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Circular Economy (CE) is today a major concept within the sustainability debate (Geissdoerfer, Savageta, Bocken & Hultinkb, 2017). Its theoretical arguments are widely accepted-especially at a crosscountry institutional level-but businesses still seem reluctant to acknowledge it as a revenue-making paradigm. This ongoing study aims to reveal where, along the value chain, firms are more unaware of CE best practice and/or reluctant to invest. After a comprehensive review of sustainable business models, the authors suggest a framework for circularity in business strategy as a beginning foothold on their research agenda. Next, the authors rely on expert informants to identify the most suitable areas in the value chain for the implementation of CE actions. Finally, an online free-access survey-like tool is launched to invite firms self-assessing (1) how relevant those identified areas are for their respective industries and (2) how CE-mature they feel regarding those areas. The initial results attest low consciousness of the CE potential across industries and even lower levels of maturity, especially by SMEs. Despite the growing evidence of Sustained Competitive Advantage (SCA) achieved by pioneering companies moving away from linear forms of production, through the development of new core competencies (Prahalad & Hamel 1990), most firms still perceive CE as something not applicable to them or too costly and risky to implement.
European Journal of Sustainable Development (2018), 7, 4, 105-118 ISSN: 2239-5938
Doi: 10.14207/ejsd.2018.v7n4p105
|¹Associate at Department of Sustainability Research and Development, WorlDynamics Pty. Ltd., Brisbane
QLD 4012 Australia.
|2Director at Department of Sustainability Research and Development, WorlDynamics Pty. Ltd., Brisbane
QLD 4012 Australia.
Perceptions of Firms Participating in a Circular
Nicolò Cristoni1, Marcello Tonelli2
Circular Economy (CE) is today a major concept within the sustainability debate (Geissdoerfer,
Savageta, Bocken & Hultinkb, 2017). Its theoretical arguments are widely accepted especially at a
cross-country institutional level but businesses still seem reluctant to acknowledge it as a revenue-
making paradigm. This ongoing study aims to reveal where, along the value chain, firms are more
unaware of CE best practice and/or reluctant to invest. After a comprehensive review of sustainable
business models, the authors suggest a framework for circularity in business strategy as a beginning
foothold on their research agenda. Next, the authors rely on expert informants to identify the most
suitable areas in the value chain for the implementation of CE actions. Finally, an online free-access
survey-like tool is launched to invite firms self-assessing (1) how relevant those identified areas are
for their respective industries and (2) how CE-mature they feel regarding those areas. The initial
results attest low consciousness of the CE potential across industries and even lower levels of
maturity, especially by SMEs. Despite the growing evidence of Sustained Competitive Advantage
(SCA) achieved by pioneering companies moving away from linear forms of production, through the
development of new core competencies (Prahalad & Hamel 1990), most firms still perceive CE as
something not applicable to them or too costly and risky to implement.
Keywords: Circular economy (CE); core competencies; grounded theory; SMEs; sustainable business models;
Sustained Competitive Advantage (SCA); value chain
1. Introduction
Environmental Sustainability is the ultimate challenge of the XXI century. The
damage caused by private and public companies is undeniable and so is the role they
need to start playing if we are to revert the current downward spiral of self-destruction
(Benn, Dunphy & Griffiths 2003; McDonough & Braungart 2002). The fundamental
problem is the industrial model standing at the roots of our economic system that is
based on a take-make-waste paradigm (The Ellen McArthur Foundation 2012). In this
linear form of production (1) natural resources are extracted from the Earth and (2)
processed in manufacturing plants to become usable objects, which are then (3) sold to
consumers, who eventually (4) discard them as waste in landfills or get incinerated. Each
of these four steps causes a great deal of damage to environmental systems, primarily in
terms of natural elements getting heavily polluted (air and water), being deprived of key
components (soil) or irreversibly modified (forests). And the problem has progressively
worsened as more and more countries worldwide have adopted this economic model.
Today, we extract and consume roughly 95% more materials than we did in 1880 and the
numbers keep rising. The world aggregate material extraction rate of 35 billion tonnes
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recorded in 1980 nearly doubled in three decades to the current 65+ billion tonnes
(Giljum, Dittrich, Lieber & Lutter 2014). What is even more alarming, today most assets
end up being thrown away within just a few months from the time of purchase, resulting
in waste generation levels exceeding 1.3 billion tonnes per year, and projected to surpass
2 billion tonnes by 2025 (The World Bank 2012). Despite all the damage caused to the
natural environment and life wellbeing, the linear economic model does not contemplate
any actions for the regeneration of the polluted natural ecosystems. As a result,
particularly after 1950, “The Great Acceleration” in global economic activities has
deepened the environmental footprint of the human enterprise, affecting the Earth
system structure and functioning on multiple levels (Rockström, et al. 2009; Steffen, et al.
2015): higher-than-ever atmospheric concentration of greenhouse gases (particularly
nitrous oxide, methane and carbon dioxide), widespread exploitation of fisheries, tropical
rainforest and woodland loss, ever-growing demand for domesticated land and
staggering rates of species extinct (Steffen, et al. 2004).
In the face of the many threats, challenges and opportunities posed by the linear way of
production (The Ellen MacArthur Foundation 2015), a new economic model has
emerged with strong impetus as the panacea for an economically successful and
environmentally sustainable future (Ghisellini, Cialani & Ulgiati, 2016). The Circular
Economy (CE) is essentially an alternative industrial model (Bocken, Olivetti, Cullen,
Potting & Lifset 2017; Franconi, Bridgeland & Webster, 2016; Lovins & Braungart,
2014) where, by taking a systems approach (Webster 2013), industrial processes are not
seen as the inevitable cause of natural resource exploitation, environmental pollution and
waste generation. While the focus is still on making business operations profitable (The
Ellen MacArthur Foundation 2013; Lacy & Rutqvist, 2015), in a CE model this is
achieved by embracing a number of innovative value-retaining strategies (Bocken,
Bakker & de Pauw, 2016) like design for prolonged use, modularity, utilization rate
maximization through practices of sharing and reuse, refurbishment, remanufacturing,
and recycling.
