How companies navigate circular economy paradoxes: An organizational perspective

Abstract

The consideration and implementation by companies of only those circular economy (CE) practices involving economic returns (win-win solutions) is the result of a utopian and reductionist view of the circular transition. A more realistic and holistic perspective toward circular economy (CE) should recognize and embrace the complexities it entails and not be limited to only instrumental solutions. By drawing on the paradox theory, we delve into the conflicting issues that companies encounter in adopting circular initiatives and analyze the role of organizational attributes in the recognition and navigation of CE tensions. We tested our conceptual framework by using survey data from 303 manufacturing and construction companies in Italy. This study shows that cognitive diversity of internal managerial figures and supply chain collaboration foster the recognition of CE tensions at corporate level. In addition, the results reveal that companies with flexible organizational design, which collaborate with other supply chain actors, and recognize CE tensions are more likely to navigate CE paradoxes. Finally, the study indicates that establishing an experimentation and dialogue space increases the effect of flexible organizational design on navigating CE paradoxes. The research findings are relevant not only to managers and companies, but also to policy makers who can implement industrial policies that incentivize companies' development of organizational attributes likely to stimulate a paradoxical approach toward CE.