that are capable of x x
(2015) jointly fulfilling customers’ needs in an economical and sustainable manner.
Vezzoli et al. An offer model providing an integrated mix of products and services that are x x x x x
(2015) together able to fulfil a particular customer demand (to deliver a ‘unit of
satisfaction’), based on innovative interactions between the stakeholders of the
value production system (satisfaction system), where the economic and
competitive interest of the providers continuously seeks environmentally and
socio-ethically beneficial new solutions.
Annarelli PSS is a business model focused toward the provision of a marketable set of x x x x
et al. products and services, designed to be economically, socially and
(2016) environmentally sustainable, with the final aim of fulfilling customer’s needs.

creating a net positive impact and societal changes (Adams et al.,
2016). In other words, system in PSS is more than just a collection
of elements, but include value propositions, type of interactions among
stakeholders, and solutions to societal problems.
2.2. PSS research streams
Since the work of Goedkoop et al. (1999), the concept of PSS has
received increasing attention in different research fields (Boehm
and Thomas, 2013). Many aspects of PSS have been studied dur-
ing the past two decades, e.g.: conceptualization and clarification
(Goedkoop et al., 1999; Mont, 2002); classification of PSS offerings
(Gaiardelli et al., 2014; Tukker, 2004); business model elements of
PSS (Barquet et al., 2013; Mont et al., 2006; Reim et al., 2015);
design of PSS (e.g. Song and Sakao, 2017; Vasantha et al., 2012;
Vezzoli et al., 2015); consumer perspective on PSS (Armstrong
et al., 2015; Catulli, 2012; Mylan, 2015); assessment of PSS perfor-
mance (Chou et al., 2015; Lindahl et al., 2014; Xing et al., 2013); and
value centered PSS design (Bertoni et al., 2013; Kuijken et al., 2017).
Annarelli et al. (2016) found that the majority of academic
literature on PSS focus on application of PSS; characteristics of PSS;
or PSS development/design, while only a few studies focus on
sustainability as the main topic, either through economic analysis
(16% of reviewed papers) or social/environmental analysis (15% of
reviewed papers). This also confirms the aim of this research, as
sustainability represents one of the less studied aspects of PSS in
current literature. In recent years, CE has entered the PSS scene:
Corvellec and Stål (2017) explored the waste effect of PSS;
Gelbmann and Hammerl (2015) focused on re-use aspects in PSS;
Fadeyi et al. (2017) focused on remanufacturing in PSS; and Pialot
et al. (2017) used the concept of “upgradable” PSS to explore new
sustainable production and consumption patterns.
A common classification of PSS, often applied by researchers, is
the trichotomy of product-oriented PSS, use-oriented PSS and
result-oriented PSS (e.g. Baines et al., 2007; Mont, 2002; Tukker,
2004). This classification aims at capturing the shift towards
more result-oriented and intangible PSS where the service and
system part is much more dominant. Van Ostaeyen et al. (2013)
argue that this classification is not able to capture the complexity
and multiplicity of PSS as it is based too strictly on the allocation of
property right, and does not distinguish well between different
subtypes of PSS. This criticism of the classic trichotomy has a point,
but our main critique is focused on the lack of a comprehensive
system perspective, and the three core elements of product, service
28 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
and system is thus proposed as the key distinguishers of value
propositions in PSS in this paper. The system perspective is seen as s
specific type of PSS value proposition and not just the combination
of products and services.
3. Research methodology
The research is iterative, inductive and combines a literature
review and a single-case study. The presented literature review on
sustainable value provides the foundation for developing the
framework for sustainable value propositions in PSS. The frame-
work was developed while the case unfolded, thus providing an
iterative research methodology, where the case continuously pro-
vided feedback to the proposed framework and supported further
refinement and clarification.