It is generally simple for firms to acknowledge the boundaries of our planet as well as the
unsustainable future of many industrial practices; firms also recognize the growing
attention of regulators and customers towards greener solutions, but very few of them
perceive a monetary return attached to investments in CE. This is perhaps due to the
great deal of innovation required to implement CE strategies within a business, together
with the existing regulatory, financial and cultural barriers still preventing both supply
and demand from fully grasping the benefits of a transition to CE products and
processes (CEPS 2015). Just a few pioneering companies (Bakker, Wang, Huisman &
den Hollander, 2014; Niero, Hauschild, Hoffmeyer & Olsen, 2017; Stål & Jansson, 2017)
mostly large MNCs and start-ups have shown success with their commitment to CE
practices. The investment required is considerable, but so are the rewards and mounting
evidence indicates applications in many key industrial sectors are possible (The Ellen
MacArthur Foundation 2013; The Ellen MacArthur Foundation 2015). The process of
stepping away from linear forms of production leads to the development of new core
competencies along the value chain (De los Rios & Charnley, 2016) and ultimately
superior performance that cut costs, improve efficiency, meet advanced government
regulations and the expectations of sophisticated customers, and represent a Sustained
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Competitive Advantage (SCA) against competitors. Of course, there is no single and
structured way of making a business practice sustainable, but over the years a rather
defined number of business models has surfaced as the most effective in concurrently
delivering environmental as well as economic gains. Circular business models are
sustainable business models, where the focus is on applying economically viable
strategies to continually exploit products over many lifecycles and to use bio-based
materials and renewable resources where possible (Bocken, Short, Rana & Evans, 2014).
The aim of this paper is to identify the business areas most suitable for the
implementation of CE actions and to establish firms‟ perceptions of CE relevance of
such actions for their industry as well as their own alleged CE maturity. The literature is
divided into two macro areas: Section 2 reviews corporate competitiveness in terms of
SCA and the development of core competencies; Section 3 focuses on sustainable
business models and concludes by merging existing knowledge into a high-level
framework for circularity in business strategy, a beginning foothold on the research.
Section 4 presents the methods used; Section 5 discusses the results and Section 6
explains why they are deemed provisional.
2. Literature on Corporate Competitiveness
The core literature on business competitive advantage can be traced back to the
early 80s when management authors began referring to it as the ability of a company,
gained through its resources and capabilities, to reach a higher than normal level of
performance (Gluck, Kaufman & Walleck, 1980; Porter 1980). After debating for an
often-greater importance of internal resources versus external considerations (i.e.
industry structure), the conversation rapidly shifted towards how competitive advantage
could be achieved and sustained, hence becoming a fertile research domain for the
strategic management literature to proliferate (Collis & Montgomery, 1995; Dierickx &
Cool, 1989; McGrath et al., 1996).
The fundamental argument presented was that a firm obtained a competitive advantage
after properly combining resources and capabilities to develop a distinctive competence.
Resources and capabilities can be physical assets like machinery, patents and even human
resources (Barney & Wright, 1998), but also intangibles and non-easily transferable assets
like knowledge, experience, stakeholder relationships, and culture (Fiol 1991).
Unfortunately, not all resources and capabilities are good enough to create a „distinctive
competence‟ and so it becomes essential to properly assess them prior to invest in them.
The most established management tool used to evaluate resources and capabilities is the
VRIO framework, introduced in 1991 by Barney, who is widely acknowledged as the
main proponent of the Resource-Based View (RBV). Although capabilities were also
considered in the model, they felt under and overly inclusive definition of “resources”
(Kraaijenbrink Spender & Groen, 2010) as the name RBV attests which to create
SCA, had to be valuable, rare, imperfectly imitable and not substitutable (Collis &
Montgomery, 1995). The best place to look for the right resource candidates is the
company‟s value chain (Barney 1991).
Since the RBV model was first presented, concepts in management theory central to
corporate competitiveness matured and gained increasing attention, often leading to
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questioning the solidity of the RBV framework (Peteraf & Barney, 2003). However, its
central proposition of requiring valuable, rare, inimitable and non-substitutable resources
and capabilities to achieve SCA remained valid and got shared by related concepts like
core competencies (Prahalad & Hamel, 1990) and dynamic capabilities (Teece, Pisano &
Shuen, 1997). The formers are defined as “the collective learning in the organization, especially
how to coordinate diverse production skills and integrate multiple streams of technologies” (Prahalad &
Hamel, 1990, p. 84). This definition clearly highlights the enrichment from the original
RBV explanation: it is not so much the value of individual resources that matters, but
rather the synergistic combination of such resources and capabilities (Laurie, Doz &
Sheer, 2006). In the short term, strategy is constrained by the resources and capabilities
available, so it is shaped by what the firm has. But over the long run, strategy is about
renewing and adding resources and capabilities to develop distinctive competences that
adapt quickly to changing environments (Alexander & Martin, 2013; Zook, 2007).
Because of the intense pressure of competing over costs and quality in the short term,
most companies do not spend sufficient time developing a corporate view of the future
and this leaves them without the core competencies necessary to tap into future
The strategic importance of being able to responsively and purposefully adapt an
organization‟s resource base to changing environments led to define such capacity as
„dynamic capabilities‟ (Teece, Pisano & Shuen, 1997), thus differentiating them from the
current operational capabilities of the company (Helfat et al., 2007). They are “the firm’s
processes that use resources specifically the processes to integrate, reconfigure, gain and release resources
to match and even create market change” (Kraaijenbrink, Spender & Groen, 2010, p. 357).
