Exploratory Studies On The Circular Economy

Wirtschaftsethik in der globalisierten Welt
Laura Frodermann
Exploratory Study
on Circular Economy
Approaches
A Comparative Analysis
of Theory and Practice
Wirtschaftsethik in der
globalisierten Welt
Reihe herausgegeben von

C. Lütge, München, Deutschland
Die Ordnungsethik analysiert die normativen Grundlagen moderner Gesellschaften ein-
schließlich ihrer ökonomischen Aspekte und macht sie für die praktische Gestaltung
zugänglich. Dies umfasst sowohl systematische als auch historische Perspektiven der
Wirtschaftsethik sowie verwandter Gebiete der Philosophie, Ökonomik, Geistes- und
Sozialwissenschaften.
Reihe herausgegeben von

Prof. Dr. Christoph Lütge
Technische Universität München
Deutschland
Weitere Bände in der Reihe http://www.springer.com/series/13464

Laura Frodermann
Exploratory Study
on Circular Economy
Approaches
A Comparative Analysis of Theory
and Practice
Laura Frodermann
München, Germany
ISSN 2524-3802 ISSN 2524-3810 (electronic)

Wirtschaftsethik in der globalisierten Welt
ISBN 978-3-658-21948-2 ISBN 978-3-658-21949-9 (eBook)
https://doi.org/10.1007/978-3-658-21949-9
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Acknowledgements
I started working on this thesis at the end of 2012, which means I have been on this
journey for over four years now. A number of people have accompanied me during
this time and supported me greatly.
First, I want to thank my academic supervisor Prof. Dr. Christoph Lütge for
providing me the opportunity to realize this project. I am grateful for your support
and in particular the intellectual freedom you gave me. I was able to work on a topic
which really interests me. Thank you for your guidance, input, and trust in my work.
I want to express my sincere gratitude to my committee members Prof. Dr. Markus
Beckmann and Prof. Dr. Sebastian Pfotenhauer for your interest in my thesis and
for taking over the roles of second supervisor and chairman of the committee. I
would also like to thank all the other colleagues at the chair for challenging me at
the doctoral seminars and for providing constructive feedback.
In addition, I want to thank my family and friends. You are my strength, and
without your love and support I would never have started this journey. I am especially
grateful to my parents and my sister. Your unconditional love has always been the
motivation in my life. Without your support this work would not have been possible.
Finally, I would like to thank the most important person in my life besides my
son, my husband. You supported me in more ways than I can express. Thank you
for your patience in the endless debates about my thesis and your encouragement
and true belief in me during this challenging time.
V
Table of Contents
Table of Contents
Table of Contents
List of Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII
List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XV
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Relevance of Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Research Questions, Scope and Contribution . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Structure of this Thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2 Theoretical Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Roots of Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Resource Management and Sustainable Development . . . . . . . . . . . . . 10
2.2.1 Sustainable Development, Sustainable Innovation
and the Role of Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2.2 Sustainability as Limit to Growth? . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3.1 Circular Economy in the Context of other New
Economy Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3.2 Fundamentals of Circular Economy . . . . . . . . . . . . . . . . . . . . . . . 18
2.3.3 Circular Economy as Economic Strategy –
Reasons to engage in Circular Economy . . . . . . . . . . . . . . . . . . . 22
2.3.5 Demarcation to Post-Growth Economics . . . . . . . . . . . . . . . . . . 29
2.3.6 Circular Economy in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.3.7 Conceptual Framework for this Thesis . . . . . . . . . . . . . . . . . . . . . 34
VII
VIII Table of Contents
3 Research Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.1 Research Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.1.1 Reasons for choosing a Qualitative Research Approach . . . . . . 39
3.1.2 Quality Criteria in Qualitative Research . . . . . . . . . . . . . . . . . . . 40
3.2 Multiple Case Study Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.2.1 Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2.2 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.2.3 Case Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.2.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4 Case Description and Within-Case Analysis . . . . . . . . . . . . . . . . . . . . . . . . 51

4.1 Definition and Operationalization of Parameters . . . . . . . . . . . . . . . . . 51
4.1.1 Framework for Description of Circular Economy
Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.1.2 Further Parameters used for the Description of the Cases . . . . 53
4.2 Background Information on the Cases and Case Order . . . . . . . . . . . . 53
4.3 Case Alpha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.3.1 The Company’s Circular Economy Approach . . . . . . . . . . . . . . . 55
4.3.2 Motivation to engage in Circular Economy . . . . . . . . . . . . . . . . . 58
4.3.3 Challenges for the Implementation . . . . . . . . . . . . . . . . . . . . . . . . 58
4.3.4 Economic Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.4 Case Beta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.5 Case Gamma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.6 Case Delta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.7 Case Epsilon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Table of Contents IX

4.8 Case Zeta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.9 Case Eta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
4.10 Case Theta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.11 Case Iota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5 Result of Analysis and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

5.1 Implementation of the Circular Economy Concept . . . . . . . . . . . . . . . . 97
5.1.1 Multiple Possibilities for Implementation . . . . . . . . . . . . . . . . . . 97
5.1.2 Motives to engage in Circular Economy . . . . . . . . . . . . . . . . . . 100
5.2 Impacts of Circular Economy Implementation on
Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
5.2.1 Monetary Aspects of Circular Economy . . . . . . . . . . . . . . . . . . 103
5.2.2 Non-Monetary Aspects of Circular Economy . . . . . . . . . . . . . . 108
5.2.3 Discussion on Impacts of Circular Economy . . . . . . . . . . . . . . 113
5.3 Practical Challenges for Realizing Benefits
in a Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
5.3.1 Nascent Stage of Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
5.3.2 Lacking Coordination of Concept Implementation . . . . . . . . . 118
5.3.3 Increased Entrepreneurial Efforts . . . . . . . . . . . . . . . . . . . . . . . . 121
IX
X Table of Contents
6 Summary and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

6.1 Summary of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
6.2 Implications for Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
6.3 Implications for Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
7.1 Critical View on Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
7.2 Limitations and Opportunities for Future Research . . . . . . . . . . . . . . 137
8 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
8.1 Semi-structured Interview Guideline in German . . . . . . . . . . . . . . . . 141
8.2 Quotations: Original German Quote and English Translation . . . . . 144
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
List of Figures
Fig. 1 Illustration of circular economy in the context of other new

economy models (own illustration) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fig. 2 Overview of monetary and non-monetary benefits derived
from literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fig. 3 Research process based on Yin, 2014 and Eisenhardt, 1989 . . . . . . . . . 42
Fig. 4 Visualization of closed-loop production process of case Gamma
(Based on figure in Product Profile, 2015, p. 6) . . . . . . . . . . . . . . . . . . . . 66
Fig. 5 Overview of identified impacts resulting from circular
economy implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Fig. 6 Overview of identified challenges in the context of circular
economy implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Fig. 7 Impacts of circular economy implementation (results from
case study) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Fig. 8 Challenges deriving from circular economy implementation
(results from case study) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
XI
List of Tables
Table 1 Literature review of circular economy benefits . . . . . . . . . . . . . . . . . . 22

Table 2 Analysis framework for this thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Table 3 Overview of collected data per case . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table 4 Analysis framework for this thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Table 5 Background information on all cases . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Table 6 Result of evaluation of maturity level of main circular
economy approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Table 7 Overview of circular economy approach of case Alpha . . . . . . . . . . 56
Table 8 Overview of circular economy approach of case Beta . . . . . . . . . . . . 61
Table 9 Overview of circular economy approach of case Gamma . . . . . . . . . 65
Table 10 Overview of circular economy approach of case Delta . . . . . . . . . . . 72
Table 11 Overview of circular economy approach of case Epsilon . . . . . . . . . 76
Table 12 Overview of circular economy approach of case Zeta . . . . . . . . . . . . 81
Table 13 Overview of circular economy approach of case Eta . . . . . . . . . . . . . 86
Table 14 Overview of circular economy approach of case Theta . . . . . . . . . . . 90
Table 15 Overview of circular economy approach of case Iota . . . . . . . . . . . . 93
Table 16 Results of evaluation of motivation reasons categorized
into four motive groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Table 17 List of monetary sub-categories and their effect on businesses . . . 103
Table 18 Interview comments on high R&D expenses . . . . . . . . . . . . . . . . . . 106
Table 19 List of non-monetary aspects and their impacts for businesses . . . 108
Table 20 Citations on creation of a positive brand image . . . . . . . . . . . . . . . . 111
Table 21 Dependencies between impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Table 22 Analysis framework for this thesis . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Table 23 Overview of implementation approaches over all cases . . . . . . . . . 127
Table 24 Mapping of challenges to circular economy approaches . . . . . . . . . 133
XIII
List of Abbreviations
CCS Carbon Capture and Storage

CEO Chief Executive Officer
CSR Corporate Social Responsibility
EREP European Resource Efficiency Platform
GDP Gross Domestic Product
LCA Lifecycle Analysis
LOHAS Persons that live a Life of Health and Sustainability
PET Polyethylene Terephthalate
R&D Research and Development
TPU Thermoplastic Polyurethane
XV
Introduction
1 Introduction 1
“The future availability of natural resources – defined

here as food, water, energy, and minerals – is critically
important. All individuals and nations require them to
sustain current standards of living, as well as to increase
economic activity” (World Economic Forum 2014b, p. 5).
The perspectives on the future availability of natural resources are highly contest-
ed. The perceived risks of resource scarcity as well as the appropriate responses to
mitigate these risks differ between stakeholders, industries, and countries (World
Economic Forum 2014b). A report from the United Nations Environment Pro-
gram indicates an increase in the extraction of materials between the years 1900
and 2005 particularly for minerals (by factor 34), ores and industrial minerals (by
factor 27), and fossil energy (by factor 12) (United Nations Environment Program
2011). This was fueled by a rapid growth in demand which led to an increase in
prices, and erased reductions in commodity prices over the last 100 years (World
Economic Forum 2014b).
Due to complexities, uncertainties, and interconnected drivers of availability it
is almost impossible to predict the world’s future supply and demand of resources.
However, the necessity for a shift in social, political and economic patterns has
been acknowledged more and more by stakeholders. A perception has developed
that only by changing the current way of resource consumption and improving
resource efficiency, can a sufficient supply of natural resources be ensured, existing
biodiversity be protected, and sustainable growth for the global population be
enabled (Tukker 2013a; BIO Intelligence Service 2012; McKinsey&Company 2011;
European Commission 2011).
With the evolving concept of the “circular economy”, an answer can be offered
to this increasing demand because it aims to transform the function of resources
in an economy (Ma et al. 2015; Liu and Bai 2014; Mathews and Tan 2011; Feng
© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2018 1

L. Frodermann, Exploratory Study on Circular Economy Approaches,
Wirtschaftsethik in der globalisierten Welt, https://doi.org/10.1007/978-3-658-21949-9_1
2 1 Introduction
and Yan 2007). In changing the way of organizational resource consumption the
circular economy offers a framework that should inspire companies to re-think
the design of their products, as well as their processes and business models. The
innovative idea of the circular economy is to restore the life of a product by making
it reusable, shift to the use of renewable energy, use non-toxic substances only and
eliminate waste. Instead of recycling waste at the end of the value chain, a smart
and innovative product, process or business model design should prevent or at least
significantly reduce waste.
The potential benefits of the circular economy appear to be numerous. Not only
economic benefits for organizations such as material cost savings, reduced price
volatility, and improved security of supply can be achieved but also environmental
pressures and impacts can be reduced (European Commission 2014). In its first
report, the Ellen MacArthur Foundation identified an “annual net material cost
savings opportunity of USD 630 billion when looking at a subset of EU manufac-
turing sector” (Ellen MacArthur Foundation 2012, p. 7).
Organizations, governments and researchers, particularly from China, recog-
nize the potential value of the circular economy (Ma et al. 2015; Liu and Bai 2014;
Naustdalslid 2014; European Commission 2014; World Economic Forum 2014a;
Tukker 2013b). More and more governments have introduced circular economy
goals, whilst organizations have started to implement the circular economy into
their businesses and researchers have increased their research activities in this
new research area.
1.1 Relevance of Circular Economy