As PSS is widely studied within academic literature, existing
reviews presented by e.g. Baines et al. (2007), Boehm and Thomas
(2013), Beuren et al. (2013), Tukker (2015), Reim et al. (2015),
Vezzoli et al. (2015), and Annarelli et al. (2016) provide sufficient
coverage of the existing literature concerning PSS, and have pro-
vided the basis for the background presented in section 2. A non-
exhaustive literature review was conducted on sustainable value
to develop the framework for sustainable value proposition in PSS.
The search was conducted in two databases: ScienceDirect and
Scopus, limited to articles in English and published before June
2018. The search words used were ‘sustainable’/’sustainability’
combined with ‘value creation’, ‘value proposition’ or ‘triple-bot-
tom line’/’TBL’. Only articles defining and conceptualizing sustain-
able value was included for review, and we focused on articles
within the business model literature. Relevant references cited in
the identified publications were also included in the review as
recommended by Fink (2014) to ensure a more comprehensive
review. Only a conceptual analysis was performed, as the goal was
to define the concept of sustainable value in order to provide the
theoretical foundation for developing the framework for sustain-
able value proposition in PSS.
To provide an empirical application of the presented framework,
a single-case study is applied, as it is a useful method to test early
stages of research as well as testing theories (Myers, 2013). We
followed the recommendations of Eisenhardt (1989) and Yin (2014)
for development and structure of the case study. The case company
is a Danish furniture company, who is specialized in school furni-
ture for educational centers (i.e. primary schools, high schools,
universities etc.). The company has for several years been engaged
in sustainable business development and had great interest in
developing new sustainable and circular business models. The au-
thors have collaborated with the company in developing a new
sustainable and circular business model since 2015. The authors
have thus participated in the iterative process of developing and
refining the business model. Data for the present study were
gathered through multiple sources (i.e. case company, customers
and suppliers) to analyze and explain the case, which helps to
ensure the validity of the study (cf. Yin, 2014). From September
2015 to June 2017, approximately 15 meetings were held with
strategic- and operational-level personnel at the case company (i.e.
CEO, project manager, product developer and supply chain man-
ager); four interviews were made with three different suppliers;
and seven interviews were conducted with customers and users at
Danish schools (six primary schools and one high school). In-
terviews at the schools were supported with observations of users
of school furniture to provide insights into the needs and usage of
furniture in schools. From July 2016 to June 2017, the authors also
took part in supporting the development of a new tender for a
framework agreement for school furniture in the local municipality,
prioritizing CE and new learning environments in the tender
documents. The authors have been able to follow the development
of both a circular business model and a public tender for school
furniture focused on CE, enabling a broader understanding of the
potential value propositions. To support the data gathered from
interviews and meetings, we also performed document studies;
reviewing reports, white papers etc. from the case company and
other stakeholders. Interviews were recorded and transcribed to
enable data-driven coding. A case study protocol was thus con-
structed, capturing case study notes, minutes, documents, inter-
view transcripts and notes.
The data gathered in the case study was coded using a data-
driven approach (Gibbs, 2007). During this process, five themes
emerged as relevant to new circular business models: changing
mindsets, flexibility in contract, value creation, collaboration/interac-
tion and sustainability. Table 2 provides an overview of the emerged
themes, split into case company, suppliers and customers. One of
the core themes was collaboration, as all informants pointed to new
ways of interacting when shifting from traditional product sales to
selling service or systemic solutions.
4. Sustainable value creation
Traditional business models often focus on creating, delivering
and capturing economic value (Evans et al., 2017), which entails a
narrow focus on economic performance, consequently leaving
environmental and social value in the background: “Value is
implicitly and uniquely measured by financial metrics with no refer-
ence to social or environmental impacts.” (Upward and Jones, 2016, p.
100). Sustainable business requires a more comprehensive under-
standing of value also integrating social and environmental objec-
tives (Bocken et al., 2013; Evans et al., 2017), and the complexity of
sustainability needs to be understood in order to deliver sustain-
able value (Hart and Milstein, 2003; Porter and Kramer, 2011).