The advent of dynamic capabilities was instrumental to step aside from the all-inclusive
resources of the RBV and acknowledge the distinction between those resources that are
inputs to the firm and the capabilities that enable the firm to select, deploy, and organize
such inputs (Makadok 2001). Resources remain important for the life of the company,
not per se, but because of the configuration conferred by dynamic capabilities
(Ambrosini, Bowman & Collier, 2009; Morgan, Vorhies & Mason, 2009). Alongside the
company‟s own internal resources, another source of input, especially concerning key
technological capabilities, are external linkages (Coombs 1996). By using collaborative
arrangements oriented toward technology access, companies can multiply internal
resources and display a broader array of core competencies (Teece, Pisano & Shuen,
1997) more rapidly and cost effectively.
When talking strategy, decisions must be made, and it is difficult to be all things for all
people. A company must choose! For example, IKEA low cost and simple assembly
appeals to a specific target of consumers, and so does BMW engineering excellence.
However, when considering environmental sustainability, the potential market gets
broader as it surpasses traditional segmentations. It touches young and old, male and
female, rich and poor, sophisticated and simple buyer. A similar consideration can be
made about combining multiple distinctive competencies (e.g. quality and effectiveness),
an effort traditionally not pursued by many companies in a linear economy given the
time and investment required to obtain them, but that circular thinking could facilitate.
In a rapidly changing society like the one we are in, talking about competitive survival
might perhaps sound more appropriate than SCA. Regardless of the term used, the
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significance of core competencies linked to environmental sustainability and the
subsequent ability of a company to outperform competitors by doing things differently
could be decisive in the years ahead.
3. Literature on Sustainable Business Models
A complete discussion of sustainable business models should arguably
commence with the emergence back in the „80s of stakeholder theory (Freeman, 1984),
as an alternative to pure profit maximization. The theory asserted that anyone, who
affects or is affected by a firm‟s operations (e.g. employee, local communities,
customers), has the right to be included in decision making, even if this means reducing
profits for shareholders. Later attempts to broaden the spectrum of the constituencies
that ought to be considered in shaping the direction of firms, focused on what was called
the silent stakeholder i.e. the environment (Shrivastava, 1995; Solomon, 1997). In 1999, the
authors of Natural Capitalism (Hawken, Lovins & Lovins, 1999) put forward a four-step
agenda to align ecological considerations with business operations, thus a sustainable
business model that would favour both profitability and the environment.
This early work on conceptualizing Corporate Social Responsibility (or CSR), and
attempting to place ecological considerations at the centre of business practices, has
gradually evolved into more pragmatic approaches that see sustainability as a means to
increase the competitive advantage of a firm, while concurrently benefitting its many
stakeholders and thus contributing to sustainable development (Lüdeke-Freund, 2010).
As the focus shifted from responsibility towards value creation, greater attention has
been given to integrating social and environmental considerations at the very heart of a
company business model (Porter & Kramer, 2011).
With the notion of CE going mainstream, today the concept of „sustainable business
model‟ is being reshaped once again to accommodate the increasing concerns
surrounding resource scarcity, a thriving middle-class, and fears of ecological thresholds
being surpassed (Rockström et al., 2009; Steffen et al., 2015). At least four different
typologies of circular business models appear in the corporate world: a switch towards
environmentally friendly products and processes (net-zero innovation); selling services
instead of goods, through servitization or product-service systems (Tukker 2015; Stål &
Jansson, 2017; Adrodegari, Saccani, Kowalkowski & Vilo, 2017); implementing reverse
cycle operations to extend the lifecycle of products; and recovering the residual value of
materials through recycling or energy generation. While these novel approaches to
business have been recognized as potentially helpful in driving a firm‟s competitiveness
as well as contributing to environmental sustainability (Tukker & Tischner, 2006), their
successful implementation depends on being carefully tailored to the specific set of
capabilities of each company, and be leveraged so that they connect modern
technological advancements with the needs of the market in which the firm operates.
Depending on the scenario, a company will favour one area of intervention or another.
For example, a focus on innovative product design will imply placing ground-breaking design
principles at the roots of the CE corporate strategy (den Hollander, Bakker & Hultink,
2017). At least three broad approaches to circular design are rapidly emerging as clear
alternatives to outdated linear solutions: green design, plan for durability and envisage
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reverse cycles (Bakker et al., 2014). Reverse cycle is the term used to identify the process of
establishing and managing one or multiple flows of materials, components and products
from the moment they get damaged, broken or discarded to their re-valorisation
through repair, reuse, refurbishing, remanufacturing or recycling and further
introduction in the economic system. Thus, a company focusing on reverse cycles will be
implementing actions aimed at collecting its used products and then establish effective
post-value channels whereby items get processed according to the new function they will
serve (Singh & Ordonez, 2015). Green internal operations are circular interventions
particularly relevant when the environmental impact of a company is largely dependent
on the performance of its own sites and internal operations. In such circumstances CE
principles can be leveraged, for example through the establishment of an Environmental
Management System (EMS), to gradually reduce environmental externalities like
greenhouse gas emissions, water use or pollution (Balta & Woodside 1999; Wilson 2001).
There is increasing evidence that a business case exists for leveraging circular solutions
and establishing closed-loop processes through supplier engagement (The Ellen MacArthur
Foundation 2014; Niero, et al., 2017). For some firms broad re-structuring of both
internal operations and relationships with business partners are required, most notably if
reverse cycles for product recovery are also established (CISL 2016). To do so,
companies might need to expand the boundaries and scope of their sourcing activities
well beyond business-as-usual. Internal alignment is the area of intervention that prompts a
company to manage the widespread implications of embracing CE principles. It implies a
change in culture touching all levels of the organization and successful implementation
would result from getting managers and employees on board, getting buy-in from
executives (CISL 2016), and ensuring strong cross-company alignment especially
between design, marketing, sales and operations. As most organizations are still at the
beginning of their circular journey, collaboration with external stakeholders can often bring
multiple benefits (Niero et al., 2017; Lieder & Rashid, 2016), especially in industries
where CE implementation is particularly difficult (e.g. due to complex and dispersed
supply chains or heavy reliance on virgin materials). Moreover, the establishment of a
novel circular business model is likely to impact the organization well beyond its
traditional boundaries and current operations. Hence, for many firms, implementing a
circular strategy will inevitably mean collaborating with a complex web of stakeholders
as opposed to managing simple transactions in a linear fashion.
