"Managing Product Circularity: The interplay of vertical integration, collaboration in service ecosystems and product design"
, Johannes Kepler Universität Linz (JKU), Linz, 4-2021
Managing Product Circularity: The interplay of vertical integration, collaboration in service ecosystems and product design
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The circular economy (CE) can be understood as a system-level innovation with implications be-yond an individual firm?s value chain. Therefore, a CE transition leads to a dynamic situation con-cerning actor constellations and rearrangement in the value chain and beyond. This dissertation focuses on complementary circular service operations (CSO), such as repair, reuse, refurbish, and recycling, that contribute to the full functionality of products, components, and materials over their entire lifetime. It thus provides insights into how manufacturers and retailers can increase their competitive advantage while promoting product lifetime extension.
This cumulative dissertation contributes to existing strategic management theory with a con-trasting approach by transferring the organizational boundary decision (make-or-buy) from an up-stream production perspective towards recovery processes in the downstream within the CE con-text. Based on a qualitative case study research design in the context of durable consumer elec-tronics (smartphones), it analyzes coordination mechanisms for product circularity covering socio-technical, product-service, and product-technology levels. Part of the research was the establish-ment of the Innovation Network aiming at Sustainable Smartphones (INaS) as a circular economy living lab (CELL). It combines participatory research from sustainability science with a business network approach to bring together previously unrelated actors in a cross-value chain setting.
Managing strategic product circularity requires central coordinators to engage with previously unrelated actors in the value chain to develop circular operational skills and safeguard their central positions. Based on multiple case studies, a typology of circular value creation architectures (CVCA) is proposed. It distinguishes a continuum between coordinated and uncoordinated archi-tectures. Central coordinators can either vertically integrate CSO, collaborate with loop operators in strategic networks, conduct outsourcing, or do nothing to offer adequate CSO (laissez-faire). A processual perspective demonstrates that slowing resource loops requires a careful combination of repair, reuse, and refurbishing activities as well as their deliberate integration into a firm?s strat-egy. While coordinated architectures have considerable incentives to adapt their product design towards circularity, they also face trade-off solutions. Central coordinators engaging in strategic product circularity, can follow either open or closed circularity approaches. While the latter takes maximum advantage of vertical integration but may lead to circular monopolies, open circularity allows for distributed service ecosystems to involve various circular complementors.
Overall, this dissertation strengthens the actor perspective in circular economy research and provides firms with strategic guidance for their positioning within a CE. Further research and so-cietal discourse are required to investigate the balance between autonomy and control rights in circular ecosystems and to further explore the implications of open and closed circularity.