The idea of including social and environmental goals in business
is far from new, and some companies are applying the triple bottom
line (Elkington, 1997) in business development. Several tools and
concepts have been developed to support companies in including
sustainability in business models, such as the value mapping tool
(Bocken et al., 2013), the triple-layered business model canvas
(Joyce and Paquin, 2016), the sustainable value framework (Hart
and Milstein, 2003), the value cycle (Barber et al., 2012), shared
value (Porter and Kramer, 2011), sustainable value added (Figge and
Hahn, 2004), the shared value creation framework (Bocken, 2015),
the value framework (den Ouden, 2012), and the sustainable value
analysis tool (Yang et al., 2017b). However, the current under-
standing and inclusion of environmental and social considerations
in business models are often focused on using methods such as life
cycle assessment (LCA), social LCA and stakeholder management
(Jørgensen, 2013; Joyce and Paquin, 2016; Upward and Jones, 2016).
The sustainable value creation have traditionally been focused on
the company’s own production and processes in the upstream
supply chain, e.g. environmental and social impacts on local envi-
ronment, workers and local communities (Adams et al., 2016;
Upward and Jones, 2016). Sustainable value is consequently often
perceived as the ability to translate environmental and social value
Table 2
Overview of themes emerged from case study.
Theme Case company Customers Suppliers
Changing mindsets x x x
Flexibility in contract x
Value creation x x
Collaboration/interaction x x x
Sustainability x x
 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
into monetary terms (Figge et al., 2006; Hart and Milstein, 2003).
However, as argued by Manninen et al. (2018), environmental value
should be seen as an absolute value and not an instrumental value
used to create economic value. In addition, social value should also
be seen as an absolute value. In this paper, we thus aim to take a
non-reductionist approach to value, inspired by Zacho et al. (2018,
p. 299), who argue that ‘it is not possible, nor desirable, to reduce all
values to one (monetary) value’.
As CE emerges as a unifying concept supporting sustainable
development, understanding and documenting the economic, so-
cial and environmental value of CE is essential (Korhonen et al.,
2018; Zacho et al., 2018). Fig. 1 illustrates the three key elements
of sustainable value proposition, namely people (social), profit
(economic), and planet (environmental). In general, value propo-
sition deals with ‘what value is provided and to whom?’ (Bocken and
Short, 2016, p. 44). A broader understanding of value propositions
was presented by den Ouden (2012, p. 117): ”Value propositions are
those multifaceted bundles of product, service, price, communication
and interaction that customers experience in relationship with the
supplier. It is the customer’s perception of the proposition that is
important, not the supplier’s.”
This conceptualization of value propositions as multifaceted
bundles enables a better understanding of the complexity that
emerges when integrating sustainability into the value proposition
of business models. As sustainability and sustainable development
requires a system perspective (Stahel, 2015), sustainable value
entails a nuanced perception of value for different stakeholders
(Hart and Milstein, 2003). Applying a stakeholder perspective en-
ables companies to consider society and the environment as key
stakeholders in business model innovation (Bocken, 2015). This
means that in a CE, companies must rethink their value proposition
to entail value creation for multi-stakeholders, including cus-
tomers, suppliers, employees, society and planet (Evans et al., 2017;
Short et al., 2013; Yang et al., 2017b).
5. The sustainable value proposition framework
The concept of value creation in a system perspective is elabo-
rated in this paper, as the system perception is highlighted by many
as a key element in PSS and CE (Evans et al., 2017; Stahel, 2015;
Vezzoli et al., 2015). However, the value created in a system
perspective for different stakeholders is not yet widely understood.
We therefore propose a framework to map and understand the
potential sustainable value proposition in business models, shown
in Fig. 2. The framework is built on the three core dimensions of PSS
(i.e. product, service and system), and these dimensions are used as
the key distinguishers of value propositions in PSS. In addition, to
Fig. 1. Sustainable value proposition, based on (Bocken, 2015).
29
understand the different value propositions, the framework is also
divided into four dimensions: economic, social, environmental and
type of interaction, based on the three core dimensions of sustain-
able value proposition (Bocken, 2015) and one of the key themes
that emerged during the case study; collaboration/interaction.