The framework below is meant as a beginning foothold on the research (Glaser &
Strauss, 1967). It developed from a comprehensive review of the existing literature on
circular business models and was strengthened by the professional experience in
management consulting matured over the years by the two authors. It outlines in
sequence from left to right: the four high-level guiding CE principles, the six CE
business objectives that generally lead to major opportunities for CE adoption; and the
six areas of intervention for operationalizing the circular opportunities identified.
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Fig.1. Framework for Circularity in Business Strategy
The growing interest of society towards sustainability is confirmed by the rapid
expansion of the literature discussing sustainability-related topics, and CE is certainly
becoming a prime concept within that conversation. However, even though there is a lot
of positive and promising talk happening, many companies still perceive CE as
something not applicable to them and/or too innovative, with high risks and prohibitive
costs involved. From this consideration the following questions were derived:
1. What business areas are most suitable for the implementation of strategies based on
principles of circularity?
2. Do companies perceive CE strategies in those areas to be relevant for their respective
industries (i.e. capable of providing a competitive advantage)?
a. Are there differences in perceptions based on company size?
b. Are there differences in perceptions across industries?
c. Are there differences in perceptions across countries?
d. Are there differences in perceptions based on business category (e.g. manufacturer,
distributor, wholesaler, service provider)?
e. Are there differences in perceptions based on customer target (e.g. B2B, B2C)?
What level of maturity do companies feel they have achieved in terms of their CE abilities,
policies, and internal programmes compared to what would be possible?
4. Methodology
Given the brief history of the field and the absence of consolidated theoretical
frameworks, the research design opted for this paper was mostly based on inductive
reasoning and sought to derive broad generalizations from specific observations.
Interviews and questionnaires were used as data sources to come up with a grounded
theory (Strauss & Corbin, 1994) capable of answering the research questions. The first
112 European Journal of Sustainable Development (2018), 7, 4, 105-118
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step in designing the research framework was to identify a purposive sample (Glaser &
Strauss, 1967; Strauss, 1987): business practitioners with some degree of knowledge or
expertise in CE. The aim was to come up with a sample large enough to cover most of
the industrial sectors in Italy. Country selection was solely based on accessibility
advantages and the limited funding available (convenience sampling). After initial
contacts were made with personal acquaintances, the sample was then expanded to reach
30 individuals by implementing elitist snowball techniques (Verschuren & Doorewaard,
1999). The objective here was to increase the likelihood of finding divergent information
and gaining access to a greater number of confirming or weakening perspectives.
This sample of „CE-expert‟ practitioners was then employed to gather data regarding the
business areas most suitable for the implementation of strategies based on principles of
circularity. The choice of interview questions and how to frame them, as well as the
selection of certain topics for detailed analysis was based on the researchers‟ ongoing
study of existing CE instruments and insights from professional experiences (Glaser &
Strauss, 1967; Strauss & Corbin, 1990). The previously presented framework for
circularity in business strategy (Figure 1) was shared with the interviewees prior to the
meeting to introduce the context and prompt thought through responses to open-ended
unstructured questions (Douglas, 1985; Saunders, Lewis & Thornhill, 2007) build around
a typical value chain: design > sourcing > production > distribution/shipment > use >
end use.
Content analysis was performed manually (analysis of phrases) and separately by two
researchers, before being circulated for comments. Upon grouping analysed data into
concepts, 17 different business areas for CE strategies were identified. Each one was
given a definition, it was linked to specific business benefits, and exemplified with fitting
cases of best practice.
The last step of the research design was to broadly disseminate the 17 business areas for
CE strategies and begin testing practitioners‟ perceptions for (1) the relevance they had for
the industry they belonged to and (2) their own degree of maturity towards them. An
online questionnaire1 was created and released with free access, hence adopting a random
sampling technique. Any company could register by filling a simple form and then
conduct a CE self-assessment (WorlDynamics, 2017). The exercise required ranking
relevance (for industry) and maturity (at the firm-level) for each of the 17 areas for
circular action. A 5-point Likert-type scale was used.
5. Results
5.1 Business Areas for Implementing CE Strategies
The collection, study and clustering of expert opinions led to the identification
of 17 areas of circular action that could most significantly modify business-as-usual
operations. These are presented in the diagram below and grouped according to the steps
of a typical value chain.
1 Circular Readiness Assessment Tool
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Fig. 2. The Key Areas of Circular Action
During the interview process, the most challenging step in the value chain to assess and
unpack into practical circular actions was DESIGN. That difficulty, primarily due to the
variety of perspectives offered by the interviewees, is in line with the vast attention given
by the literature when compared to other phases (Bakker et al. 2014; Mendoza,
Sharmina, Gallego-Schmid, Heyes & Azapagic, 2017) and arguably justified by a
recognition that changes in product design have clear and direct consequences on the
entire value chain (De los Rios & Charnley 2016). Item #4 “Design for recycling” was
initially included, just as “Recycling” under END-USE, primarily for consistency with
the other reverse cycle operations clustered under that heading. However, after careful
analysis, some experts suggested it would have been sounder to move recycling under
DESIGN, notably because, contrary to reuse, repair, refurbishing and remanufacturing,
usually the recycling of a product is not processed by the company producing it, but
rather by specialized external firms. According to this view, “Design for recycling” was
created to denote the design efforts put in place when developing products that are
easier to recycle. PRODUCTION was another area that required substantial analytical
work to comprehensively identify and evaluate all the possible circular activities a
company can pursue. And once again the literature confirmed how manufacturing had
traditionally been an area highly investigated under the CE perspective (Lieder & Rashid
Overall, the 17 circular actions were defined according to a broad understanding of the
CE as being an umbrella concept (Blomsma & Brennan 2017) covering not only
activities aimed at phasing out waste and pollution while keeping products and materials
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in use, but also focusing on regenerating natural systems (The Ellen MacArthur
Foundation 2014). As such, besides the “core” CE activities linked to the establishment
of reverse cycle operations and closed-loop systems, there has been unanimous
agreement among the experts involved on the inclusion of a number of CE actions
primarily concerned with minimizing environmental externalities caused by emissions
and the use of toxic substances (“Optimise input materials”, “Engage Suppliers On
Environmental Programs”, “Maximize Overall Environmental Performance Of
Operations” and “Switch To Renewable Energy To Power Operations”).