1.1 Relevance of Circular Economy
Earlier management studies discovered the potential of a competitive advantage
in the incorporation of environmental concerns into their business operations
(Porter and van der Linde, C. 1995). When evaluating the relationship between
incorporation of environmental issues and a firm’s performance, results have shown
an increase in profits (Russo and Fouts 1997). Scholars have already investigated
various strategies organizations can adopt to reduce pollution and increase product
efficiency. Areas of previous research include supply chain management (Bell et al.
2013; Seuring and Müller 2008), reverse logistics (Jayaraman and Yadong L. 2007;
Guide et al. 2003), and end-of-life product management (Kocabasoglu et al. 2007;
Pagell et al. 2007).
Despite these studies focusing mainly on environmental protection and product
efficiency, it remains a main challenge for organizations to create a win-win situation
1.2 Research Questions, Scope and Contribution 3
for themselves and the environment. One framework that supports organizations to
successfully incorporate environmental concerns is the circular economy (Gregson
et al. 2015). The circular economy allows business leaders to integrate economic,
environmental and social concerns into the vision of their organizations. It is a
promising concept which provides several possibilities for firms and practitioners
on how the threat of resource scarcity can be turned into business opportunities,
e.g. through the upcycling of old products or repurposing of production wastes.
But it is not only practitioners who have shown a growing interest in the concept,
policy makers have also demonstrated increased attention. A number of policies
have been introduced to support the implementation of the circular economy. As
a result of the growing pressures on natural resources, the European Commission
initiated the European Resource Efficiency Platform (EREP) in 2012. The aim is to
work towards a transition towards a resource-efficient and ultimately regenerative
circular economy (European Commission 2012). Since its foundation, the platform,
consisting of politicians and practitioners, has provided guidelines to promote the
change towards a circular economy and is implementing an enabling framework
for the circular economy.
From an academic perspective, the topic offers great potential to contribute
substantially to the ongoing sustainable transformation discussion (Gregson et al.
2015). Coming back to the studies mentioned at the beginning of this chapter, the
circular economy can result in a promising strategy for organizations to incorporate
environmental concerns with the effect of achieving competitive advantage or any
other positive effect on organizational performance. Gaining a deeper understand-
ing of the concept, its implementation, and also its resulting benefits as well as the
challenges it presents, contributes to the overall sustainability discussion and the
recent debate on the circular economy.
1.2 Research Questions, Scope and Contribution

1.2 Research Questions, Scope and Contribution
As introduced above, little academic attention has been paid so far to the circular
economy except in China where academic papers on the topic have been written
and first results indicate organizational benefits such as cost savings, increased
revenues, and a positive brand image (Geng et al. 2012; Park et al. 2010).
However, the circular economy is a concept which offers a variety of possible
modes of implementation. Consequently, there is no one size fits all solution and
implementation differs from company to company depending on the business
model, industry, country, legislation etc.. For that reason, the textile industry has
3
4 1 Introduction
been selected as the focus industry accompanied by other industries selected to

explore which modes of the circular economy have been implemented and which
benefits companies have derived from it. Consequently, three key questions form
the research focus of this thesis:
1. How is the concept of the circular economy implemented?

2. What impact has the implementation of circular economy on organizations?
3. What are the challenges deriving from circular economy implementation?
The aim and objective of this research project is to inductively develop a conceptual
understanding of the circular economy as a concept and provide insights on how
organizations implement it. Moreover, the purpose is to gain a deeper understanding
for drivers to engage in the circular economy and challenges the organizations are
facing. In contrast to the existing literature on the circular economy in China, this
study concentrates on Western culture countries. In doing so, this thesis aims to
primarily contribute to the open questions in research on the circular economy.
Moreover the study offers potential implications and strategies for managers – those
considering to invest in the circular economy approach as well as those that have
already started their engagement.
1.3 Structure of this Thesis

1.3 Structure of this Thesis
This dissertation is structured into seven chapters. After introducing the research
focus and main questions in this chapter, chapter 2 deals with the theoretical
background by explaining the link between the current sustainability debate and
the role of the circular economy in this debate. Furthermore, the concept of the
circular economy is explained in detail by introducing its principles, providing a
review on existing literature on its economic benefits, and developing a framework
which is used in the course of this study to analyze cases and draw conclusions.
Chapter 3 discusses the research methodology applied to answer the research
questions posed. In section 3.1, the design of the qualitative multiple case study
approach is presented as well as reasons given as to why this approach has been
chosen as the adequate one to answer the research questions. Moreover, quality
criteria for qualitative research are introduced and their adherence illustrated.
Section 3.2 outlines the research steps by presenting how and why these cases have
been selected for this study, and how the data has been collected and analyzed.
1.3 Structure of this Thesis 5
Nine selected case studies represent the different aspects of the circular economy
in the form of a within-case analysis (chapter 4). To develop a deeper analysis of
the circular economy, these cases have been investigated for their motivation, their
circular economy approach, challenges and the economic impact they have had on
their business through the implementation of the circular economy.
Chapter 5 sums up the important and recognizable aspects of the selected cases
and provides an overview of consolidated key results.
The central findings of this study and their implications on current views in
research will be discussed as well as the impact on practical management (chapter 6).
The contributions and limitations of this study as well as a critical view on
circular economy are found in the concluding chapter 7 where opportunities for
future research are also outlined.
5
Theoretical Foundations
2 Theoretical Foundations 2
Before analyzing the circular economy and its economic benefits for corporations
this chapter will begin by providing some background information on sustainable
development and later elaborate the role that the circular economy can play in
achieving sustainable development.
Before illustrating the development of the term sustainable development to its
current well-known definition this chapter will present a terminological differen-
tiation between sustainability and sustainable development. Although the terms
sustainability and sustainable development are often used interchangeably, the
concepts can be differentiated: sustainable development is seen as the process of
satisfying the current needs of the population without compromising the capacity
to do so of future generations, as stated in the Brundtland Report in 1987 (World
Commission on Environment and Development 1987). On the other hand, sustain-
ability has its origin in the context of maintaining a certain number of populations,
e.g. in fisheries or forests. It is often understood as the protection of non-renewable
natural resources, biodiversity and avoidance of climatic changes (Lélé 1991). With
the main focus being on environmental issues this type of sustainability is also
framed as ecological sustainability. There is also social sustainability defined as
sustainability that “refers to actively supporting the preservation and creation of
skills as well as the capabilities of future generations, promoting health and sup-
porting equal and democratic treatments that allow for good quality of life both
inside and outside of the company context” (Longoni and Cagliano 2015, p. 218).
Hence, sustainability can be seen as part of sustainable development and the latter
term describes the transition process towards a sustainable world. This research
project is on sustainable development as the circular economy can be understood
as a concept contributing to this transition process.

8 2 Theoretical Foundations
2.1 Roots of Sustainable Development

2.1 Roots of Sustainable Development
The 1987 Brundtland Report is often seen as the hour of birth for sustainable de-
velopment. However, concerns were raised long before this document by environ-
mentalists who published their considerations regarding the impact of industrial
society on the environment.
The United States established its first Earth Day in 1970, as a result of increased
ecological awareness led by Rachel Carson and others (Edwards 2005; Carson
1962). The purpose of Earth Day was to show society the consequences industrial
production has had on the environment. Over 20 million people throughout
the US celebrated Earth Day. This event triggered a political process in the US
government which ultimately led to the creation of laws such as the Clean Air
Act or the Clean Water Act (Edwards 2005). A United Nations Conference that
took place in Stockholm in 1972 is another milestone in the history of sustainable
development. Thanks to this event the American Earth Day was internationalized
and various environmental protection agencies were established as a result. More-
over, the United Nations Environmental Program was set up with the objective of
encouraging people to care for the environment and to improve their own lives
without jeopardizing the environment for future generations. In the following years
sustainable development gained broader attention which saw the creation of the
Declaration of State of Emergency in 1978 in the US by President Jimmy Carter,
followed by the Comprehensive Environmental Response, and the Compensation
and Liability Act of 1980, also known as Superfund (United States Environmental
Protection Agency (EPA) 2002). Publications such as “How to save the World” by
Robert Allen in 1980 or “Building a Sustainable Society” by Lester Brown in 1981
captured public’s attention and further promoted the idea of a new relationship
between humanity and the environment. Shortly after, the United Nations created
the World Commission on Environmental and Development (WECD), led by the
former prime minister of Norway Gro Harlem Brundtland who was responsible for
the widely acknowledged Brundtland Report “Our Common Future”. The report has
provided the most well-known definition of sustainable development describing it
as “development that meets the needs of the present generation without compromising
the ability of future generations to meet their own needs” (World Commission on
Environment and Development 1987, p. 41). The Brundtland Report was also one
of the first official documents to mention the relationship and interaction between
ecology, the economy and social equity (World Commission on Environment and
Development 1987).
The next major step in bringing sustainable development to wider attention was
the “Agenda 21: Earth’s Action Plan” enacted at the World Summit in 1992 in Rio
2.1 Roots of Sustainable Development 9
de Janeiro. It was a conference which brought together more than 180 world leaders
who agreed to adhere to the 27 principles of the “Rio Declaration” for action on
sustainable development. Ten years after this summit the World Summit on Sus-
tainable Development (WSSD) took place in 2002 in Johannesburg. As a result of
the conference a “Plan of Implementation” and “The Johannesburg Declaration on
Sustainable Development” were released. The documents contain ways in which to
act to eradicate poverty, deal with consumption and production issues, and health
concerns (World Summit on Sustainable Development 2002a, 2002b; Edwards 2005).
In comparison to the first conference the second one in Johannesburg was able to
more effectively include issues like economic and social equity into the discussion
besides environmental topics (Edwards 2005). However, both of these conferences
specified principles but did not propose an action plan on how these initiatives
would be implemented. The effects of this are apparent today with corporations
facing challenges in how to meet the expressed expectations in the Agenda 21 and
in the other two documents mentioned above while achieving a satisfying business
performance (Rainey 2010).
This summary of milestones and key conferences on sustainable development
shows the evolution of the “sustainability revolution” based on the often called three
E’s: ecology/ environment, economy/ employment, equity/ equality (Edwards 2005).
The three E’s express the interlinkage of three distinct areas for sustainable actions.
First the environment as one component of sustainable development shall be
explained. This includes maintaining an intact ecosystem, and a long term stock
of natural resources as well as ensuring ecological basics for human society such
as clean water, air, and food. Second, sustainable action in the area of economy
expresses the close relationship between ecosystems and the economy. A certain
dependence has been identified between the two concepts. A healthy ecosystem
with all its services is important for a healthy, growing economy. While a dynamic
economy contributes to a responsible management of natural resources. This third
aspect of sustainable development describes the understanding that well-being
of an individual and the larger community are interdependent. Furthermore, it
adds the recognition that an equitable distribution of resources is required for the
viability of society (Edwards 2005).
To summarize, sustainable development is built on three pillars: economy,
ecology and society. It engenders a dynamic which balances the environmental
exploitation, creation of economic wealth and the fulfillment of social needs.
However, corporations are still searching for ways to find this balance and achieve
sustainable success.
9
2.2 Resource Management and Sustainable Development

2.2 Resource Management and Sustainable Development
As described in the previous chapter, the concept of sustainable development has
increased in attention since the 1970s. Not only are politicians and governmental
and non-governmental organizations showing interest in the topic, but in academia
this fairly new research field has become more and more important. As mentioned
previously, the definition of sustainable development in the Brundtland Report is
probably the best-known but following its publication the concept of sustainable
development advanced significantly and took on various different definitions and
descriptions, e.g. Barbier 1987; Pearce et al. 1989; Lélé 1991; Common and Perrings
1992. The most recent debate has tended to focus on the differentiation between
weak and strong sustainability (Grissom et al. 2014).
The origin for these two paradigms is that capital is a key concept for human
well-being and should for that reason remain at a permanent level and under no
circumstances decline. Capital can be defined as the “stock that possesses the ca-
pacity of giving rise to flows of goods and/or services” (Ekins et al. 2003, p. 166).
The controversial subject in this debate between weak and strong sustainability
concerns the substitutability of all forms of capital: man-made capital, human
capital, and natural capital (Pearce and Atkinson 1998). Natural capital represents
every structure and process that provides ecosystem functions. Whereas human
and man-made capital describes e.g. production plants, infrastructure but also
skills and knowledge (Ang and van Passel 2012).
Weak sustainability assumes that all forms of capital are substitutes, which means
that they can replace each other without any loss or change in social wellbeing.
Supporters of this view therefore argue that the exploitation of one kind of capital
(particularly natural capital) can be replaced by other forms of capital. Solely the
aggregate stock level of capital matters, which should therefore be maintained or
ideally added to. Degradation of natural capital can be compensated by the esti-
mated equivalent amount of other forms of capital (Pelenc and Ballet 2015). The
theory requires sufficient technological innovations to compensate environmental
damage and to maintain human well-being (Ang and van Passel 2012). Prominent
supporters of this view are P. Dasgupta and Heal, J. M. Hartwick and R. M. Solow.
Strong sustainability on the other hand contradicts the view that capital can be
kept at the same level by replacing one form of capital with another one. Instead,
advocates (such as Ekins et al. 2003; Chiesura and Groot 2003; Groot et al. 2003;
Neumayer 2003) of strong sustainability see different forms of capital as comple-
mentary for human well-being with a qualitative difference (Ekins et al. 2003; Daly
1995). Supporters are skeptical or even pessimistic when it comes to the question,
if technological progress is sufficient to e.g. replace exploited natural capital.
2.2 Resource Management and Sustainable Development 11
Therefore, natural capital has to be maintained to remain at the current level of