In the framework, PSS is thus seen as a three-step enlargement
of value propositions, moving from product to service to system.
The traditional outline of PSS represents a scale of tangibility and
intangibility (Tukker, 2004), hence presenting a potential to shift
from a focus on materiality (i.e. product) towards non-materiality
(i.e. system). We argue that this shift from materiality to non-
materiality also implies a shift from non-social to social, as the
focus changes from products and user satisfaction to solving soci-
etal challenges, which includes multiple stakeholder relations. The
focus of the framework is on value creation beyond impact reduc-
tion, risks and compliance. The purpose is to illustrate the differ-
ences between traditional product sales; product sales with added
service; and lastly complete systems designed with a combination
of products and services and with a broader value proposition.
Firstly, product represents the traditional transactional business
model focused on product price, design and sale. Secondly, service
represents the addition of service to an existing product portfolio
e.g. through service contracts. Lastly, system represents a wider
understanding of creating value through new solutions, combining
products and services, including a sustainable and shared value
perspective. Service encompass product, while system embodies
both product and service. This is particularly the case for the
dimension of environmental value proposition, as a system
perspective requires narrowing, slowing and closing strategies
(Bocken et al., 2016). Fig. 2 illustrates the sustainable value prop-
osition framework, which shows how the value proposition is
enlarged when shifting focus from product to service to system.
However, the different value propositions are not separate di-
mensions, as a system perspective requires considerations related
to product and service as well. Consequently, the presented
framework is a simplification of sustainable value propositions, as it
in reality is more complex than that.
As a brief example of the different business offerings, one can
view wind energy. As a product, the company is selling wind tur-
bines. In a service perspective, the company is offering service
contracts to wind turbines or pay-per-unit. However, as a system,
the company is providing a sustainable transition of the energy
system, including synergies with supporting solutions and enabling
technologies, e.g. electric cars, as well as entering into partnerships
with other companies, e.g. solar power, mobility companies, etc.
5.1. Economic value proposition
Within product focused PSS, the economic value proposition
focuses on the customer acquiring ownership of the product and
the company relies on the sale price and two years warranty
(Barquet et al., 2011). A shift from selling products to servitized
products involves a broader perspective on the economic value
proposition, as it entails life-cycle thinking, since the addition of
services require reflections regarding the product use. Total cost of
ownership (TCO) can provide insights into the actual costs by
including the sum of the costs related to the acquisition, use and
disposal (Ellram, 1995). Most TCO models are based on monetary
accounting, and the value-based understanding is often expressed
in monetary terms such as company reputation, products avail-
ability, downtime, etc. (Saccani et al., 2017). The system perspective
requires fundamental changes in the business model and provides
an opportunity to understand and utilize PSS as a tool to deliver
sustainable value by addressing societal challenges. Companies can
generate economic value by creating societal value and solutions to
30 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
Fig. 2. The sustainable value proposition framework. Narrowing, slowing and closing refer to CE resource loops, presented by (Bocken et al., 2016).
grand challenges. A system perspective on the economic value
proposition can be seen as system value of solution. This enables a
new understanding of the needs to be met, which products and
services to offer and how to configure the value chain to deliver
shared value. The system perspective on the combination of
products and services thus represent a new perception of value
creation as more than monetary, and for a broader range of
stakeholders.