5.2 Firms Perceptions of CE Efforts
Over a period of 3 months, a total of 38 companies registered to take the CE
self-assessment test. All these all were based in Italy, with of them operating business-
to-business, while the rest were business-to-consumer (B2C). Most of these companies
(roughly 92%) were SMEs operating as manufacturers in their respective value chains.
The table below offers an overview of the aggregate results collected thus far.
Table 1. Summary of Firms Perceptions Towards CE Efforts
Relevance was the industry-level indicator of how firms perceive the 17 circular actions
might have a positive impact on the overall environmental performance of their
industries. According to the feedback received, the areas recognized to be potentially
transformed by an industry-wide implementation of circular principles were DESIGN,
SOURCING, PRODUCTION and END USE. This was little surprise, given most
respondents being SMEs operating in manufacturing sectors (e.g. textile, consumer
products and food), with elaborated supply chains, environmentally impactful operations
and overall poor closed-loop performance.
As for Maturity the firm-level indicator used to self-assess one‟s own operations on the
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17 circular actions SHIPMENT, PRODUCTION, and DESIGN scored slightly higher
than the rest, but still in the low range. The average maturity for SHIPMENT was low
because generally perceived as being not so relevant, which is consistent with green
shipment activities usually being pursued only by large multinationals that can afford
investing in such projects. However, there have been instances of SMEs communicating
that they had taken some initial steps to address their unsold inventory stocks (13) by, for
example, regularly donating to local charities. Other firms have been engaged by their
clients to improve their logistic operations (12). With respect to PRODUCTION, it is
worth mentioning that some respondents scored relatively high to both items (7) and (8),
for they had either embarked on an environmental certification path (EMAS or
ISO14001, which both the setting up of an EMS), or had installed renewable energy
systems (primarily solar) to power their manufacturing operations (even though only
partially). When it came to DESIGN, it must be said that a considerable number of
respondents supplied products to clients in the business-to-business (B2B) arena, and
therefore often these firms received mandatory design instructions on how to create the
product directly from their customers. Therefore, the adoption of circular design
principles was automatically prevented to them. However, a considerable number of
respondents gave a medium rating to the optimization of input materials (2) for they
communicated that many toxic substances used in production, like glues and paints, have
been replaced over the last few years with ecological and bio-based alternatives.
SOURCING, USE, and END-USE proved to be the weakest areas, with average scores
of 1. A rational similar the one used for DESIGN also applied to the USE and END-
USE phases, for usually the companies lost track of their products after being sold to
clients. Regarding SOURCING, most respondents based their rating on the
acknowledgement that they lacked the resources and capabilities to engage suppliers on
environmental programs (5) or to partner up with them to find circular feedstock
solutions (6).
This paper is part of an ongoing research project aiming to identify the business
areas most suitable for the implementation of CE actions and to establish firms‟
perceptions of CE relevance for their industries as well as their own alleged CE maturity.
While the preliminary results show a picture consistent with the findings of recent
studies, they are based on a still limited dataset and need to be pondered as a first
attempt at informing on the subject. Further validation is necessary and will be built
overtime as the tool progresses through advanced phases of development and adoption.
The prospect, once the limitations of sample size have been overcome, is to allow for
statistically meaningful aggregate analyses based on firm size, industry type, location,
category (e.g. manufacturer, distributor, wholesaler, service provider), and customer
target (B2B, B2C).
In its current form, the study substantiates the view shared by academic literature and
practice: a swift and widespread prosperity of CE principles is challenging. Apparently,
the common perception is still anchored to CE efforts aiming at weakening profit-
maximization by placing excessive attention towards reaching new heights in
116 European Journal of Sustainable Development (2018), 7, 4, 105-118
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environmental protection. This erroneous understanding represents a serious threat to
implementation as theoretical arguments can only go so far in presenting a valid case for
CE. To help all companies (especially SMEs) appreciate the full potential of circularity
for business, it would seem highly beneficial to incorporate novel CE notions into
conventional conversations surrounding the strategic management process (definition,
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... One additional component, Firm Maturity (FM), has been incorporated in the ETPB model to study the predictability of CE readiness. Fim maturity identifies how mature a firm is regarding the practices of CE principles in design, sourcing, production, use, and end-use (Cristoni and Tonelli, 2018;Worldynamics, 2021). Together, these six components have been considered and named the RTPB model to assess the CE readiness of the RMG firms. ...
... Maturity is the firm-level indicator that justifies operations in circular areas like design, sourcing, production, shipment, use, and enduse. The maturity indicator identifies how mature a firm is towards following the circularity principles in the areas just mentioned above (Cristoni and Tonelli, 2018). Therefore, it can be used to investigate how prepared manufacturing companies are for the circular economy. ...
... Therefore, it can be used to investigate how prepared manufacturing companies are for the circular economy. (RMG, consumer products & foods, furniture, light engineering) (Cristoni and Tonelli, 2018;Worldynamics, 2021). Therefore, it has been revised the TPB with the FM parameter hypothesized that. ...