human well-being (Daly 1995). For some scholars this even means to retard or even
completely inhibit global economic growth to stop depletion of natural capital
(Balisacan et al. 2014). However, the point on economic growth and sustainable
development, respectively the circular economy will be elaborated on later in this
thesis in chapters 2.2.2 and 2.3.5.
To sum up, strong sustainability sees certain elements of natural capital as crit-
ical for human well-being. These elements have been conceptualized as ecosystem
services (Brand 2009). Ecosystem services have been defined by the Millennium
Ecosystem Assessment as “benefits people obtain from ecosystem” (Millennium
Ecosystem Assessment 2005, p. 5). More precisely they can be distinguished between
provisioning services (drinking water, food production, etc.), supporting services
(water cycling, etc.), regulating services (water and air regulating services, etc.)
and cultural services (recreation, tourism, etc.). However, the strong sustainability
approach does not make clear which services play the key role in supporting life
and are therefore critical to maintain (Pelenc and Ballet 2015; Ekins et al. 2003).
Reducing degradation of natural capital and maintaining the natural capital stock
represents the link to the topic of this thesis on the circular economy. Theoretically,
this is exactly the purpose of circular economy, but empirical studies are required
to further deepen the understanding of this concept and its potential in terms of
maintaining natural capital at a constant stock level.
2.2.1 Sustainable Development, Sustainable Innovation and

the Role of Circular Economy
One of the main questions within the sustainability debate is if the world is on
a trajectory in which living standards can be further improved or at least main-
tained into the indefinite future, or if natural resources are being exploited which
might lead to a downturn at some point (Brander 2007). This question also refers
to “meeting the needs of the present generation without compromising the ability of
future generations to meet their own needs” an integral part of the widely used defi-
nition of sustainable development, as mentioned previously. (World Commission
on Environment and Development 1987, p. 41).
As a result of the concerns about the evident ecological consequences of human
activities, the world community committed itself to the principles of sustainable
development as described in the Brundtland Report in 1987. This commitment
made by the participating countries requires a transition towards sustainability
implying changes in technologies, infrastructure, lifecycles and institutions as
11
well as in structures of consumption and production that were radical, long-term

and far-reaching (Ceschin 2013; Kemp et al. 2007; World Resource Institute 2005;
Rennings 2000). Sustainability transition is also defined as “long-term, multi-di-
mensional, and fundamental transformation processes through which established
socio-technical systems shift to more sustainable modes of production and consump-
tion” (Markard et al. 2012, p. 956). To achieve these kind of changes, researchers
particularly stressed the importance of innovation and more specifically system
innovations (Gaziulusoy et al. 2013; Loorbach 2010).
The potential of system innovations for sustainable development has been
recognized and investigated since the early 1990s (Weaver et al. 2000). Since then
the topic garnered the attention of various researchers (Tukker et al. 2008; Elzen
et al. 2002; Geels 2002; Green and Vergragt 2002; Partidário 2002; Partidário
and Vergragt 2002). Although no common definition has been established by
any academic scholar, system innovation for sustainability can be described as
a combination of innovations on various levels to provide service in a new way.
This entails a socio-technical change with new ways of practice and consumption
(Weber et al. 2008; Geels 2005). The term socio-technical in this context means
that this change does not only affect a technological change but in addition it
requires a modification of social patterns. These fundamental shifts usually take
several decades (Weber et al. 2008) and require an interplay between a variety of
actors such as policy makers, knowledge-generating institutions, companies and
customers (Gaziulusoy et al. 2013).
These requirements for system innovations lead to the role the circular econ-
omy can play in the transition towards sustainable development. As described by
Geng and Doberstein (2008) the circular economy in China is seen as a socio-eco-
nomic organizing principle which takes place on three levels: corporate (micro),
inter-firm (meso), and societal (macro) level. The first two levels mainly include
measurements of cleaner production of singular companies or in eco-industrial
parks. While the purpose of these two levels is to use resources more efficiently
e.g. by using by-products from some businesses as inputs for their production the
third level concentrates on production as well as consumption patterns. On a macro
level activities from micro and meso level are included and linked to a network for
recycling, reusing, resource saving and circulation. At this level, authorities play an
important role for the implementation by linking the organization to individuals,
households, and societal infrastructures (transport, refuse collection, recycling,
etc.) (Naustdalslid 2014).
2.2 Resource Management and Sustainable Development 13
2.2.2 Sustainability as Limit to Growth?
When Meadows et al. (1972) published their report, “The Limits to growth”, for the
Club of Rome, the broader public was confronted with the thought that only limited
growth is possible on a finite planet with finite resources. Although the publication
is not the first one to address this topic it was probably the most successful at gaining
significant public attention. As the title of the book suggests, the authors depict a
scenario for the future in which the death rate decreases, birth rates increase and the
demand for food and other products grow to a point of collapse where resources are
depleted and a lack of food and health issues eradicate a large part of human kind.
The model of Meadows and colleagues examines the interaction of the following
five subsystems: population, pollution, non-renewable resources, food and industrial
output. In their scenario, even under the assumption that society learns to more
efficiently conserve nonrenewable resources, the collapse will come due to pollution.
The growing world population and the consequently increased demand for food and
other goods will lead to problems in food production erasing three-quarters of the
world’s population (Meadows et al. 1972). The authors come to the conclusion that
the only possible way to avoid this collapse is to introduce policies to force people
to have fewer children and to limit general consumption. Consequently, this might
lead to a significant loss in well-fare and a materialistically poorer society. With
regards to their calculations, Meadows and his coauthors examined 19 resources
of which twelve were going to run short within the next 40 years. They assumed
an on-going exponential growth in demand and even included in their analysis an
assumption that reserves will be five times as high as known to date. However, their
result indicated that short running on these resources can only be extended by a few
decades. The knowledge one has today shows that assumptions in the report have
been incorrect. Reserves of critical resources (as defined by Meadows et al. 1972)
are still available today, some even at a higher amount than what was available 40
years ago. This can be explained by taking petroleum as an example. In the report
of 1972 the known reserves of petroleum were 500 billion barrel. 40 years later the
used amount of petroleum is 760 billion and the estimated reserves are at 1.2 trillion
barrel. The paradox of how increased demand can lead to increased reserves can be
explained easily. Increased demand leads to higher prices which makes depletion,
even in areas which are difficult to access, economically beneficial. Furthermore,
new extraction technologies, effective exploitation of oilfields and the discovery of
new fields can explain the above paradox (Fücks 2013).
The book from Meadows et al. received a high amount of attention which helped
in initiating a discussion on the environmental concerns. This debate deals with
the depletion of resources and how demand for food and other products can be
13
satisfied with a growing population in the future. However, numerous scientists

have since criticized the report. One of the first critics was H. S. D. Cole in 1973.
He re-used Meadow’s model with different assumptions and arrived at different
results. Other scientists criticizing Meadow’s results and defending economic growth
include W. Beckerman and more recently B. Lomborg (Lomborg 2012; Beckerman
1974). The Danish scientist B. Lomborg pointed to one major subsystem Meadows
et al. missed in their observations. They did not take into consideration the factor
of human ingenuity and the strength innovations can have. Through innovation,
human society can not only increase the use of depleted resources, but can also
increase the ways in which to access untouched resources (Lomborg 2012). This is
not beneficial for the environment in every case which will be explained in more
detail later in this chapter.
Another point of criticism is that Meadows et al. did not come up with a real-
istic solution to stop resource depletion. Current economic systems are based on
growth. It is highly unrealistic to change this growth-based economy concerning
the predicted loss of welfare for the society. Moreover, the suggestion to introduce
restrictive policies regarding birth rates and consumption is unlikely to be followed
in democratic governments but rather in authoritarian systems.
While acknowledging all the criticism mentioned above, Meadows report raised
a lot of awareness in the public realm which engendered further thoughts. As men-
tioned above, decreasing resource reserves lead to an increase in prices. While this
might lead to environmental damaging procedures of resource extraction, there is
also positive side to increased prices. Corporations either start looking for substi-
tutes for these resources or try to increase their resource productivity to achieve
more independence from the respective resource.
Therefore, the question should not be if economic growth can be combined with
environmental concerns but how growth can be combined with preservation of the
environment. To answer the second question resource productivity and eco-effi-
ciency play an important role in the context of environmental concerns and lead
to the concept of decoupling. This concept has the objective of reducing resource
depletion and environmental impact while ensuring economic growth (United
Nations Environment Program 2011). Therefore, decoupling can be understood
as an important factor to ensure long-term economic growth under the condition
of sustainable development.
Resource decoupling describes the process of producing the same amount of
output with a reduced amount of primary resources. This can be achieved by using
less material, energy, water as well as land resource and reusing material. Resource
decoupling can be applied for a production chain, an economic process, a whole
2.3 Circular Economy 15
economic sector or even for a national economy (United Nations Environment

Program 2011).
Impact decoupling means to reduce negative environmental impact while
increasing or maintaining the economic output. In this sense all impacts are im-
portant whether they occur during resource extraction, production, use phase or
post-consumption phase. Lifecycle Analysis (LCA) is an adequate tool to estimate
the impact. However, on a higher level such as within the national economy or
within the economic sector LCA is very difficult to use due to the variety of influ-
encing factors (United Nations Environment Program 2011). Impact decoupling
is especially important to avoid overstressing central eco systems such as climate,
land, ocean and water reservoirs.
This leads to the conclusion that it is not important to entirely stop growth but
to change the way that the economy is growing. By decoupling economic growth
from resource consumption economic growth can be further maintained while
ensuring sustainable development. The objective has to be to minimize the con-
sumption of resources and the impact on the environment as well as to use human
capacity to create sustainable ways of life with the almost infinite solar energy as
a source of production and life.
2.3 Circular Economy

2.3 Circular Economy
The circular economy concept emerged as a prominent policy goal on several
political and business agendas during the late 1970s as a result of climatic changes
and the fear of rising resource prices (Gregson et al. 2015; European Commission
2014). First, a definition of the concept of circular economy is provided. Therefore,
this chapter aims to delimit circular economy from other prominent or emerging
concepts in the area of environmental protection as well as from the post-growth
movement. The benefits of circular economy as described in the literature reviewed
are presented later in this chapter. Lastly, a conceptual framework structuring po-
tential circular economy business models is developed. This framework is employed
when undertaking the case study analysis later in this thesis.
15
2.3.1 Circular Economy in the Context of other New Economy

Models
As a contrast to the current industrial economy, new types of economies have

emerged and gained enormous popularity within the last decade. ‘Collaborative
economy’, ‘restorative economy’, ‘service economy’ and ‘circular economy’ represent
potential replacements of the current take, make and dispose economy (Ellen
MacArthur Foundation 2012). Some of these alternative economic models can be
Figure 1.into
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section movement’
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an overview section provides
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these economic models and their sub-concepts. Since in the literature some of these
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literature some of theseitconcepts
is sometimes diffi
are often usedcult to differentiate
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Fig. 1 Illustration of circular economy in the context of other new economy models
(own illustration)
A collaborative economy is a decentralized economy with networks of individuals

and communities instead of institutions. This type of economy aims to change the
way of current production, consumption, finance and education (Botsman 2013).
Other phrases describing this kind of economy are: ‘collaborative consumption’
and ‘sharing economy’ or ‘peer economy’. This type of economy brings together
investors and inventors to share, select, produce and distribute new products (e.g.
www.quirk.com) or foster an ideal utilization of products through redistribution
and shared access (e.g. www.airbnb.com). Examples include e-businesses such as
www.zopa.com which illustrates a new way of financing projects through peer-
to-peer financing and www.coursera.org providing universal access to free online

courses from top universities and educational organizations.
To summarize, the three main commonalities for concepts in a collaborative
economy can be identified as follows: (I) A shift of power away from institutions
towards networks of individual actors (II) main drivers are technological innovation,
shifting values, economic realities and environmental pressure and (III) innovative
and efficient product utilization (Botsman 2013).
Restorative Economy also named ‘regenerative economy’ describes the need
to develop a new relationship between the natural and the business system. This
relationship should be one that is restorative instead of degrading and where the
economy should imitate the efficient practices of nature. Drawing inspiration
from nature reflects the idea of designing products in a way that includes their
deconstruction and also by-products which occur during the production process.
This means, that the current way of producing products and throwing them away
at the end of their lifecycles has to change. Moreover, products should be seen as
source of material for new products. In addition, production should no longer rely
on finite fossil fuels but on renewable sun-powered energy sources and the purpose
of society should be to increase biodiversity instead of decreasing it (Hawken 1993).
Other nature-inspired design strategies and concepts are:
• ‘Cradle to Cradle’, with its three major principles being (I) waste is food, (II) use
current solar income and (III) respect diversity (McDonough and Braungart 2002).
Products are designed to last and in a way that they can be disassembled and
refurbished. The concept aims to replace eco-efficiency by eco-effectiveness.
Organizations can get their products cradle-to-cradle certified. Evaluation is
conducted in five categories: (1) material health, (2) material reutilization, (3)
renewable energy and carbon management, (4) water stewardship and (5) social
fairness (Llorach-Massana et al. 2015)
• ‘Biomimcry’, ‘biomimetics’, ‘bio-inspired design’ and ‘bionics’. This concept
suggests that product developers should integrate knowledge perceived from
nature into the design (Montana-Hoyos 2010). This means nature should be the
inspiration for forms, processes and systems (Pauw et al. 2014). In this concept
an integral part of the trajectory to a more sustainable product, is to include
the system level which was a result of one of the rare studies on the application
of biomimicry on product design (Reap et al. 2005).
• ‘Natural Capitalism’ is a concept that values natural capital and human-made
capital equally and outlines benefits for shareholders and future generations in
making resources more productive (Kuo and Hsiao 2008). Four major changes
in current business practices are required for the realization of that concept:
17
(I) Increase the productivity of natural resources, (II) change to biologically