5.2. Social value proposition
The social dimension has often been related to “do less harm”
and to compliance - the traditional aspects of Corporate Social
Responsibility (CSR). However, the social value proposition must
take into consideration a larger conceptualization of social value, as
the needs to be met broadens from the individual user to the so-
ciety, which means the value embodies more elements. The sus-
tainable value proposition in PSS requires a broader understanding
of value recipients, as the network and system approach to PSS
expands the traditional focus on value for supplier, provider and
direct user/customer. In general, companies’ responsibilities have
begun to exceed their own boundaries and consequently include
society and sustainability issues (Sulkowski et al., 2017). In the
same way, companies providing PSS also expand their perception of
value to include multiple value recipients, society and sustainability
issues to understand the different value created in the solution
provided. As a product, the primary customer/user of the product is
the main value recipient, and the value is closely connected to the
product, e.g. usability, comfort etc. Service-oriented implies a
broader and different strategy to social value creation. By adding
services, it is possible for customers to experience added value
(directly linked to the product) as well as reduction of adminis-
trative burdens through improved customer satisfaction and con-
venience (Chou et al., 2015). In a system perspective, society must
be considered as one of the main value recipients, and conse-
quently solving societal issues by providing systemic solutions (den
Ouden, 2012).
5.3. Environmental value proposition
Traditionally, the environmental dimension of a business model
is focused on using LCA to calculate the environmental impacts of a
product or service (e.g. Joyce and Paquin, 2016), and improving the
environmental performance. Reducing environmental impacts of
products have been the focal point for companies in many years,
thus demonstrating resource efficiency and the ability to narrow
resource loops (Bocken et al., 2016), resulting in ‘less bad’ products
(Moreno et al., 2016). Since the 1980s, companies have increasingly
been exploring the potentials of servitization to improve business
(Oliva and Kallenberg, 2003; Spring and Araujo, 2013;
Vandermerwe and Rada, 1988), thus making service innovation
and service contracts a part of business strategies. The reasoning for
servitization of manufacturing companies have remained remark-
ably unchanged since the concept emerged; to capture new reve-
nue streams, increase profitability and sustain a competitive
advantage (Oliva and Kallenberg, 2003; Spring and Araujo, 2013;
Vandermerwe and Rada, 1988). Even though the environmental
performance has not been a key driver for servitization, it is ex-
pected that product life extension through service, maintenance
and repair can lead to a reduced environmental impact in a prod-
uct’s lifecycle (Chou et al., 2015) as well as having the potential of
slowing resource loops (Bocken et al., 2016). The last perspective of
system embodies both slowing resource loops and closing resource
loops, as well as potential considerations of narrowing resource
loops through take-back systems, refurbishment, design for circu-
larity and recycling (Bocken et al., 2016; Nubholz, 2017). In addition,
the system perspective also includes potential dematerialization as
functionality becomes the core strategy for developing business
offerings (Maxwell and van der Vorst, 2003). The environmental
dimension is thus represented by the concepts of narrowing,
slowing and closing resource loops introduced by Bocken et al.
(2016).
5.4. Type of interaction
This part of the framework represents the relations needed to
realize the sustainable value creation in product, service or system
centered business models, and was presented as a key theme in the
case study. Within product centered models, the relations will take
form of traditional transfer of ownership from provider to customer
with no or limited interaction and collaboration, and with tradi-
tional contractual and non-collaborative supply chain management
in upstream relations (Formentini and Taticchi, 2016). For the ser-
vice perspective, the relations differ as collaboration in the supply
chain is needed, upstream and downstream. Firstly, upstream
collaboration will enable a cooperative approach to joint product
design for improved service. Secondly, downstream collaboration is
necessary to ensure knowledge of user needs and product usage to
enable optimal service design. For the system perspective, new
partnerships are necessary as it requires rethinking of the way a
 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
company does business (Adams et al., 2016). A system-oriented PSS
requires involvement of various stakeholders, which again requires
a better understanding of their capabilities, practices and cultures
(Kimita et al., 2015). The type of interaction consequently changes
from transaction-based to relationship-based (Gaiardelli et al.,
2014).
6. Case study of school furniture
School furniture is chosen as a case study to demonstrate the
applicability of the framework in practice, since this represents
three different ways of providing furniture to public schools in
Denmark. The case is based on a current transformation of public
schools in a Danish municipality from traditional classrooms to
innovative learning environments. This transformation corre-
sponds to the change presented by Cornell (2002) of a change in
learning and teaching paradigm from an Industrial Economy to a
Knowledge Economy. The application of the framework is demon-
strated in Fig. 3, putting emphasis on the expanded value creation
through a system perspective. The key points of the framework are
based on the case study and are thus grounded in the conducted
interviews.
