Abstract
AbstractSlowing and closing product and related material loops in a circular economy (CE) requires circular service operations such as take‐back, repair, and recycling. However, it remains open whether these are coordinated by OEMs, retailers, or third‐party loop operators (e.g., refurbishers). Literature rooted in the classic make‐or‐buy concept proposes four generic coordination mechanisms and related value creation architectures: vertical integration, network, outsourcing, or doing nothing (laissez‐faire). For each of these existing architectures, we conducted an embedded case study in the domain of smartphones with the aim to better understand how central coordinators align with actors in the value chain to offer voluntary circular service operations. Based on the above coordination mechanisms, our central contribution is the development of a typology of circular value creation architectures (CVCAs) and its elaboration regarding circular coordination, loop configuration, and ambition levels. We find that firms following slowing strategies (i.e., repair, reuse, and remanufacturing) pursue higher degrees of vertical integration than those following closing strategies (i.e., recycling) because of the specificity of the assets involved and their greater strategic relevance. The typology also shows that higher degrees of vertical integration enable higher degrees of loop closure (i.e., from open to closed loops) and better feedbacks into product design. Furthermore, we differentiate the understanding on third‐party actors by distinguishing between independent and autonomous loop operators. Overall, we strengthen the actor perspective in product circularity literature by clarifying the actor set, their interrelationships, and how they form value creation architectures.
Highlights
The circular economy (CE) has emerged as an umbrella concept for integrating various life cycle-based approaches from research and practice with the aim to decouple economic growth from absolute resource use (Blomsma & Brennan, 2017)
While industrial symbiosis provides insights into inter-firm coordination for material circularity during production (Chertow & Ehrenfeld, 2012; Magnusson, Andersson, & Ottosson, 2019; Prosman, Waehrens, & Liotta, 2017) and closed-loop supply chain literature provides insights into remanufacturing (Guide & van Wassenhove, 2009; Savaskan, Bhattacharya, & van Wassenhove, 2004), there is little research on coordination for holistic product circularity (Hopkinson, Zils, Hawkins, & Roper, 2018; Revellio & Hansen, 2017; Toffel, 2003). We address this gap with three interrelated research questions: How can voluntary reverse cycles be centrally coordinated? What are the relationships between the central coordinator (OEM or retailer) and loop operators? And what are the loop configurations and potentials of different circular coordination patterns? We address these questions by utilizing the classic “make-or-buy” concept rooted in transaction cost economics (TCE; Williamson, 1991) and the resource-based view (RBV; Wernerfelt, 1984) to compare the degrees of vertical integration of different value creation architectures (Dietl, Royer, & Stratmann, 2009)
We propose to extend the open- versus closed-loop understanding from the material recycling context to product cycling, with closed loops defined as products being returned with their same inherent properties to the original value chain and open loops for cascade markets with possibly lower substitution effects (Krikke, 2011)
Summary
The circular economy (CE) has emerged as an umbrella concept for integrating various life cycle-based approaches from research and practice with the aim to decouple economic growth from absolute resource use (Blomsma & Brennan, 2017). Acting as a long-term vision for closed product, parts, and material loops, the CE concept aims to displace primary production, while evading potential rebound effects (Zink & Geyer, 2017). It covers both technical (i.e., products of use) and biological (i.e., products of consumption) cycles (EMF, 2012; McDonough & Braungart, 2002). It spans diverse actors, organizations, and life cycle stages (EMF 2012; Geissdoerfer, Savaget, Bocken, & Hultink, 2017; Stahel, 1984), transcending the narrow Journal of Industrial Ecology published by Wiley Periodicals LLC on behalf of Yale University
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