inspired production processes, (III) incorporate a solution-based business model
in which value is delivered instead of a product and (IV) reinvest in natural
capital (Lovins et al. 1999).
• ‘Industrial Ecology’ is another concept dealing with material and energy flows in
product development. The systems view which is a key feature of this approach
attempts to understand processes of industrial production and their impact on
the biosphere (Erkman 1997). What distinguishes this concept from the previous
two is that nature is not only the inspiration for the design of the product and
the product lifecycle but also the integration of the production process into the
local environment (Kagawa et al. 2015).
• The concept of the ‘Blue Economy’ was introduced by Pauli (2010) in a report
to the Club of Rome in 2010. Pauli chose to use a waterfall as a visual metaphor
to illustrate the flow of nutrients drawn largely by the force of gravity and very
little external energy.
In a service economy the consumption pattern changes from buying products to

buying a particular service. The consumer becomes a user, who pays for using a
specific product instead of owning it. The term refers to an economic model where
the importance is placed on services and the majority of jobs are in service activities.
By changing this economic pattern, the service provider not only has an incentive
to cut down the resource expenditure but also to reduce the energy consumption
in the production process (Stahel 1997).
The circular economy contains aspects of all three alternative economic models
mentioned above. However, the concept distinguishes itself by focusing on the
circularity of resources and the avoidance of waste. The models above have helped
to refine and further develop the concept of circular economy.
2.3.2 Fundamentals of Circular Economy
While the concept circular economy emerged as a political objective only a few
years ago its origins have a longer history. It was formulated during the 1960s by
academic scholars in ecological and environmental economics. Concerns regarding
the limits of growth and resource scarcity, raised by R. Carson and K. Boulding
laid the foundation for the concept of circular economy (Boulding 1966; Carson
1962). Boulding, (1966) in his article titled “The Economics of the Coming Spaceship
Earth” argued that as an answer to the planet’s finite supply of resources, water and
energy, it is crucial for the survival of humankind to re-use and recycle.
In the context of ecological economics, two distinct principles were developed and
continue to be developed that exemplify the circular economy: industrial ecology
and lifecycle assessment and extension (Gregson et al. 2015).
Industrial ecology as briefly described in the previous chapter describes the
analogy between material and energy flows in natural ecosystems and argues that
closed-loop systems are required to pursue sustainable development (Frosch and
Gallopoulos 1989). By exchanging by-products and waste from production the ma-
terial loop can be closed and resource efficiency improved. This results in a change
from a linear to a circular economy (Frosch and Gallopoulos 1989).
The concept of lifecycle assessment and extension became more prominent for
researchers in early 1980s. One reason leading to this increased attention is the added
benefit which was seen in the waste reduction as well as reduced expenditures for
production of new products (Bras and McIntosh 1999). The first scholars to conduct
further research into this topic were R. Lund and D. Skeels (Lund and Skeels 1983).
The idea behind this concept is simple: extending a product’s lifetime by repairing
or remanufacturing it (Bras and McIntosh 1999). Hence, lifecycle thinking begins
early in the manufacturing process. It is a crucial element in the design phase to
develop the product in a way that it is repairable and can be remanufactured.
Environmental economists employ, in comparison to ecological economists,
a neoclassical analytical approach to investigate the connection between the so-
cio-economic system and the environment. D.W. Pearce and R.K. Turner advanced
the concept of the circular economy in 1990 in their book “Economics of Natural
Resources and the Environment” (Pearce and Turner 1990). They described the
traditional economy as an open-ended one that treated the environment as a waste
reservoir. Confronted with environmental problems, they concluded that the econ-
omy had to move towards a circular system regarding resource consumption and
waste residuals (Pearce and Turner 1990). The development of the concept of circular
economy has been a critical strategy in China. This has led to the establishment
of principles that aided China’s practice of circular economy and made the rather
vague descriptions from ecological and environmental economics more concrete.
The Chinese approach to implementing the circular economy is commonly
described as the 3 R principle: Reduce, recycle and reuse. Reduction is the leading
principle of the circular economy system (Su et al. 2013). It focuses on reducing
resource consumption and waste produced through increased production efficiency
(Su et al. 2013). The principle of recycling means that potential waste even if it is
biodegradable should be used in other areas of application before putting it into a
landfill. Reusing stands for the lifecycle extension through e.g. reselling of discard-
ed products or using by-products of other firms as input into the manufacturing
19
process. Furthermore, products shall be used to their maximum capability, e.g.

through regular and professional maintenance (Naustdalslid 2014; Yong 2007).
In China the circular economy is implemented in of a three-layer approach
as described in chapter 2.3.6. The layers are: (I) corporate (micro), (II) inter-firm
(meso), and (III) societal (macro) level (Geng and Doberstein 2008). On a corporate
level (I), organizations are encouraged to develop environmental friendly products
and implement technologies for cleaner production. On the inter-firm-level (II),
organizations aim to develop networks so that they can benefit e.g. through ex-
change of by-products, recycling of wastes, sharing of infrastructure and energy
cascading (Yuan et al. 2006). Consequently, these two levels tend to concentrate
mainly on the production side while the societal level (III) includes both production
and consumption activities as key elements. This level describes cities or municipal
areas in which recycling and other eco-friendly processes are promoted through
economic and administrative incentives (Mathews and Tan 2011).
In September 2010 the Ellen MacArthur Foundation was launched with the
objective of spreading the idea of the circular economy as well as to promote a tran-
sition to this type of economy. The Ellen MacArthur Foundation released reports
examining the potential of circular economy and initiated the ‘Circular Economy
100’, a platform for leading companies and innovators from regions around the
world to exchange ideas as well as best practices. Today the foundation is viewed
as a thought leader in the circular economy environment. Hence the definition
of circular economy according to the foundation plays an important role when
attempting to gain a deeper understanding of the concept.
The Ellen MacArthur Foundation bases its definition of circular economy on
five characteristics:
1. Design out waste,

2. Build resilience trough diversity,
3. Work towards using energy from renewable resources,
4. Think in systems, and
5. Think in cascades.
In the following paragraph a comprehensive overview of the five characteristics

whilst also outlining how they differentiate from one another is provided.
1. In their definition of the circular economy the Ellen MacArthur Foundation

differentiates between two product types: consumables and durables. This means
products are either designed in a way that at the end of their lifecycle they return
into the technical (durables) or into the biological cycle (consumables). The
technical cycle means that material can be recycled without a loss of quality.
The biological cycle means that material is fully biodegradable and can be used
as fertilizer for growing new resources.
2. Diversity results in resilience against external shocks and is therefore one of the
objectives of the circular economy.
3. Production systems should run on renewable sources.
4. Understanding the interdependence between elements and the relationship
amongst them is crucial in the circular economy.
5. In case of biological raw material the complete biological entity should be con-
sidered. In doing so additional value can be generated through using ‘waste’
which would usually not have been considered as valuable.
In addition to these five principles the Ellen MacArthur Foundation sees in the
circular economy a concept that aims to use material instead of consuming it. This
means that manufacturers and retailers retain ownership of products and become
the service provider by selling the use of a product. Furthermore, decoupling
economic growth from consumption of natural resources is an essential aspect of
circular economy (Ellen MacArthur Foundation 2012)
Although, there is no consensual definition for the circular economy, the
summary of principles above provides a good understanding of what constitutes a
circular economy. Moreover, it delineates the multitude of opportunities the concept
provides for corporations willing to implement the circular economy.
In order to implement a circular economy, it is necessary to create products that
belong either to the biological or technical cycle. Products belonging to the biological
cycle consist of biodegradable material. Products belonging to the technical cycle
consist of materials that are able to stay in the material cycle endlessly and without
a loss in quality. Literature review and internet searches showed that there is no
appropriate term in English for this second type of material. Therefore the term
‘circulatable’ (in German: kreislauffähig) has been invented and used throughout
the course of this research project.
21
2.3.3 Circular Economy as Economic Strategy –

Reasons to engage in Circular Economy
One key question of this research project asks which impact the implementation of
circular economy has on organizations. To answer this question, an extensive review
of the existing literature has been conducted before starting the case study of this
research project. The results of which are presented in the course of this chapter.
The literature available on circular economy remains limited. Only five academic
articles containing information on the impacts circular economy implementation has
on organizations have been identified. In addition to these academic publications,
three non-academic reports, published by the Ellen MacArthur Foundation and
the consulting companies Accenture and Kienbaum Management Consulting were
found and included in this review. Table 1 provides an overview of the literature
identified including information on the respective benefits of circular economy.
Table 1 Literature review of circular economy benefits

Author Methodology Impacts
Academic literature on circular economy benefits
Su et al. 2013 Literature Review • Improves competitiveness of Chinese
enterprises
Geng et al. 2012 Conceptual • More efficient use of materials and energy
• Increased revenues from sale of “waste”
• Cost savings from lower insurance costs
• Reduced environmental penalties
• Increased competitive advantage
Preston 2012 Literature Review/ • Closer and more direct relationship
Conceptual with consumer through collaborative
consumption
Park et al. 2010 Empirical Study • Cost reduction through usage of returned
and recycled material
• Cost reduction for waste management
through centralized waste management
in industrial parks
• Revenue generation through reselling of
used products
• Positive corporate image and legitimacy
to do business
Sinkin et al. 2008 – Empirical Study • Reduced costs through less waste
study on eco- inefficiencies and pollution
efficiency • Increased profits
• Increased firm value
Non-academic literature on circular economy benefits

Kienbaum Manage- n/a • Reduced material costs
ment Consulting • Reduced energy costs
2014 • Competitive advantage
Accenture 2014 n/a • Additional income streams through selling
of refurbished products
• Reduced labor costs
• Material cost savings
• Enhanced customer value
• Enhanced differentiation
Ellen MacArthur n/a • Annual net material cost savings up to
Foundation 2012 USD 630 billion in the European economy
and • Less expenses for disposed material
Ellen MacArthur through reuse and better product design
Foundation 2013 • Reduced labor and energy costs
• Reduced costs for carbon emissions
• Decreased dependency on resource prices
through reuse of material
• Improved customer interaction and loyalty
• Reduced warranty risks
• Less product complexity and more man-
ageable lifecycles
Table 1 not only provides an overview of the existing literature drawing particular
attention to the positive impacts of circular economy but identifies two distinct types
of impact: monetary and non-monetary aspect. Monetary in this sense describes
impacts related to financial aspects. This includes not only directly related impacts
such as cost savings but also indirect related impacts such as reduced warranty
risk. In Figure 2, a further categorization is conducted and impacts are grouped
into two monetary and two non-monetary categories with several sub-categories.
23
Fig. 2 Overview of monetary and non-monetary benefits derived from literature
As presented in Figure 2, cost savings is a monetary category identified in literature.

The category is distinguished in cost savings achieved through (1) lower material
costs by retrieving and reusing material (Park et al. 2010; Kienbaum Management
Consulting 2014), and (2) the reduction of other ‘non-value-added’ costs. The later
can be achieved e.g. through lower insurance costs, more efficient energy use and
fewer environmental penalties (Geng et al. 2012), lesser pollution and waste inef-
ficiencies (Sinkin et al. 2008; Ellen MacArthur Foundation 2012; Accenture 2014)
or reduction of warranty costs (Ellen MacArthur Foundation 2012).
On (1): A case study undertaken by Park et al., consisting of three cases in the
information technology and electronic industries in China, distinguished between
cost reduction on corporate and inter-firm level. The results showed that on a
corporate level, production cost savings are possible by retrieving and reusing
material. On an inter-firm level, findings show that organizations which are part
of an eco-industrial park can benefit from material cost reduction through col-
lection, remanufacturing and reuse of materials within the park (Park et al. 2010).
The Ellen MacArthur Foundation sees the potential of a reduced material bill by
“reselling and component recovery” (Ellen MacArthur Foundation 2012, p. 75).
35
Furthermore, Kienbaum Management Consulting describes the reduction of ma-