Firstly, the product-oriented perspective represents sale of ta-
bles and chairs, which embodies a traditional 1:1 relationship in
the classroom: 1 teacher per class, 1 table and 1 chair per student
(Mehlsen, 2011). The value proposition includes traditional transfer
of product ownership from company to customer, which makes the
economic value proposition focused on product price, investment
costs and regular price competition. The environmental value
proposition is focused on ecolabels of furniture (e.g. FSC certified
wood and the Nordic Swan) and resource optimization and effi-
ciency in production of products. The social value proposition en-
tails a focus on classic design, quality and comfort, providing
ergonomic seating solutions.
The service-oriented perspective adds services to the existing
products at the schools. In this business model, the focus shifts from
optimizing production costs to optimizing service life, which en-
tails increased focus on quality, repair and maintenance. The eco-
nomic value proposition shifts to total cost of ownership (TCO), as
the use phase of products is considered, which in turn yields
Fig. 3. Application of the framework to the case of school furniture in Denmark.
31
improved customer satisfaction (Gebauer et al., 2005). The relations
thus broaden to include suppliers of the furniture, as collaboration
in the upstream supply chain is key for improving repair and
maintenance of products supplied downstream, which means that
sustainable supply chain management (Seuring and Müller, 2008)
is relevant to include in the interaction (Kristensen, 2016). The
environmental value proposition is focused on reducing the
environmental impact by slowing resource loops through product
life extension (Chou et al., 2015). The social value proposition en-
tails a reduction of the burden for technical staff at schools, as they
no longer need to maintain the furniture. In addition, employment
will be created by the providing company to take care of the service.
The social value created in the classroom does not differ much from
the product perspective, as the individual products will remain the
same. The main addition in the social value proposition is the ex-
pected employment for service and repair at the provider (or third-
party organization), which in turn might result in a reduced burden
on technical personnel at the school.
The system perspective entails a different overall understanding
of furniture in schools. Whereas the product- and service-oriented
offerings entail traditional classroom settings, the system offering
represent a new understanding of the actual needs of the users,
putting functionality and demand in the center of design (Van
Ostaeyen et al., 2013). Rethinking the purpose of classrooms and
a new focus on solving societal issue is required instead of purely
delivering products and services. In a system perspective, the
business offerings will not only aim to deliver innovative learning
environments that meet current demands and requirements, but
also support a sustainable development of society through sus-
tainable production and consumption and CE. The economic value
proposition is based on a renting scheme of learning environments
for a certain number of students, thus focusing on providing
functionality. This means low initial investment for the schools,
however more risk for the providing company. The environmental
value proposition entails both narrowing and slowing resource
loops as well as closing loops through the addition of take-back
systems, refurbishment and recycling. Designing sustainable
learning environments have to focus on the use of pure and sus-
tainable materials, and modular design that can ease refurbishment
and reuse of modules and materials. The social value proposition in
32 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
learning environments increases the scope and complexity of social
value, as the system perspective entails a broader understanding of
value for multiple stakeholders. Users of new learning environ-
ments in Denmark highlight improved learning and teaching, and
increased flexibility, comfort and wellbeing. To enable such renting
scheme of learning environments, new partnerships are necessary
(Adams et al., 2016; Kristensen, 2016) with closer collaboration
between provider, teachers, students and schools in order to clarify
needs and develop solutions. This process also prerequisites new
roles in the collaboration, as the provider shall function as a
consultant for learning as well as supplier of innovative furniture
solutions. Somehow, the system perspective thus represents a
paradigm shift from selling products to providing solutions, which
could be co-created with the final users, in this case the students
and the teachers. This requires new competences on the suppliers’
side regarding understanding the learning environments as well as
how to enter into co-creation processes with students and teachers
on defining flexible and sustainable solutions.
