103 political, social, economic and financial considerations. Yet, this dialogue is needed to succeed in developing a CE capable of transforming the change.
104 the overlap of the concepts of sustainability and circularity, intensifies the barriers towards the growth of a literature on CE.
The common theories on business models evaluate the single company’s perspective, with few stakeholders. This outdated vision lays on a different concept of value creation, where the value is created by one company at the time and the value embedded in products is sold to customers and end-users. For example, the Business Model Canvas is centered on the linear consumption pattern, although some academics have suggested improvements.
Yet these improvements only extend the current model to considering sustainability within business models by adding new element for reducing the environmental impact. It is concluded that Circular Economy is still not addressed and most of the improvements have been directed towards the concept of sustainability instead. The tools and blueprints available to companies to guide the transition towards CE are not sufficient to assist the shift across different industries. Building on this, the number of actors involved across the value chain makes the transition more difficult.
This way of adapting theories fails to achieve the goal of rethinking the whole system implied for the creation of the Circular Economy, acting on the sole micro level of the single company. Conversely, in a CE the value created is the result of the synergies that have arisen between all the stakeholders involved in the system. This brings to reconsider the way business models consider how value is created and delivered.
With this regard, the Butterfly Diagram has been considered as the most recognized tool, because it focuses on the understanding of Circular Economy and its systems thinking perspective. Nevertheless, it lacks a strategic level of analysis and value creation within CE.
For this reason, the chosen theoretical approach has considered the ReSOLVE Framework as an extension of the Butterfly Diagram. It is concluded that the ReSOLVE completes the analysis of the Butterfly Diagram, assessing the fit of Circular business practices, aimed to material and resource recovery.
The combined use of the Butterfly Diagram and the ReSOLVE framework is consistent with the scope of the present research which investigates the Circular Economy in its systematic perspective. For this reason, it is believed that the use of other frameworks, such as the Business Model Canvas, extensively employed in the literature, would have biased the findings.
As a result, the present study has found that existing theories find difficult to grasp the full essence of the CE as it involves a holistic perspective and system thinking. The specific synergies between the actors are different across the industries. This makes more difficult the integration between technological and management perspective as the first can be very industry specific. For instance, Servitization theories in the economic literature lack of assessing the interplay between Servitization and technological innovations from the management perspective.
For this reason, the researchers of the present study have extended the chosen Products-Service System Framework with Garvin’s Eight Dimensions of Quality to understand the effect of technology on the value embedded in the products or PSSs. Yet, it has been found that the use of Garvin’s Eight Dimensions is a flexible framework for assessing the effect of IoT and technologies on products or PSSs that can be applied across different solutions.
105 Thus, the theoretical conclusion indicates how this thesis has contributed to the existing literature and create the base for understanding the empirical conclusion.
7.2 Empirical
The practical examples illustrate how Danish small medium-sized companies are providing solutions that help progress the transition towards a CE. Furthermore, it has been investigated how the case companies perceive CE value drivers and how they bring technological innovation in the play in order to bring value to the people and environment. On the one hand, it is possible to differentiate between low-tech and hi-tech companies. The first group includes SvampeFarm and Sprout. These two companies base their business models and activities on simple reuse of materials that do not need the use of advanced technologies. These companies’ commitment is directed towards the education of conscious consumers through the use of the products. On the other hand, the second group includes Kaffe Bueno, Schoeller Plast, Refurb and Plastix. These companies exploit advanced technologies in their cascading, maintaining, refurbishment or recycling. For these companies, innovation is not only connected to the idea behind the product but is strictly related to the investments in hi-tech machineries and techniques.
Nevertheless, all companies are affected by the existing infrastructure in today’s context. Today´s waste is collected in few categories, not separated or transported in a way that ensures material purity. An example of contamination that results from this is mold, making the spent coffee grounds unfit for use for the extraction of oil, and as soil for mushrooms. At the same time, plastic-based products are currently not sorted accordingly to the different plastic polymers. This hinders the recyclability and encourages waste handlers towards incineration.
The way end-consumers sort plastic-based products is still not efficient because of the lack of understanding of the differences between the polymers. On the other hand, it is also concluded that the improvement in waste sorting needs to be matched with product redesign for an easy disassembly. Also, electronic waste does not recover the embedded valuable materials and metals. Instead, the toxic substances contaminate the environment and are difficult to be dismantled. Further, the manual collection is not financially sustainable, showing that a large-scale solution is important for the niches to scale their business. In this sense, Denmark has proven to be receptive to the CE concept and has created policies to stimulate it. In this sense the Scandinavian country has already shown its commitment to energy efficiency and renewable energies. At the same time, Denmark has found compliant industries that pioneers green solutions.
For this reason, PSSs have been evaluated as a possible solution to solve the mentioned challenges within the Circular Economy. The analysis has highlighted that the three case companies of the biological side of the Butterfly Diagram, namely Kaffe Bueno, SvampeFarm and Sprout, have only been able to exploit product-oriented PSSs, which consist in the product-related services and advice and consultancy services while the application of IoT has been considered feasible only for Kaffe Bueno. For what concerns SvampeFarm and Sprout this is due to the different capabilities and focus of low-tech companies. Low-tech companies are mainly dedicated to product development and design, while outsource most of the logistics, both on the supply side and on the distribution side.
106 In this context, the integration of IoT within the current products or the suggested PSS has not been successful for all case companies. Overall, companies that process biodegradable nutrients have found limited applicability for IoT. This is because IoT sensors represent non-biodegradable materials that hinder the biodegradability of the products sold by these companies. Thus, their use would also be against their corporate image. However, the application of IoT-enabled PSS has been evaluated particularly successful for Schoeller Plast and Refurb. For these companies, the networks enabled by IoT represents the further opportunities for the development Circular Economy. For both IoT and CE, opportunities opened through growth of networks as the number of participants grows. If the number of connected actors increases, the higher the possibilities for sharing resources, reusing components and optimizing processes. Finally, for Kaffe Bueno and Plastix the use of IoT would be limited to improvements in the supply side of their businesses. Having more connected suppliers, would allow these companies to better synchronize the supply chain, refining the production planning.
It is concluded that the implementation of PSSs and IoT will be determined by the cooperation between companies and policymakers by defining new regulations that are able to attract investments to the companies operating within the Circular Economy. The policies have to incentivize the cooperation between the public and the private sectors. These policies have to aim to create transparent value for consumers, while creating profits for businesses. In order to achieve this, both companies and policymakers should consider political, social, economic and financial consequences. Although this dialogue requires efforts to be conducted, the benefits will be highly relevant and able to bring radical change across the multiple actors involved.