Upscaling niche innovations by circular start-ups for sustainability transitions

• CSUs upscale business models to foster sustainability transitions. • Fit-and-conform includes adapt-and-comply and adjust-and-refine upscaling practices. • Stretch-and-transform enact renew-and-reconfigure and alter-and-replace practices. • Niche innovations are upscaled through stabilizing and disruptive transition forces. • Global South scaling involves mimicry, collectivity, blending paths, and emancipation. While research acknowledges the role of start-ups in introducing niche innovations, the way these firms contribute to sustainability transitions through upscaling circular business models remains under-theorized. To advance this understanding, we analyze how circular start-ups (CSUs) upscale niche innovations within regimes to foster sustainability transitions. By combining the literature on circular economy and sustainability transitions, we draw on the frameworks of niche empowerment, the Business Model Design Space (BMDS), and the Multi-Level Perspective (MLP) to analyze upscaling strategies through a multiple-case study of 30 CSUs in Latin America. Our study offers a nuanced interpretation of how circular business model innovation (CBMI) diffuses via empowerment strategies: (a) fit-and-conform, which manifests through the upscaling practices of adapt-and-comply and adjust-and-refine; and (b) stretch-and-transform, which unfolds through renew-and-reconfigure and alter and-replace upscaling practices. By positioning this phenomenon within the MLP, we interpret CBMI upscaling by examining the interplay between stabilizing and disruptive forces that drive sustainability transitions. In particular, we examine how these transition dynamics are linked to the specific business model typologies adopted by CSUs. Finally, we offer insights for sustainability transitions from a Global South perspective, acknowledge the study’s limitations, and propose avenues for future research