terial costs through an adequate product design where the emphasis lies on reusing
material at the end of its first lifecycle (Kienbaum Management Consulting 2014).
On (2): In an evaluation of the Chinese indicator system by Geng et al. (2012) the
authors attribute cost savings to lower insurance costs, more efficient energy use as
well as reduced environmental penalties. The evaluated Chinese indicator system
is a metric for policy-makers and decision-makers to assist them in achieving the
objectives of circular economy and enable them to reflect on the outcomes achieved.
Moreover, using this indicator system supports managers, implementing the circular
economy concept, to reach either their company’s own or governmental predefined
objectives. By adhering to given targets the costs of environmental penalties and
insurances are avoided. Sinkin et al. (2008) confirm their hypothesis that process
improvements and technological innovation stemming from the implementation
of eco-efficient measures led to the reduction of further ‘non-value-added’ costs,
such as waste and pollution inefficiencies. According to the Ellen MacArthur
Foundation, it is essential that products in a circular economy are made to last in
order to reduce the warranty costs for organizations (Ellen MacArthur Foundation
2012). The case study of Park et al. (2010) concludes that in industrial parks the
presence of a certified waste management company leads to cost savings for waste
management of all organizations of the industrial park.
The second monetary effect which has been alluded to in various reports is an
additional revenue. Additional revenue can be generated by new income streams
resulting either from selling ‘waste’ (Geng et al. 2012) or from the reselling of used
and refurbished products (Accenture 2014). Geng et al. are not explicit about what
the term waste means in this context. It could either mean that leftovers from pro-
duction which would have usually been thrown away are transformed into products
and sold to the consumers. Another option is that manufacturing waste is sold to
business clients who are able to process it as input for their own production cycle.
And third option is that organizations resell used products for a second lifetime
as also described by Park et al. (2010). In addition, Sinkin et al. (2008) come to the
conclusion that increased profits are more highly valued by the market when firms
are engaged in eco-efficient activities compared to competitive organizations which
are not engaged in these activities (Sinkin et al. 2008). However they lack to specify
how firms generate additional revenue.
As first non-monetary effect increased competitive advantage has been iden-
tified. First sub-category of this effect is the improved customer relationship. In
2012 Preston published a paper on the potential of circular economy as a model
for industrial organization. He argued that a long-term relationship between firms
and their customers, which goes beyond the point of sale, is a large incentive for
25
firms to engage with circular economy. This new relationship allows organizations
to gain an insight into user behavior and to generate improved personalization,
customization and retention (Ellen MacArthur Foundation 2012). Accenture (2014)
recognized an improved customer relationship through the increased value circular
products offer. In case a product belongs to the biological cycle the customer’s health
benefits from non-toxic, pollutant-free products. When the product belongs to the
technical cycle the material is reusable and customers should be incentivized in
order to encourage them to return the product at the end of the lifecycle. Incentive
can be offering a refund of the product price or a discount for buying a new product.
Second sub-category has been mentioned in the review of Su et al. (2013) who
also delineate an improved competitiveness of Chinese organizations through the
implementation of circular economy. They identify the removal of green barriers in
international trade (Su et al. 2013) as beneficial for competiveness of an organization.
By implementing circular economy green reforms in production and transportation
need to be implemented which ensures the compliance with international produc-
tion and environmental standards (Wang and Liu 2007).
As third sub-category Accenture (2014) identified the enhanced differentiation
from competitors that arises from the unique features circular products offer to
customers. With being the only one offering these product features to the customer
organizations get the chance to have a unique selling proposition.
Fourth and last sub-category of the competitive advantage is the decreased de-
pendence on resource volatility which is described in the report published by the
Ellen MacArthur Foundation (Ellen MacArthur Foundation 2012). According to
their definition it is a key characteristic of the circular economy that the required
energy is provided by renewable resources so that resource dependence is decreased
and system resilience is improved. Furthermore, through collecting and reselling
or reusing components organizations achieve independence from resource prices
for virgin material.
The second non-monetary benefit discovered in the literature reviewed, is a
positive brand image which is described in the study by Park et al. (2010). The
implementation of circular economy helps organizations to build a positive repu-
tation for their brand. The commitment to such an extensive concept demonstrates
sincere interest in the environment respectively in the society and creates therefore
a positive brand image. Also stated in the study of Park et al. (2010) is the effect that
a positive brand image enables organizations to gain legitimacy.
Circular Economy in the Context of Traditional Ethics, Business Ethics and
Order Ethics
1. Reviewing circular economy from an ethical point of view raises the following
questions:
2. Do organizations have social and environmental responsibilities? And, more
specifically, should organizations care about concepts such as circular economy?
3. Is circular economy capable of mitigating environmental problems such as
resource scarcity or do we need to change our minds and behavior about the
environment?
Is circular economy which boosts global competitiveness desirable for our society?
The late economist Milton Friedman, a Nobel Prize winner would not have
agreed with organizations engaging in circular economy. Friedman believed that
the only responsibility an organization has is to make as much money as possible
for its stakeholders. A famous quote taken from his book “Capitalism and Free-
dom” reads, “[In a free society]... there is one and only one social responsibility of
business - to use its resources and engage in activities designed to increase its profits
so long as it stays within the rules of the game, which is to say, engages in open and
free competition without deception or fraud” (Friedman and Friedman 1962, p. 133).
In order to maximize profits, Friedman argued that organizations should use what-
ever resources and as much of these resources as is required. However, if we look at
today’s economy it is clear that organizations still of course want to make a profit
but have become more aware of their social and environmental responsibilities (e.g.
minimum wage, protecting the environment) and are committed to fulfilling these.
What explains this move away from Friedman’s view on corporate responsi-
bility? The answer can be found in the explications on business ethics described
by Homann and Lütge (2013). A growing awareness amongst organizations of the
social and ecological problems affecting society has led to them pay more and more
attention to ethical concerns. Today, organizations have to integrate these ethical
concerns into their business decisions. By doing so, they are able to prevent loss of
reputation resulting from operating within legal boundaries but outside of ethical
perception (Lütge and Jauernig 2014). Business ethics has become an integral part
of organizational risk management in many organizations. As stated by Homann
and Lütge (2013), business ethics provides guidance on how to positively combine
entrepreneurial success and moral acceptance. According to corporate social
responsibility (CSR) organizations have social and environmental responsibili-
ties. The circular economy offers organizations a way to incorporate social and
environmental priorities and practices into their brand, their products and their
relationships with customers, vendors and employees.
The second question raised from an ethical standpoint is whether or not circular
economy is capable of mitigating environmental difficulties. In the context of busi-
27
ness ethics, there is a commonly known dualism between ethics and the economy
which creates antagonism between the two. This results in the domestication of
the economy which is when economic players place moral considerations before
economic ones. Nevertheless, those who believe that there is an antagonism between
ethics and the economy argue that circular economy as an economic concept is not
‘enough.’ They claim moral action towards environmental protection i.e. stopping
resource exploitation and fostering the reusing of resources requires the cultivation
of moral behavior. However, in a competitive market the actor that puts their moral
beliefs before economic behavior will lose out. To avoid this dualism of ethics and
the economy, Homann and Lütge (2013) suggest order ethics. Lütge (2016) defines
the term as follows, “the term order ethics refers to the conception’s objective, that
is, the order framework. The term ethics of benefits and incentives, or “benefits and
incentive ethics,” connotes the means of such a conception” (Lütge 2016, p. 29). An
order framework plays an important part in making markets profitable instead of
restricting them. The aim of order ethics is to alter the framework of a society in order
to ensure ethical behavior rather than appealing to moral behavior. It is preferred
to answer the question from the order ethics point of view which considers circular
economy as something positive. The circular economy concept fosters competition
which plays a pivotal role in order ethics. If adequate rules of competition are set
these can help to achieve many positive results for society.
This leads on to question three, whether competition is desirable and/or even
beneficial for a society. As previously mentioned, in chapter 1.1, organizations are
able to acquire a competitive advantage by incorporating environmental concerns
into their strategic decisions. The literature on circular economy identifies com-
petitive advantage as one impact deriving from the implementation of a circular
economy as explained in chapter 2.3.3.
For many scholars and others, competition remains a zero-sum game in which
only one person can be the winner. In the pre-modern social world, people played
zero-sum games in which one participant‘s gain is the other participant’s loss.
However, societies today experience continuous growth and positive sum games
are played as a result of competitive markets. Competition in societies with contin-
uous growth and under certain (formal and informal) rules is able to improve the
position of every individual (Lütge 2015). Competitive markets force organizations
to constantly innovate and promote creativity and society benefits from these in-
novations (Lütge 2014). The answer to the third question raised at the beginning
of this chapter has to be that increased competition has positive effects on society
and is therefore desirable.
2.3.5 Demarcation to Post-Growth Economics
The concept of circular economy contradicts certain characteristics of today’s in-

dustrial economy. The relationship between the two concepts shall be explained in
detail in the following chapter and a clear differentiation between circular economy
and the concept of “post-growth economy” given.
The theory of industrial economy addresses the interactions between organi-
zations, industries and markets. In order to describe markets formal models have
been developed. These models assume that rational decision making is employed
by participating organizations usually with the objective of profit maximization.
The focus of an industrial economy is on demand and supply behavior as well
as the determination of market equilibriums (Bester 2007). The two important
characteristics of the industrial economy are: Firstly, the linear model of resource
consumption: take, make, and dispose; And secondly, the permanent urge for
economic growth, for social welfare and progress (World Economy Forum 2014).
When comparing the current industrial economy and the circular economy one
of the main differences is the latter’s emphasis on taking, making, and reusing and
the circular economy’s objective of decoupling economic growth from resource
constraints. This objective distinguishes the circular economy from all post-growth
economy concepts which are discussed widely in academic literature, for example
in the special edition of the Journal of Cleaner Production in April 2010 (Volume
18, Issue 6) titled “Growth, Recession or Degrowth for Sustainability and Equity?”
and other scholars such as Paech 2012; Seidl and Zahrnt 2010; Latouche 2010;
Schneider et al. 2010.
Although some serious concerns exist regarding growth and the associated
exploitation of resources (such as the loss of fertile grounds, overexploitation of
drinking water reserves and climate change) rejecting growth is not the solution
of the circular economy concept. Rather, the focus is on pursuing smart growth.
This means that organizations have to redesign their products, processes and even
business models to become independent from scarce resources through renewability,
reusing, repairing, refurbishing, capacity sharing and dematerialization. As stated
in chapter 2.3.2, this requires a high degree of innovation, not only technological
innovation to improve the products ingredients and the production process but also
business model innovation to include the full range of decoupling options offered
in the circular economy concept.
29
2.3.6 Circular Economy in China
Following the death of Mao in 1976, China experienced rapid economic growth
that lasted a decade. This growth was accompanied by massive land degradation,
deforestation, desertification, water depletion and a loss of biodiversity (Su et al.
2013). The significant impact on the environment led to serious social and economic
problems. Health issues and the rapid depletion of resources brought the authorities
to the conclusion that new consumption and production patterns would have to
be found in order for the economy to continue growing without compromising
the health of the population and environmental biodiversity (Naustdalslid 2014).
This acknowledgement led China to enact the Circular Economy Promotion Law.
Mathews and Tan describe the way in which the Chinese have embraced the con-
cept of circular economy as ‘thinking further’ because “only in China has a circular
economy been made the object of official development goals and been taken from the
realm of environmental policy into the realm of development and economic policy”
(Mathews and Tan 2011, p. 437). This reveals the great value placed on this concept
by the Chinese government.
The circular economy in China forms part of a strategy designed to achieve a
harmonious relationship between society and nature. As a result, the Chinese concept
of circular economy has a more deeper and broader understanding to it compared
to how the concept has been interpreted by other countries (Naustdalslid 2014).
In 1998 scholars in China proposed the country’s transition to a circular economy
when they started to realize that the country’s single-minded focus on economic
growth and industrial expansion would lead to serious environmental problems
(Naustdalslid 2014). In 1999, the State Environmental Protection Administration
(SEPA) started to promote the circular economy by initiating a series of projects
across the country. Furthermore, SEPA developed and published guidelines on how
the circular economy could be developed in China. Early projects focused mainly on
waste recycling and often lacked an adequate evaluation of cost and technological
feasibility. This led to the realization that the circular economy approach could be
even more efficient when projects moved away from simple waste recycling to the
adjustment of the industrial structure, the development of new technologies and
the reformation of industrial policies. As a result, the National Development and
Reform Commission (NDRC) was given the task of leading on the development of
the circular economy approach. In 2002, the government formally announced that
the circular economy was now part of its development strategy to enable economic
growth without overexploiting natural resources.
While SEPA continues to play an important role in supporting the implementation
of the circular economy in China, the decision to establish the NDRC symbolized
China’s commitment to developing the circular economy. For China, the circular
economy was not only an environmental strategy but a comprehensive state policy
and plays an essential role in China’s economic development.
The state included the circular economy in its 11th Five Year Plan (2006-2010)
as a strategic policy element. The 12th Five Year Plan (2011-2015) concentrates on
the continuous implementation and development of the circular economy (Su et
al. 2013). The circular economy has gained popularity in China not only at various
governmental levels but also with scholars from different fields of research such as
economics, management, law and society. They have started to further examine
the concept so that they can develop their understanding of it. In 2008, the first
worldwide Circular Economy Promotion Law was adopted by China and became
effective the following year (Geng et al. 2012). It defines the circular economy as
follows: “The term ‘circular economy’ as mentioned in these measures is a generic
term for the reducing, reusing and recycling activities conducted in the process of
production, circulation and consumption” (Standing Committee of the National
People’s Congress 2009, p. 1).
• Daijan Zhu (2008), a professor at the Tonji University in Shanghai, in his article
“Background, Pattern and Policy of China for Developing Circular Economy”
describes the circular economy in China in four points:
• The responsibility for promoting the circular economy lies with the State Devel-
opment and Reform Commission whose functions include, but are not limited to
environmental management. The State Development and Reform Commission
is also responsible for guiding the restructuring of the Chinese economy.
• The circular economy not only reduces waste but optimizes the relationship
between resource depletion and economic growth and reduces the reliance on
scarce resources such as water and land.
• The system approach is one that is important for China. The Chinese govern-
ment strives for a comprehensive approach which includes the implementation
of the circular economy on three levels: individual organizations, industrial
parks and regional.
The implementation is forced gradually from low-level recycling practices to reduce

