A contingency perspective on manufacturing configurations for the circular economy: Insights from successful start-ups

Abstract

While the circular economy offers a hopeful prospect for the future in terms of environmental sustainability, the main barrier regarding the industrial adoption is its financial viability. Supply characteristics such as heterogeneous quality, insufficient quantities and uncertain timing of used products often constrain manufacturing activities, consequently leading to mediocre financial viability. Building on contingency theory, this paper sets out to explore how to configure circular manufacturing activities in alignment with supply characteristics. Building on a sample of 96 successful circular start-ups, we collected data on the manufacturing activities in terms of grading and sorting activities, the production type and the product transformation as well as the supply characteristics in terms of heterogeneous quality, insufficient quantities, uncertain timing and the residual value of the used products. Qualitative Comparative Analysis (QCA) reveals three manufacturing configurations used by successful circular start-ups to extend product value, extend resource value and process used products. Each configuration is applied under different supply characteristics. As such, the research highlights the contingency factors for when, when not and how to adopt a given manufacturing configuration in the context of the circular economy. Moreover, by analyzing the manufacturing configurations, this study redirects the focus towards the until now under-researched circular economy in the process industry instead of the more heavily researched discrete remanufacturing activities. The three manufacturing configurations and the supply characteristics in which to apply them serve as a starting point for further research.