This study aimed to investigate the readiness of the ready-made garments (RMG) sector in one of the developing countries to implement circular economy (CE) practices, which involve reusing, remanufacturing, and recycling materials and products to create a sustainable and resilient future. To achieve this goal, the study applied the revised theory of planned behavior model (RTPB) and analyzed the data using a structural equation modeling (SEM) approach. The study found that the basic elements of the TPB model, along with environmental commitment, green economic incentive, and firm maturity, can more effectively explain CE readiness than the original TPB model. The findings suggest that attitude, social pressure, green economic incentive, environmental commitment, and firm maturity significantly impact CE readiness. The results of this study have implications for policymakers in developing countries who seek to promote CE implementation in the RMG sector. By providing a unified framework to assess CE readiness, this study can help policymakers articulate strategic plans that prioritize environmental sustainability, economic benefits, and social responsibility. However, the study acknowledges that further research is needed to explore potential limitations and areas for improvement in this field.
... We used the 5-point Likert scale because it allows for a selection of an intermediate performance (i.e., it does not force the respondent to provide a skewed result). A 5-point Likert scale was effective in other research measuring sustainability in SMEs (e.g., Brendzel-Skowera, 2021;Cristoni and Tonelli, 2018;Golinska and Kuebler, 2014;Irimiás, and Mitev, 2020;Prashar, 2019;Seidel-Sterzik et al., 2018). Table 1 presents the scale (as presented in the surveysee Appendix A). ...
... From a knowledge and competencies perspective. Companies acknowledge the need to manage resources within planetary boundaries, but the monetary return on investments in more sustainable practices is still blurry (Cristoni and Tonelli, 2018). A challenge concerns unveiling the path where increased sustainability leads to increased profitability (Vandenbrande, 2021). ...
... A sustainability-driven strategy provides better cost-effectiveness, drives innovation (Golinska and Kuebler, 2014), and helps companies understand how to move forward (Hamidi et al., 2018). It helps them add resources and capabilities to develop distinctive competencies that enable them to adapt to changing environments (Alexander and Martin, 2013;Cristoni and Tonelli, 2018). ...
... The interest in Circular Economy (CE) as a concept and model of economic system is growing faster than ever all over the world [ 1]. The CE is considered as one of the pillars of response to pressing environmental issues [ 2,3] and the declared climate emergency [ 4] as well as a tool for establishing sustainable development [ 2,5]. ...
... 1 In recent years, the EU, China and Japan being pioneers in adopting circular strategies [ 7,8], have continued to guide the process of transition towards CE, and many other countries are beginning to follow in their footsteps. 2,3 Programs, policies and legislation have been adopted to pursue the CE goal and accelerate the transition [7][8][9][10][11][12]. While cities such as Amsterdam, Rotterdam, Brussels, London, and Paris are adopting circular strategies city-wide, other countries (such as China) are aiming more directly at sector integration (such as industrial parks, civic waste) and mapping circularity 4 according to their development pattern [ 7]. ...
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The CE is mainly conceived as a response to multiple global environmental and social challenges, including climate change and resource scarcity. This chapter first presents an overview of what entails the adoption of CE in cities. Later, CE in other macro-level systems (such as nations and wider areas) and the necessity for circularity assessment during the transition towards CE are discussed. From a global perspective, cities play a crucial role in contributing to tackle the climate challenges given the high consumption of energy and materials. The discussion elaborates on assessment frameworks and indicators for monitoring and evaluating the progress towards the CE at the city and regional/national/supra-national (e.g. The EU)/global levels. Case studies of Rotterdam and Paris are provided to show how cities have designed their circular plans by analyzing their strategies, tools, and performance indicators. The monitoring framework implemented by the EU, to monitor the transition to CE in its member states is also analyzed. The chapter concludes by pointing out the importance of promoting preventive measures to enhance the circularity and broader assessment framework that captures the social dimension of the CE.
... In particular, CEI is suspected to be the prime contributor in achieving the SDGs [15]. As a result, many firms around the world have shown greater interest in adopting the practices of CEI [16], and have upgraded the production system to the advanced level of an ecosystem with the aim of achieving the desired level of performance and implementing the digital ecosystem among industries [16,17]. ...
... In particular, CEI is suspected to be the prime contributor in achieving the SDGs [15]. As a result, many firms around the world have shown greater interest in adopting the practices of CEI [16], and have upgraded the production system to the advanced level of an ecosystem with the aim of achieving the desired level of performance and implementing the digital ecosystem among industries [16,17]. ...
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The current study aims to examine the reverse association between circular economy innovation (CEI) and digital sustainability (DS), as well as the dual mediation of government incentives (GI) among firms. Data was collected through a structured-questionnaire-based survey among financial institutions (banks, insurance, and financial companies) in Pakistan, Malaysia, and China. The study collected data via structured questionnaires in an online survey and analysed the data using partial least squares structural equation modelling (PLS-SEM), to find results. The results revealed that CEI has a two-way relationship with the DS among firms in the defined context. Furthermore, the results confirmed the dual mediating role of GI between CEI and DS among firms. The outcomes can guide the policy makers to focus on the practices of CEI in the settings of the relevant state support schemes, to enhance the practices of DS among firms in emerging markets. The implications of the study are presented at the end of this study.
... The transition towards the circular economy-i.e., "an industrial economy that is restorative or regenerative by intention and design" (Ellen MacArthur Foundation, 2013, p. 14) is considered a viable solution to global environmental problems by both researchers and policymakers (Cristoni & Tonelli, 2018;OECD, 2018). Albeit worldwide firms are increasingly embracing the circular paradigm (Panwar & Niesten, 2022), it seems that economy-wide transformations in this direction still require time to be achieved (ibid.). ...