consumption of resources and pollution to high level recycling practices for products
and services to prevent consumption and pollution (Zhu 2008).
• Especially the first and third point distinguishes how the circular economy
has been implemented in China compared to in other countries. In China the
implementation of circular economy is mainly driven by the government and
31
enforced by policies and laws. In other countries is a voluntary engagement

and mainly driven by the organizations themselves. Further in China there is
a special focus on circular economy as a socioeconomic principle in contrast
to circular economy as an environmental measure (Naustdalslid 2014). The
following three principles reflect this societal organization of circular economy
(Geng and Doberstein 2008):
• Circular economy on a micro level includes every measure on a corporate level.
Mostly, those measures are initiatives for a cleaner production which cannot
actually be called circular economy measure if they are not somehow related
to the other two levels.
• Circular economy on a macro level means the approach on an inter-firm level
or in industrial parks. Organizations build a network in an integrated manner
to increase resource efficiency, e.g. by using by-products from each other. In
China it is apparent that these networks are usually integrated industrial and
residential sites which include not only the production factories but also areas
for scientific activities and service areas to serve the community.
Circular economy on a meso level presents a challenge for local authorities to link
activities from the other two levels and to systems on a wider territorial level.
Processes are required to link individuals, households and social infrastructures,
such as transport, reuse of consumer items and energy-savings arrangements. It
is within this context that eco-cities or eco-provinces are developed (Naustdalslid
2014; Geng and Doberstein 2008).
• To support the implementation of the circular economy the NDRC initiated

a number of pilot projects nationally in which 109 enterprises, 33 industrial
parks, seven provinces and 19 cities participated (Xue et al. 2010). One of these
initiatives introduced a system of indicators to provide objectives and credible
information on the current status of circular economy implementation. To de-
velop this system of indicators, the NDRC invited representatives from politics
and academia to share their experiences of circular economy implementation
at national and supranational level. The indicator set consists of the following
four categories:
• Resource output: Amount of GDP produced from resource consumption
• Resource consumption: Used amount of resources per produced unit
• Integrated utilization: Level of material recycling
And waste disposal/pollutant emission indicators: Amount of disposed material

and emissions (Geng et al. 2012).
This set of indicators provides information which can be analyzed to find out
about the development of the circular economy on a macro and on a meso level.
Despite the development of the indicator system the shift to a circular economy
has not progressed as far as was planned. Three critical areas that challenge the
implementation of the circular economy in China have been identified as:
1. Inadequate system of indicators

2. Inadequate supporting policies
3. Lack of information management system
First, the national circular economy indicator system contains significant weak-
nesses and therefore a substantive revision of the system is required. The system
lacks comprehensive sustainability indicators (Geng et al. 2012). As explained
above, the implementation of circular economy should occur on three levels. The
set of indicators however comprises only two of these levels. There is no guidance
on the micro (organizational) level (Geng et al. 2012). Furthermore, Geng et al.
(2012) perceive the absence of “social indicators, lack of indicators on industrial
symbiosis, lack of indicators for businesses, lack of absolute energy/ material reduc-
tion indicators, lack of prevention-oriented indicators, lack of measurable criteria
and barriers for the implementation” as challenges (Geng et al. 2012, p. 221). The
authors do acknowledge that the indicator system encourages practitioners to
strengthen their commitment to economic, environmental and social changes and
gives decision-makers guidance on how to realize specific goals (Geng et al. 2012).
Second, the dearth of policies to facilitate the implementation of the circular
economy is identified as another challenge. Policies concerning adequate tax reg-
ulations for recycled and virgin resources, information management to support
the demand for new technologies and a consistent management framework do not
exist yet (Naustdalslid 2014; Geng and Doberstein 2008).
The third challenge which relates to the lack of policy formulation is the lack
of an adequate information management system. There is a shortage of academic
programs promoting knowledge and understanding of the concept of the circular
economy. Policy-makers in particular do not possess a sufficient understanding
of the concept (Naustdalslid 2014; Geng and Doberstein 2008). A study conducted
in six cities to evaluate the popularity of the circular economy amongst public
officials concluded that they were better informed than the general public about
the circular economy. 78.6 percent of public officials possessed an awareness of
the circular economy and 3.2 percent claimed they had never heard of it (Xue et
al. 2010). When questioned about what they perceived to be the main challenges
33
hampering the implementation of circular economy development, 64.29 percent

stated “lack of public awareness” (Xue et al. 2010, p. 1300).
To summarize, although China is not the only country working on large-scale
implementation of circular economy the Chinese case does provide a unique in-
sight into the development of such an economy. In China the circular economy
is being implemented via government policy and is therefore a top-down process
with the defined purpose of constructing a harmonious society. Despite huge
government support for circular economy in China the involvement of society is
a missing element. This means that there is no external pressure on organizations
and institutions. What organizations usually care about the most is the needs of
their customers. Since in China there is a lack of awareness in society about circular
economy this driver is missing. In contrast, the pursuit of circular economy in the
West is lead primarily by organizations with limited support from the government
and is therefore a bottom up process.
2.3.7 Conceptual Framework for this Thesis
The research questions in this thesis aim to close an empirical gap by investigating
how circular economy is implemented, what impacts the commitment to circular
economy implementation has on organizations and the challenges organizations
are confronted with. Regarding the first question on how circular economy is im-
plemented, the first step is to develop a framework categorizing potential modes
of implementation. This framework shall be used later in the case study to analyze
circular economy approaches in a structured and consistent way. This is necessary
because the concept of circular economy itself is not very specific about which
business model or implementation mode is the best or even possible to execute.
It seems that this concept is designed to provoke and stimulate organizations to
rethink their current mode of operation.
In order to be able to develop a framework it is important to keep in mind the
principles of the circular economy concept. For organizations these principles
imply that innovations are an essential part of the circular economy concept and
a mandatory requirement for its implementation. Therefore, as first step in the
development of the framework the various types of innovation are elaborated and
its relevance for the implementation of circular economy evaluated.
Innovation Types
Schumpeter, J. A. (2006) subdivides innovation into five different types: product
innovation, process innovation, organizational innovation, market innovation
and input innovation.
1. Product innovation is either the development of a new product or a new variant

of a product.
2. Process innovation is defined as a change in the usual production process.
3. Organizational innovation describes either a change in a firm’s behavior or to
the current operating model.
4. Market innovation is the introduction of a product to a qualitatively different
group of customers.
5. And lastly, input innovation describes the introduction of a new raw material
or intermediate good.
The extent to which an organization is impacted by changes depends on the type

of innovation pursued. The benefits reaped, success achieved and challenges faced
may be different. Therefore, an evaluation of the different types of innovation in
the context of circular economy is necessary to select which types are relevant for
the framework.
Circular economy inspires organizations to redesign their products and processes
therefore the first two types of innovations play a crucial role in the implementation
of the concept. Furthermore, organizational changes may be required in order
to implement the product and process changes. Hence why the third innovation
type has to be included in the framework. Market innovation is not included in
the framework because opening up to new markets would be a second step in the
implementation of circular economy. It is not considered important in the early
stages of implementing the concept. Input innovation is also not included in the
framework. The understanding underlying this thesis is that sourcing a new raw
material is a required step towards producing a circular product and is therefore
part of the product innovation. Consequently, the following three innovation types:
product, process, and organizational innovation have been selected as the first set
of categories in the framework.
Business Models
As second step in developing the framework business models recognized as being
potentially beneficial for organizations in the circular economy implementation
process are included to give the framework more structure. The five business models
35
identified are: circular supplies, resource recovery, product life extension, sharing
platform and product as a service (Accenture 2014). Before assigning the models
to the innovation types their characteristics will be explained.
Circular supplies describes business models that are based on renewable, circu-
latable or biodegradable resources. The objective is to completely replace a linear
resource model, reduce the use of scarce resources and eliminate waste.
Resource recovery focuses on the end of a product’s lifecycle and that products
are made to be fed into one of the two possible value chains at the end of their
product life: biological and technical cycle. In this business model it is important
that recycling is done to the same quality or an even higher level to create a circular
flow. It is necessary to consider the end of life of a product in the design phase. By
doing so, the best solution for processing a product and its raw material at the end
of its first lifecycle is ensured. Furthermore, this business model is applicable for
by-products which appear during production. The implementation possibilities range
from industrial symbiosis where several organizations share services, utility and
by-product resources to closed-loop production systems for singular organizations.
The product life extension business model attempts to prolong the usage of a
product either by repairing the broken parts, or by upgrading, remanufacturing or
remarketing it. In this model it is important in the design phase to create products
with replaceable modules so that broken parts can be replaced by an equivalent
or upgraded part.
Sharing platforms provide a place for collaboration between product users i.e.
individuals and organizations. The objective in this business model is to maximize
the utilization of a product by sharing overcapacity and reducing underutilization.
The last business model identified in the Accenture study is product as a ser-
vice and it represents a fundamentally different approach to the ‘product owner
economy’. In this business model products are no longer sold to the customer.
Organizations only sell a certain outcome and customers pay for the use or per
lease (Accenture 2014).
Combination of Innovation Types and Business Models into one

Framework
For the purpose of the framework of this thesis, the business models have been
assigned to the three innovation types. This provides further guidance on how to
categorize and then analyze the implementation approaches in the case study. Table
2 shows the combination of innovation types and business models which result in
seven circular economy approaches.
Table 2 Analysis framework for this thesis

Innovation Type Circular Economy Approach
Product Innovation Circular supplies (e.g. creation of products which are fully
(Changes the product) circulatable)
Resource recovery (e.g. creation of new products to use left-
overs from the production line)
Remanufacturing (e.g. implementation of new products
which can be built from reusable parts of original products)
Process Innovation Circular supplies (e.g. use of renewable energy for the produc-
(Changes the process) tion line)
Organizational Sharing platform (e.g. enable customers to extend the use of
Innovation their products)
(Changes or adds a Product as a service (e.g. sell access to the product, internalize
business model) the lifecycle management)
Product life extension (e.g. gather used products and resell
them if possible, repair broken products)
In order to be able to assign the business models to the three innovation types the
following considerations were made:
Product innovation means that an organization releases a new type of product
or variant of a product into the market. Only the business models circular supplies,
resource recovery and product life extension in the sense of remanufacturing are
sorted into this category. In a circular economy the category product innovation
suggests creating products which are fully circulatable (circular supplies) or creating
new products by using leftovers from production (resource recovery). Remanufac-
turing offers a possible business model when companies invent new products from
the reusable parts of their original product.
The second type the process innovation involves a bigger change in the daily
practice of a company. In the circular economy framework only the circular sup-
plies business model has been assigned to this category. For the implementation
this means switching partially or entirely to renewable energy sources (circular
supplies) as supply for the production lines.
Organizational innovation has the following business models assigned: shar-
ing platforms, the product as a service and product life extension. In a circular
economy this provides options such as initiating a sharing platform which enables
customers to extend their product use by sharing it with others. In addition to this,
companies can offer their products as a service meaning that instead of selling
their product organizations only sell the use of it. This implies a re-consideration
of the whole lifecycle management. The last business model which falls into this
37
category is the extension of a products life (product life extension) by gathering,

repairing and reselling it.
The framework, as shown in Table 2 is used to classify the individual modes of
circular economy implementation in a standardized way.
Research Method
3 Research Method 3
For the purpose of investigating the concept of circular economy, a multiple case
study approach has been adopted. Based on theoretical considerations, nine cases
have been selected to study the implementation of circular economy and the eco-
nomic impacts derived from a transition to the circular economy.
In this chapter, the rationale for using a multiple case study approach will be
explained. Furthermore, the theoretical considerations underlying the selection
of each case, as well as how the data was collected and analyzed will be explained.
The quality criteria for qualitative research will be described as well as how these
criteria were adhered to throughout the research process.
3.1 Research Design

3.1 Research Design
3.1.1 Reasons for choosing a Qualitative Research Approach
The decision to employ quantitative or qualitative research methods depends on

the research questions (Morgan and Smircich 1980). Key questions for this research
project are:
1. How is the concept of the circular economy implemented?