6.1. Focusing on the social value proposition
The case of school furniture indicates that the social dimension
of sustainability more clearly becomes part of the value proposition
when applying a system perspective in the business model: “[…]
sustainable design does not merely signify the integration of green
principles, but rather how the learning environment e social and
physical e can contribute to the development of the learner.”
(Lippman, 2010, p. 4). The social value proposition becomes rather
multifaceted, as the number of stakeholders is expanded to include
the students, teachers, parents, technical staff, etc. taking part in
the learning environments, as well as society and the planet. Po-
tential social value propositions are listed below to provide more
evidence for the outline in Fig. 3:
 Improved learning for students: An extensive study in public
schools in the UK concludes that the physical design and layout
of learning environments (e.g. light, sound, air quality, color,
flexibility, ownership and complexity) impact the learning
outcome of students in math, writing and reading (Barrett et al.,
2017). A properly designed learning environment can improve
students’ learning in math, writing and reading by 16% in the
elementary school (Barrett et al., 2017).
 Improved pedagogic opportunities for teachers: Flexible
learning environments that are designed to meet different
learning needs and styles, provides an opportunity for teachers
to explore new didactic styles in innovative classroom designs.
 Improved well-being of students and teachers: Fewer sick-days
due to less noise and disturbance in the classroom, which may
result in better working conditions for the teachers as well as an
improved learning environment for the students.
 More environmental conscious students: As we learn from
buildings, not just in them (Janda, 2011), school facilities affect
the learning outcome (Schneider, 2002). Sustainable learning
environments, spaces and schools that embody pro-
environmental values are likely to influence the environ-
mental behavior and value in students towards a more pro-
environmental attitude (Tucker and Izadpanahi, 2017). This is
of course more likely if the students are engaged in the main-
tenance and repair of the furniture as well as in the organization
of the flexible learning environments, where different learning
situations can take place at the same time. Hopefully, more
environmentally aware students will also give inspiration to
their own social practices related to consumption.
 Employment in social enterprises: To enable repair, mainte-
nance, take-back and refurbishment in high labor-cost
countries, such as Denmark, the providing company can estab-
lish a social enterprise or enter in a partnership with such. This
can provide meaningful employment for people on the edge of
the labor market.
An economic aspect considered in the case but not really
investigated was improved space management at the schools: by
designing flexible learning environments that are not restricted to
the existing four walls of classrooms, the schools will be able to
achieve a better utilization of space in buildings and include hall-
ways and other passive spaces in the learning situations.
7. Discussion
Traditional PSS is often classified as product-, use- or result-
oriented. The system has been seen as a “collection” of elements
or as an infrastructure to provide the combination of products and
services. The traditional system perspective focuses on the com-
bination of tangible products and intangible services (Tukker,
2004), while in the presented framework, the system perspective
has an independent character and a value proposition on its own
with value creation for multiple stakeholders through sustainable
solutions. Besides the new understanding and role of system in PSS,
presented in the framework, the interplay between the four di-
mensions of the framework also have to be considered. The
different value propositions are not separate, but overlaps may
occur between the dimensions. The framework provides a con-
ceptual separation of value propositions, while in reality it is not
possible to separate the different dimensions that clearly.
Traditionally, the economic and environmental value proposi-
tions have been in forefront in the focus on products and services,
while in the presented framework the social value proposition
becomes prominent due to the system perspective. Companies
tend to have a too narrow focus in their value creation, and is often
focused on the customer value, while not considering value for
society and environment. The proposed framework allows com-
panies to rethink their value creation and open their minds to a
larger understanding of value. The application of the framework on
learning environments demonstrates how the value enlarges
depending on the focal point of the business model, and points
towards the importance of integrating a system perspective in
business models for sustainability and CE. The solutions will then
not only entail economic gain for few actors in the supply chain, but
also create societal value and enable narrowing, slowing and clos-
ing of resource loops. The framework can thus be used as a mapping
tool by companies to map existing sustainable value propositions in
their business model. This mapping can then support the identifi-
cation of weak or blind spots in the company, and thus identify
improvement potentials and further developments, e.g. through
business model innovation towards CE or social sustainability.