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The purpose of this open access edited collection is to discuss the role and importance of stakeholder engagement in a sustainable circular economy from multiple theoretical and practical perspectives. Developing and maintaining a circular economy is an essential step to a more environmentally friendly and socially inclusive society. In addition to redesigning products and business models to minimise waste and increase the reuse of materials, a transition towards a sustainable circular economy requires collaboration and co-operation between various stakeholders from all parts of society. An international team of contributors explore how stakeholder engagement can foster and support sustainable change, assessing current literature and laying out guidance for future study. The collection is of interest to academics and students of sustainability management and sustainable business models, stakeholder theory and practice, and the circular economy.
... The transition towards the circular economy-i.e., "an industrial economy that is restorative or regenerative by intention and design" (Ellen MacArthur Foundation, 2013, p. 14) is considered a viable solution to global environmental problems by both researchers and policymakers (Cristoni & Tonelli, 2018;OECD, 2018). Albeit worldwide firms are increasingly embracing the circular paradigm (Panwar & Niesten, 2022), it seems that economy-wide transformations in this direction still require time to be achieved (ibid.). ...
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The circular economy has been presented as a means to promote ecological, economic, and social sustainability. However, the connection between the circular economy and sustainability remains undefined in both theory and practice. In this chapter, we examine how a circular economy and its connection to sustainability are understood among key stakeholder groups promoting the circular economy in Finland, a forerunner country in sustainable development. Theoretically, we build on circular economy and corporate sustainability literature. Empirically, we conducted an analysis of 26 qualitative interviews with circular economy stakeholders. As a result, we present three categorisations of a sustainable circular economy: a business-centric circular economy, a systemic circular economy, and a regenerative circular economy. Our findings demonstrate that different stakeholder groups at the local, regional, and national levels acknowledge the importance of the circular economy for the promotion of sustainability. Stakeholder views vary in terms of how broadly sustainability is understood and to what extent a circular economy is connected to the promotion of economic, ecological, and social sustainability. The findings call for a dialogue among stakeholders on how the circular economy can promote sustainable development.
... Authors such as Baldassarre et al. (2020) and Barros et al. (2021) agree on the importance of companies having a research and development (R&D) department for designers to create more environmentally sustainable products while working together with THE INTERNATIONAL JOURNAL OF ENVIRONMENTAL SUSTAINABILITY engineers for design validation (Jia et al. 2020). In this sense, the impact of product design decisions on the business model can be observed (Cristoni and Tonelli 2018), especially when transferring sustainability principles to the value proposal (Todeschini et al. 2017). ...
... In this case CE awareness is related to supplies, resource recovery, and reducing costs, which indicates that the implementation of CE does not stand as a priority to SMEs mainly as a result of a limited budget, the lack of a long-term vision coupled with time constrains. For these companies the transition and implementing CE is still a risky and costly process (Eurobarometer, 2016;Ormazabal et al., 2018;Cristoni and Tonelli, 2018). ...
This study aims to identify gaps in digital financial inclusion (DFI). By examining the deficiencies in previous research methods, inequality variables, and variables related to DFI, it offers an important direction for further research. Inequality variables include gender, age, and disability. Variables related to DFI consist of education, security or safety, technology, and economy related to cost and income. Research gaps are identified using a systematic literature review and categories from three main aspects. Focusing on developing countries from literature data shows that the gap in the previous method lies in simulation and action research, and the gap in inequality variables involves age and disability. The gap in variables related to digital financial inclusion involves education, safety, and the economy. Overall, results of this study suggest that more research is required in the field of financial inclusion.
Commodity price volatility is a major source of instability in those countries that are primarily commodity‐dependent and has a negative impact, especially on economic growth. With this premise, commodities represent an effective financial exchange tool that nowadays finds relevance in being involved in the processes inherent to environmental sustainability. This work focus on raw materials and their demand, connected with the need for a transition towards the Circular Economy, as part of a strategy to address commodity supply disruptions. It presupposes changes in the mentality and behavior of companies in the various economic sectors. A crucial issue debated in the literature concerns whether or not the size of the companies favors their attitude towards Circular Economy. We propose a nonparametric method to test the effect of firm size on their propensity to undertake Circular Economy activities. Considering of such activities, this propensity is a multidimensional concept and it can be represented by a ‐dimensional vector of proportions. Each element of the vector represents the share of companies of the population under study that implement a specific Circular Economy activity. The main difficulty of such a multivariate testing problem, together with the multidimensional nature of the dichotomous response, is the one‐sided type alternative, which is a stochastic dominance for multidimensional binary variables. A Monte Carlo simulation study proves the good power behavior of the proposed solution, based on a nonparametric approach. Case studies related to Italian small and medium enterprises in some strategic sectors are also addressed.
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Introduction: Despite increasing research on the transition of a well-established linear-oriented economic system toward the circular economy (CE) model, existing literature on the adoption and implementation of educational approaches that reinforce CE concept in secondary education seems to be limited. In light of the current challenges and the critical role of education in empowering students to explore new paths of sustainable development and grow into active citizens, conscious producers, and consumers, this study focuses on experiential learning as an effective tool for teaching CE and sustainability concepts. The literature review has revealed a research gap as regards the formulation of educational approaches to support CE concepts for secondary education students effectively, particularly in Greek vocational education. The present study describes and critically discusses how a virtual enterprise could introduce secondary-level students to the circularity and sustainability perspective, prepare them to build prosperity, and act circularly in the future. Methods: Drawing on the activities of 32 students coming from different disciplines and participants in a virtual agri-business, we recommend practical educational strategies expecting (i) to encourage teachers to adopt innovative teaching methods and share good practices of CE teaching and (ii) to urge education policymakers to integrate the CE vision into school curricula. Results and discussion: Furthermore, the students' responses to a structured questionnaire before and after the programme implementation indicate that experiential learning should be supported by the teaching of theoretical aspects for a better consolidation of abstract concepts such as CE and sustainability. The implementation of a circular enterprise by a student team consists of a positive prospect for the community and economy.