2. What impact has the implementation of circular economy on organizations?
3. What are the challenges deriving from circular economy implementation?
A qualitative approach has been identified as most suitable for the purpose of this
study for the following three reasons. Firstly, qualitative research methods have
an exploratory character. This is particularly appropriate for research areas which
are at an early stage such as circular economy. The purpose of this research project
40 3 Research Method
lies in further advancing theory on circular economy and providing a conceptual

understanding of it (Bansal and Corley 2012; Eisenhardt 1989). To further research
on the circular economy it was necessary to ensure that the case studies selected
provided rich, detailed and evocative data. This is why interviews have been con-
ducted with open-ended questions and documents have been gathered to explore
the concept of circular economy (Edmondson and McManus 2007).
Secondly, the objective of an exploratory study is to develop insights into a new
phenomenon and explore it in depth in order to formulate propositions (Edmond-
son and McManus 2007; Kohlbacher 2005; Eisenhardt 1989). Instead of testing
hypotheses, as is typically done in quantitative research, qualitative research aims
to formulate propositions (Mayring 2010).
A benefit deriving from the decision to use a qualitative research methodology
is the large amount of flexibility within the research process (Kohlbacher 2005).
It allows to iteratively alter the research design throughout the process of data
collection and analysis. The findings in each case analysis influenced which case
was selected next. Furthermore, a slight adaption of research questions has been
made to gain meaningful and substantial results.
3.1.2 Quality Criteria in Qualitative Research
Since case study research in general is often criticized as subjective and interpretive
(Flyvbjerg 2006) quality criteria have been identified aiming to ensure a valid and
reliable approach. This chapter will name these criteria, explain them and then
outline how these were adhered to.
The first quality criterion is validity. Gibbert et al. (2008) identify three types
of validity internal, construct and external. While they all are interdependent, a
hierarchical order can be distinguished. For example, external validity can only
be achieved when construct and internal validity are ensured (Gibbert et al. 2008).
Internal validity “refers to the causal relationship between variables and result”
(Gibbert et al. 2008, p. 1466). It has to be assured that x causes y without a third
factor z which might not be observed. This criterion requires thorough work from
the researcher in order to build the conclusion on a powerful, logical and compre-
hensible chain of arguments. Additionally, to further enhance the internal validity,
it is important that researchers compare their results with other established patterns
from previous studies, even patterns from different contexts (Yin 2014; Gibbert et
al. 2008; Eisenhardt 1989). To ensure internal validity, findings from individual
cases have been iteratively compared to each other in order to provide universal
explanations fitting all cases. Moreover, an extensive review of the literature has
3.1 Research Design 41
been conducted in this research so that patterns could be identified. These patterns
have been compared to findings from this study to shape final conclusions.
A further quality assurance criterion is construct validity. It refers to the extent
to which a study investigates what it aims to investigate. Two measures enhance
the construct validity: triangulation and a clear chain of evidence (Gibbert et al.
2008). This study achieved a sufficient level of construct validity through data tri-
angulation by using transcribed interviews, corporate documents and case notes as
source for conclusions. Furthermore, a chain of evidence is used to ensure that the
research process from formulating research questions to drawing conclusions is a
comprehensible process for the reader. Chapter 3.2 provides a detailed description
of the steps employed during the research process. The results are described through
ample data such as interview quotes to make conclusions reasonable. Besides its
importance for construct validity, the chain of evidence plays an essential role in
the context of reliability (Yin 2014; Gibbert et al. 2008). This importance will be
explained later in this chapter.
The third and last type of validity is external validity, often called generalizability.
This describes “the extent to which findings (…) can be analytically generalized
to other situations” (Yin 2014, p. 238). Although case studies are not designed for
statistical generalization they offer the possibility for analytical generalization.
Analytical generalization describes building theory from empirical findings and
qualitative case studies are a good starting point to develop theory (Gibbert et al.
2008; Eisenhardt 1989).
Eisenhardt (1989) further suggests cross-case analysis of four to ten cases to begin
building a theory in order to be able to conduct an analytical generalization. By
doing so, the complexity is kept at a manageable level whilst achieving saturation.
Likewise, it is important that the researcher provides his/her theoretical reasons
for the case selection so the reader is able to “appreciate the researchers’ sample
choices” (Gibbert et al. 2008, p. 1468). For this thesis nine cases were selected. The
theoretical considerations leading to the selection of each case will be explained
in detail in chapter 3.2.1.2.
Reliability describes the fact that subsequent researchers conducting the same
study would come to the same conclusions (Gibbert et al. 2008). It is therefore im-
portant for the researcher to provide a transparent and comprehensible description
of the research process as well as the previously mentioned chain of evidence (Yin
2014). For the purpose of making the study replicable, Gibbert et al. (2008) suggest
the creation of a case study database to store and organize transcripts, notes and
all other documents collected during the course of research.
41
3.2 Multiple Case Study Approach

3.2 Multiple Case Study Approach
For this research project the multiple case approach is selected. This approach enables
the researcher firstly to investigate multiple cases individually and in depth and
secondly to compare patterns amongst the cases to draw conclusions. The multiple
case approach in contrast to the single case analysis facilitates considerably higher
robustness (Yin 2014; Eisenhardt 1989). The multiple case study approach can draw
stronger conclusions if cases are carefully selected. In the case of contradicting
findings across cases, this might lead to further investigation and to the discovery
of additional and unexpected results (Yin 2014). When deciding between multiple
and single case study approaches it is important to ensure the availability of the
required resources and also time to really gain a deep understanding of all the cases
and to obtain substantial findings.
Fig. 3 Research process based on Yin, 2014 and Eisenhardt, 1989
Figure 3 describes a typical multiple case study process. The process is based on
the description from Yin (2014) and Eisenhardt (1989) and it depicts the procedure
underlying this research process. The following chapter will describe the four steps
in the process following the structure in the figure above.
Before outlining the research process in more detail, two central concepts
for the case study approach and their meaning for this research project shall be
explained: ‘case’ and ‘unit of analysis’. Following the definition from Grünbaum
(2007), a distinction between the two concepts is made in which the unit of analysis
3.2 Multiple Case Study Approach 43
is on a lower abstraction level than the case layers. In the context of this research
project, the case is an organization that implemented circular economy. Unit of
analysis is the specific circular economy implementation approach including the
challenges and impacts.
3.2.1 Design
The first phase in the process is the design. In this phase it is important to develop
relevant research questions based on an intensive review of existing literature.
Further activities are the selection of cases based on theory and the design of an
instrument for data collection. The qualitative research chosen for this project
requires the researcher to incorporate existing literature and previous theoretical
knowledge. The challenge for researchers is to process pre-existing knowledge whilst
maintaining the explorative character of the study. Only by ensuring this balance
a decrease in the quality of findings can be avoided (Wrona 2005).
3.2.1.1 Develop research questions

According to Eisenhardt (1989), it is important to define research questions at the
beginning of the research project. This enables the researcher to select relevant
cases and to know which organizations to approach. However, although defining
research questions and frameworks at such an early stage can be helpful it has to
be noted that both are preliminary and can be changed during the course of the
research (Eisenhardt 1989). In the course of this case study, preliminary research
questions have been changed based on results obtained from case analysis. The
resulting and final questions for this research project are found in chapter 1.2.
Furthermore, it can be helpful to develop a conceptual framework from literature
before starting the case analysis to ensure and facilitate the measurement of the
‘right things’ according to the key questions of the research project. Clarification
of terms and concepts, as well as a framework which has been developed based on
a combination of existing literature are shown in chapter 2 of this thesis.
3.2.1.2 Case Selection

A critical aspect of case study research is the case selection. In general, case selection
happens based on theoretical considerations rather than selecting cases randomly.
This is crucial to adequately enabling the researcher to build theory from his/her
case selection. The usual objectives for case studies are replication of theory, en-
hancement of theory or provision of examples for extreme types (Eisenhardt 1989).
43
In this thesis, the objective is to enhance theory on circular economy. Therefore

the case sample is chosen based on the following considerations:
• Object of study: The organizations chosen for this case study officially commu-
nicate on their corporate homepage and/or yearly report their commitment to
closed loop productions systems (e.g. Cradle-to-Cradle) or more specifically
to circular economy. To obtain a good overview, the case studies differ in how
circular economy has been implemented and what stage of implementation
has been reached. Whilst some of the cases just recently decided to implement
circular economy others started several years ago.
• Industry: Since implementation modes of circular economy strongly vary, this
thesis focuses on the textile industry (six cases) but also includes the following
industries: parquet (one case), agribusiness (one case) and furniture (one case)
for comparison reasons. Furthermore, this selection of industries shall lead to
better results when it comes to the cross case analysis and the identification of
patterns across industries.
• Location: Country specific regulations and laws play an important role if and
to what extent companies commit to closed production systems and circular
economy. China, as the only country worldwide with a circular economy law,
has been excluded from the study. The different schools of thought gravitating
around the basic principles of circular economy are essentially shaped in western
countries such as the USA (e.g. K. Boulding, Ellen MacArthur Foundation) or
Europe (e.g. W. Stahel, M. Braungart). On this account cases with headquarters
either in Europe, Canada or USA have been selected.
• Consumer relevance: Since the variety of industries is great, to reduce complexity,
only organizations with products of high closeness (such as textile and furniture)
to the customer have been selected for this case study.
For the case selection, an internet search around the topics circular economy, closed
loop production and Cradle-to-Cradle, was conducted to identify organizations
disclosing on their closed-loop production and respectively circular economy
commitment. In an iterative process, 44 cases have been identified as potentially
relevant to this research. After applying all criteria, 20 cases remained relevant and
have been contacted via email. The emails contained a pdf document providing
the high-level research outline with objective, general approach and time line of
the research project. Whilst not every organization was interested in participating
in this study some were willing to have an initial short conversation in order to
determine for sure whether or not they were willing to participate. Others agreed
to participate immediately. Nine of the selected cases were willing to participate

in the study.
3.2.1.3 Design instruments

The next step is preparing the data collection instruments. In this regard, the
previously mentioned quality criterion data triangulation becomes important.
Combining multiple data collection methods such as interviews, observations and
archival sources is recommended to achieve a stronger substantiation of results
(Eisenhardt 1989). In this case study, secondary data/ documents which have been
publicly published by the corporation, case interviews with one representative
from each case, and case notes taken during or after each interview were used as
sources of data.
Semi-structured expert interviews with open-ended questions have been con-
ducted. Prior to this, interview guidelines were created so that the interviews were
structured and to ensure the inclusion of specific topic areas (the interview guideline
can be found in the Appendix 8.1). To test the relevance and comprehensibility of
the open-ended questions, extracts of the interview guideline have been tested in
short preliminary interviews conducted with five test cases via phone between
May and July 2014.
Questions were asked in such a way as to encourage the interviewee to narrate
freely and also to allow a certain degree of flexibility to the conversation (Wrona
2005). The advantage of this kind of interview is that it gives deep insights. The
interview guidelines provided structure to the interviews making the cases easier
to compare and had a positive impact in that it helped to achieve substantial results
(Helfferich 2011).
The development of interview guidelines was an iterative process and the
guidelines changed slightly in the course of this research. To create the guidelines
all questions that could potentially help to answer the research questions were
written down randomly. As a second step, every question was evaluated to check
its contribution and to sort the questions accordingly (Helfferich 2011). The key
interview questions were identified in this step. In general, the interview guidelines
were divided into the following sections: general questions to the interviewee,
general information about the circular economy approach of the organization,
questions regarding the economic impacts, questions regarding success factors and
questions regarding the future perspective of circular economy in the organization.
The closing question gave the interviewee the chance to express his own relevance
and reflect on the interview (Helfferich 2011).
Besides the interviews, secondary data was collected for this research project.
Yearly corporate reports and other internet documents, such as points of views
45
disclosed on the circular economy commitment were used in the analysis. All
documents used in this inquiry are publicly accessible. The advantage of docu-
ments in general is their stability, unobtrusiveness and broadness. On the other
hand, it is important to be careful concerning the bias a document can have based
on its purpose or authors (Yin 2014). To manage this weakness the purpose of the
document as well as its author and its role within the organization were taken into
consideration.
3.2.2 Data Collection
The second phase in the research process consists mainly of conducting the interviews
as well as collecting the documents. To collect the data the instruments which have
been designed in the previous phase are used. As indicated by the dotted arrows in
the figure, data collection and analysis usually are an iterative process. This is why
a timely overlap of the data collection and data analysis phase is beneficial for the
research process. Starting data analysis while the data collection is not yet finalized
accelerates the process. Furthermore, it enables the researcher to make adjustments
to the collection instruments when first results indicate the necessity (Eisenhardt
1989). The primary data used in this study were collected between July 2014 and
May 2015. Primary data are for the most part interviews supplemented with field
notes taken during and after the case interviews. Interviews were conducted with
one expert in each of the nine organizations. For each case study, at least one doc-
ument was identified containing relevant information regarding circular economy
commitment sand used as secondary data. The exact amount and type of documents
collected is shown in Table 3.
Table 3 Overview of collected data per case

Name Interview Collected Documents
Partner
Eta Head of • Sustainability Report 2013
Sustainability
& CSR
Alpha Vice President • Environmental and Social Initiatives 2014 Report
for Environ- • Online Documents on Corporate Homepage:
mental Affairs • The footprint chronicles, Worn Wear, Vote the Environ-
and ment, Becoming a Responsible Company, The Responsible
Philanthropy Economy (accessed from October 14 - June 15)
Zeta Deputy Head • Annual Report 2013