The study presented is limited by only applying the framework
to a single-case study and not demonstrating the applicability
across industries or validating the framework through a multi-case
study. A point for further research is therefore to test the frame-
work in other industries and business areas as well as exper-
imenting with business models in each classification. As further
research direction, additional empirical research into the different
value aspects is recommended to deepen the understanding of
value in PSS and to provide empirical validation of this framework.
As we have focused on the positive values of PSS, further
research into the complexity of value is relevant, e.g. by utilizing the
concept of value uncaptured presented by Yang et al. (2017a), and
especially focusing on value destroyed to include negative value in
the framework. This could be done by applying the four forms of
uncaptured value: value surplus, value absence, value missed and
 H.S. Kristensen, A. Remmen / Journal of Cleaner Production 223 (2019) 25e35
value destroyed (Yang et al., 2017a) to each dimension in the
framework, and thereby consider these four types of value in the
framework. While the case study showed that there might be po-
tential burden reduction for technical staff at the schools, this
might also lead to a redundancy in staff, and thus value destroyed.
Further research into the complexity of value within the framework
is therefore recommended.
Besides considering potential negative values, there is also po-
tential for further development of the framework to include mea-
sures to assess and document the different values. The framework
is conceptual for mapping value propositions, but could be
strengthened by adding measures to document the impact and
value, e.g. by considering the 17 Sustainable Development Goals
and including the 169 targets (UN, 2015) as measures for impact
and value.
Lastly, further research should explore the role of PSS and sus-
tainable value proposition in the transition from an unsustainable
linear economy to a sustainable CE. The current sustainability
challenges cannot be fixed by pure technological and incremental
improvements, which means that deep changes of sociotechnical
systems are required (Savaget et al., 2019). The sustainable transi-
tion field is thus relevant to consider in relation to the developed
framework presented in this paper by investigating the socio-
technical transition needed to move towards a system perspective
of PSS. By building on the work of e.g. Ceschin and Gaziulusoy
(2016), Gaziulusoy and Brezet (2015) and Joore and Brezet (2015),
the presented framework could be strengthened by exploring
further the societal and sociotechnical systems in which the busi-
ness model must function.
8. Conclusion
This paper is a contribution to the research field of sustainable
business models in circular economy, and the presented framework
provides an opportunity for mapping and understanding the sus-
tainable value proposition within business models based on a
product, service, and/or system focus. The framework provides a
foundation for considering a system perspective when designing
and evaluating new business models that expands beyond products
and services. On this background, companies will be able to map
their current business model related to the framework and assess
potentials and pitfalls within business models in which the focus
changes towards a system perspective. The framework is intended
to be flexible and adaptable to specific contexts. Our aim is to
demonstrate the potential added value in the circular economy,
when addressing business models in a system perspective. The
embeddedness in the framework is therefore highlighted; system
encompasses service and product, while service encompass prod-
uct. In addition, awareness to how business models are designed is
important to keep circular economy and sustainable development
as objectives to ensure solutions that aim to solve societal prob-
lems, and thus look beyond traditional profit-making business
models.
The framework enables a larger understanding of value for
multiple stakeholders, when looking at different foci of business
models; product, service or system. Applying a system perspective
that includes the economic, environmental and social value prop-
osition as well as the type of interactions needed, could boost the
implementation of PSS business models that support a circular
economy.
Acknowledgements
The authors thank Højer Møbler for sharing knowledge and
ideas of the new business model, which has inspired and provided
33
valuable insights into the potential value creation of learning en-
vironments. The research has been part of the project Business
Strategies for Sustainable Production 3.0 supported by the Danish
Industrial Foundation. In an industrial PhD project with HOLMRIS
B8 Circular, we continue to explore the sustainable value proposi-
tion in PSS. Lastly, we thank the reviewers for valuable comments
and suggestions for improvement of the paper.
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