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The discussion about business models has gained considerable attention in the last decade. Business model frameworks have been developed in the literature as management methods helping companies to comprehend and analyse their current business logic and guide the deployment of new strategies. In response to calls for a deeper understanding of the application of a business model approach to product-service systems (PSS), this study develops a two-level hierarchical framework that (i) includes a set of components with pertinent, second-order variables to take into account when undergoing the shift from products to solutions; (ii) supports industrial companies, especially SMEs, in designing their future business model and in consistently planning the actions needed to implement it. The framework was applied and refined within real-life settings. The application to KINE – a robot solutions supplier – shows how key challenges faced by servitization firms may be thoroughly addressed through the adoption of a business model perspective.
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In a circular economy (CE), the economic and environmental value of materials is preserved for as long as possible by keeping them in the economic system, either by lengthening the life of the products formed from them or by looping them back in the system to be reused. The notion of waste no longer exists in a CE, because products and materials are, in principle, reused and cycled indefinitely. Taking this description as a starting point, the article asks which guiding principles, design strategies, and methods are required for circular product design and to what extent these differ from the principles, strategies, and methods of eco-design. The article argues that there is a fundamental distinction to be made between eco-design and circular product design and proceeds to develop, based on an extensive literature review, a set of new concepts and definitions, starting from a redefinition of product lifetime and introducing new terms such as presource and recovery horizon. The article then takes Walter Stahel's Inertia Principle as the guiding principle in circular product design and develops a typology of approaches for Design for Product Integrity, with a focus on tangible durable consumer products. The newly developed typology contributes to a deeper understanding of the CE as a concept and informs the discussion on the role of product design in a CE.
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In this article, we use Hirsch and Levin’s notion of umbrella concepts as an analytical lens, in order to articulate the valuable catalytic function the circular economy (CE) concept could perform in the waste and resource management debate. We realize this goal by anchoring the CE concept in this broader debate through a narrative approach. This leads to the insight that whereas the various resource strategies grouped under the CE’s banner are not new individually, the concept offers a new framing of these strategies by drawing attention to their capacity of prolonging resource use as well as to the relationship between these strategies. As such, the CE offers a new perspective on waste and resource management and provides a new cognitive unit and discursive space for debate. We conclude by discussing research opportunities for the industrial ecology (IE) community relating to the concept’s theoretical development and its implementation. Specifically, we pose that reinvigorating and growing the social science aspects of IE is required for both. After all, it is in understanding and facilitating the collective implementation of any idea, also the CE concept, that the potential lies for shaping our material future.
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The circular economy (CE) is essential for decoupling economic growth from resource consumption and environmental impacts. However, effective implementation requires a systemic change across supply chains, involving both technological and nontechnological innovations. Frameworks are beginning to emerge to foster CE thinking in organizations. However, literature review carried out as part of this research has revealed gaps in their ability to fulfil CE requirements. Furthermore, few frameworks provide support on how CE requirements may be implemented. To address these issues, this article presents a new framework, BECE (backcasting and eco-design for the circular economy), to ensure that businesses can implement CE requirements more readily. BECE empowers organizations to tackle the CE holistically by embedding the concept into corporate decision making and by bringing operational and systems thinking together, thus increasing the likelihood of successful implementation. The potential of the BECE framework was tested through a pilot workshop focusing on the development of a CE business model through redesign of products and supply chains. Using vacuum cleaners as an illustrative case study, several product design and supply-chain alternatives were identified, including the development of scenarios and action plans for their implementation at the business level. Although the case study focuses on a particular product, the BECE framework is generic and applicable across different products and business sectors.
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While the terms Circular Economy and sustainability are increasingly gaining traction with academia, industry, and policymakers, the similarities and differences between both concepts remain ambiguous. The relationship between the concepts is not made explicit in literature, which is blurring their conceptual contours and constrains the efficacy of using the approaches in research and practice. This research addresses this gap and aims to provide conceptual clarity by distinguishing the terms and synthesising the different types of relationships between them. We conducted an extensive literature review, employing bibliometric analysis and snowballing techniques to investigate the state of the art in the field and synthesise the similarities, differences and relationships between both terms. We identified eight different relationship types in the literature and illustrated the most evident similarities and differences between both concepts.
The purpose of this chapter is to outline the development of the idea of "stakeholder management" as it has come to be applied in strategic management. We begin by developing a brief history of the concept. We then suggest that traditionally the stakeholder approach to strategic management has several related characteristics that serve as distinguishing features. We review recent work on stakeholder theory and suggest how stakeholder management has affected the practice of management. We end by suggesting further research questions.
Eco-efficiency (i.e., increasing value while reducing resource use and pollution) can with advantage be combined with eco-effectiveness (i.e., maximizing the benefits to ecological and economical systems) to address the challenges posed by the circular economy in the design of circular industrial systems. We present a framework combining life cycle assessment (LCA) and the Cradle to Cradle® (C2C) certification program for the development of continuous loop packaging systems, which was conceived for aluminum cans in the context of the Carlsberg Circular Community. As a first step, the environmentally optimal beverage packaging life cycle scenario is identified, both in terms of defined use and reuse. Second, the limiting factors are identified for the continuous use of materials in multiple loops, meeting the two requirements in the C2C certification process that address the material level (i.e., “material health” and “material reutilization” criteria) and the “renewable energy” criterion. Then, alternative scenarios are built to meet C2C certification criteria, and LCA is used to quantify the environmental impacts of the resulting improvement strategies, for example, change in material composition, in order to guide the identification of the optimal scenario from an eco-efficiency point of view. Finally, the business perspective is addressed by assessing the potential for a green value network business model for a closed-loop supply. The outcome is a list of prioritized actions needed to implement the most efficient and effective “upcycling” strategy for the beverage packaging, both from an environmental and an economic point of view. In the case of the aluminum cans, the main recommendation from both the LCA and C2C perspective is to ensure a system that enables can-to-can recycling.