Safe Global • Safe Environmental Handbook Vol.1
Gamma Director R&D • Portfolio Description 2015
• Detailed Product Description
• Annual Report 2014
Delta Chief Executive • Online Documents on Corporate Homepage:
Officer Nachhaltigkeit, Umwelt- & Energiepolitik, Qualität,
Rohstoff Baumwolle, Bluesign Zertifizierung, Cradle to
Cradle Prinzip (accessed from December 14 - June 15)
Epsilon Chief Financial • Corporate Brochure on Cradle to Cradle
Officer • Online Documents on Corporate Homepage:
Nachhaltigkeit- Ökologischer Standpunkt (accessed from
December 14 - June 15)
Theta Chief Executive • Online Documents on Corporate Homepage: Nach-
Officer haltigkeit, Soziale Verantwortung, Gesundheit & Umwelt,
Code of Conduct (accessed from November 14 - June 15)
Iota Director • Sustainability Report 2014
Global • Online Documents on the Homepage of the Ellen MacAr-
Innovation thur Foundation: Case Studies (accessed from October
14 - June 15)
Kappa Director • Online Documents on Corporate Homepage: Sustainabil-
Advanced ity: The Long Run, Environmental Stewardship, Manufac-
Materials turing Policy, Working within our Community (accessed
Development from May 15 -June 15)
3.2.2.1 Semi-structured Expert-Interviews

The interviews lasted between 35 and 60 minutes and were conducted with the
reference person for circular economy commitment in the respective company.
For the execution, personal appointments at site have been made as well as phone
and video calls depending on the availability of the interviewee (two in person,
six phone calls, and one video call). The interviews were conducted in English and
German, depending on the mother tongue of the interviewee. All interviews were
recorded and then transcribed. The transcription process followed the suggestion
from Strauss (1987) who proposes to “transcribe only as much as needed” (Strauss
1987, p. 266). This is to ensure that time and energy are not wasted in the research
process and that resources are invested in the interpretation rather than in an exact
transcription. In the case of this thesis, this means that dialectic speech, repetition
of words, short breaks and phonetic noises were not captured in the transcripts.
During the interviews, field notes were taken to capture observations or to high-
light facts which have been specifically emphasized by the interviewee. To use
47
statements from the interviews conducted in German a translation into English

was necessary. Appendix 8.1 provides an overview of all translated citations with
original and translated statements. All translated quotes are numbered in the text
and the table. Original quotes aren’t numbered.
3.2.2.2 Document Analysis

The selected documents are part of an organization’s corporate communication
and have been published for a certain purpose and audience and researcher should
bear this mind (Flick 2009). Before using a document as a source of data, its quality
has to be assessed. According to Scott (1990) criteria for document quality are:
• Authenticity: Is the origin of the document clear?

• Credibility: Is the document free of errors?
• Representativeness: Is this document typical for this type of documents?
• Meaning: Is the document comprehensible?
Special attention has been given to these criteria and therefore only official annual
reports, sustainability reports, other reports or official communication regarding
the circular economy engagement published directly on the homepage of the
organization have been used to ensure the first criterion authenticity. Since the
selected documents are all part of official corporate communication they also
fulfill the credibility criterion mentioned by Scott (1990). The last two criteria rep-
resentativeness and meaning, were also evaluated and verified when the selection
of documents took place.
The result of the quality assessment showed that all documents initially iden-
tified for the study were relevant and of adequate quality for this research project.
3.2.3 Case Analysis
The third step of the process is the case analysis. The activity in this step is a within
case analysis. This enables the researcher to acquire a deeper understanding of each
case and to achieve first preliminary theoretical findings. As second step, a cross
case analysis is conducted. The purpose of this second step is to confirm or contra-
dict the results from step one. Special attention has been given to the description
of how organizations have implemented their circular economy approach and the
impacts and challenges derived from it. The results of the cross case analysis will
be presented in chapter 5.
3.2.3.1 Within Case Study Analysis

The method of data analysis chosen was the qualitative content analysis. According
to Mayring (2010), content analysis can have three different objectives: summarize,
explicate and structure. For this thesis a summarizing and structuring content
analysis was selected as an adequate method. The objective is to reduce the material
in a way as to capture the relevant content and to create a manageable amount of
data. Moreover, the structuring content analysis has the purpose of identifying cer-
tain aspects of the data or to enable assessment of the data by the means of certain
criteria (Mayring 2010). This approach ensured a process of structured analysis as
well as a systematical investigation. Furthermore, it is common to let theoretical
assumptions guide the coding process.
Three methods are possible to code data: inductive, deductive and abductive
development of categories (Döring and Bortz 2016). Induction describes catego-
ries as derived directly from the material without incorporating prior knowledge
regarding theory or concepts. For the deduction on the other hand, the current
state of research plays an integral part in the creation of categories. Abduction is
similar to induction as the cognitive process starts with the data but the process to
formulate hypothesis is less structured and more creative. For this thesis a mixed
approach containing inductive and deductive methods was used.
A review of existing literature provided a full list of impacts as described in
current literature (inductive approach). Based on this knowledge, a framework
with common circular economy approaches has been deductively developed. The
purpose of this framework is to make case study data comparable by providing a
structure to code the data material accordingly. In the cases studies, data analysis
codes for circular economy implementation were identified in each inductively.
Later, the codes were categorized according to the framework.
The coding process has been conducted with the support of the coding software
Atlas.ti. As soon as the coding process was finalized, the cross case analysis was
conducted to identify common patterns, similarities and differences.
3.2.3.2 Cross Case Analysis

The last step in the data analysis phase is the cross case analysis with the purpose
of comparing cases in order to identify patterns. To avoid drawing false or prema-
ture conclusions during the cross case analysis it was important for the researcher
to approach the data from different perspectives. For this purpose, cases were
grouped in pairs and later in threes and fours so that it was easier to recognize the
similarities and differences between them. This helps to exceed initial impressions.
This procedure not only ensures the probability of developing a reliable new theory
49
and avoiding false findings but also increases the chance of getting genuinely new
results (Eisenhardt 1989).
3.2.4 Conclusions
The last step of the process is shaping conclusions, where the researcher shapes his
conclusions by replicating findings across cases. The objective of this phase is to
confirm, sharpen and extend theory. To increase the internal validity (which has
been explained in more detail in chapter 3.1.2), comparisons with existing literature
are required until further improvements are only marginal and a theoretical sat-
uration is reached (Eisenhardt 1989). This step consists of three activities: shaping
propositions, comparing findings and finalizing conclusions.
3.2.4.1 Shape Propositions, Compare Findings and

Finalize Conclusions
As a result from the within and cross case analysis in this step, propositions are
developed to answer the research questions. The purpose of the comparison with
existing literature is to be able to identify similarities and contradictions as well
as reasons for potential differences. Especially important in this step is to look at
a broad range of literature and to include publications contradicting as well as
confirming the new findings. By doing so, internal validity, generalizability and
the theoretical level of the new conclusions are enhanced (Eisenhardt 1989). The
results of comparing findings with existing literature can be found in chapter 5.
Case Description and
Within-Case Analysis
4 Case Description and Within-Case Analysis
4
This chapter provides detailed descriptions of the selected cases as well as a with-
in-case analysis of each case. General information for each case such as company
details and information on the interviewee are given in a table and then a within-case
analysis is conducted the results of which are shared.
The sources of information include transcripts of the interviews undertaken,
field notes and corporate documents containing information about the commitment
of the organization to circular economy (list of documents has been provided in
Table 3 in chapter 3.2.2). These are supplemented with company specifics derived
from the Hoppenstedt company database. In chapters 4 and 5 citations are used
extensively to provide as well as support evidence.
Before giving a description of each case, the parameters used to define the scope
of each within-case analysis are introduced and explained in section 4.1. Case
background information and detailed descriptions follow in section 4.2 through
to section 4.11. Whilst this chapter analyzes each case individually and in depth,
chapter 5 analyzes these results across cases to identify common patterns.
4.1 Definition and Operationalization of Parameters

4.1 Definition and Operationalization of Parameters
In order to investigate the implementation modes of circular economy and the
benefits derived from them as well as the challenges they present it is necessary
to define important aspects. Hence why a brief recap of the framework underly-
ing the analysis will be provided in chapter 4.1.1. Chapter 4.1.2 contains further
parameters which have been used to produce a comprehensive description and
analysis of each case.

52 4 Case Description and Within-Case Analysis
4.1.1 Framework for Description of Circular Economy

Implementation
Since circular economy provides aspirational targets for organizations, the ap-
proaches employed when transitioning towards this type of economy differ a lot.
In order to enable the analysis of these approaches in a structured way a framework
has been developed which is explained in chapter 2.3.7.
As described in the previous chapter, the framework is a combination of the
Schumpeterian differentiation between the different types of innovation, and the
five business models for circular economy as identified by Accenture. Since the
framework has already been presented in detail in chapter 2.3.7 only a quick recap
of it will be provided in the next section.
Only three types of innovation out of five have been found relevant for the
framework: product innovation, process innovation and business model innovation.
These three innovation types constitute the first level of distinction. As a second
level, the business models for circular economy implementation have been selected.
The field of application for each business case were checked in order to sort them
into the correct type of innovation. Organizations can implement either just one
or multiple approaches to transform their business towards circular economy.

Innovation Type Circular Economy Approach Organization
Product Circular Supplies (e.g. creation of products which
Innovation are fully recyclable)
(Changes the Resource recovery (e.g. creation of new products to
product) use up left-overs from the production line)
Remanufacturing (e.g. implementation of new
products which can be built from the reusable
parts of the original product)
Process Innova- Circular Supplies (e.g. use of renewable energy for
tion (Changes the the production line)
process)
Organizational Sharing Platform (e.g. enable customers to extend
Innovation the use of their products)
(Changes or adds Product as a Service (e.g. sell the products access,
a business model) internalize the lifecycle management)
Product Life Extension (e.g. gather used products
and resell them if possible, replace certain parts of
the product)
4.2 Background Information on the Cases and Case Order 53
Table 4 is the resulting framework and has been used in the analysis to document
which implementation approaches a case has chosen. The table completed as part
of each case description also provides a comprehensible and comparable overview
for the cross-case analysis which follows later in this thesis. It is not only fully
implemented business models that have been considered in the analysis. If organi-
zations had partially implemented or scheduled approaches this was also included
in the results table.
4.1.2 Further Parameters used for the Description

of the Cases
In order to answer the key questions of this thesis, cases have been analyzed
regarding their motives, challenges and benefits. The cases are at different stages
in the implementation of their circular economy approach with some being right
at the beginning of their transition. As a result, benefits which are currently only
theoretical and have not yet been practically confirmed are also listed in the case
descriptions. The same holds true for challenges. Some organizations describe the
challenges they have encountered more generally rather than being specific about
these challenges. However, to include as much information as possible into the
description and to draw an exhaustive picture this approach is appropriate.
4.2 Background Information on the Cases and Case Order

4.2 Background Information on the Cases and Case Order
The table below provides background information on the interviewees for each case.
The sources of this data were either the transcripts of the interview with them, the
corporate homepage or the Hoppenstedt Company Database. To keep a necessary
degree of anonymization the outlined information is brief.
53
54
Table 5 Background information on all cases
Case Alpha Beta Gamma Delta Epsilon Zeta Eta Theta Ioata
Industry Textile Textile Parquet Textile Office Interior Textile Textile Agribusiness Textile
Founded 1972 1919 1947 1834 1872 1948 1974 1818 1989
Headquarter Germany/ since

USA Germany Germany Switzerland Germany Germany USA Canada
Location 2013 Norway
Responsible
Vice President Head Global for Director of
Chief Chief Director of
Interview of Chief Financial Safe and Sustainability Advanced
Executive Director R&D Executive Global
Partner Environmental Officer Environmental and Corporate Materials
Officer Officer Innovation
Affairs Affiars Social Development
Responsibility
Employees*
1400 (2015) 1200 (2013) 1700 (2014) 310 (2013) na 10750 (2013) 520 (2013) 35000 (2013) 500 (2013)
(Year)
Revenue* 600 Mio $ 88 Mio € 272,4 Mio € 38,54 Mio € 2985,3 Million 62.77 Mio € 61 Mio € 2136 Mio €
na
(Year) (2015) (2013) (2014) (2013) € (2013) (2013) (2013) (2013)
4 Case Description and Within-Case Analysis
4.3 Case Alpha 55
The order of the cases is based on the maturity level of the mode of circular economy
implementation the organizations have chosen to pursue. Since many cases have
used more than one approach to circular economy the main approach taken by the
organization was chosen and its level of maturity evaluated. The maturity levels
of the cases in this study are either a fully implemented or partially implemented
circular economy approach. The result of the implementation can be viewed below
in Table 6.
Table 6 Result of evaluation of maturity level of main circular economy approach
4.3 Case Alpha

4.3 Case Alpha
4.3.1 The Company’s Circular Economy Approach
The circular economy approach of case Alpha includes the use of circular supplies
at product and process level, resource recovery, remanufacturing and product life
extension. The table below provides an overview of the chosen circular economy
approaches.
55
Table 7 Overview of circular economy approach of case Alpha

Alpha
Product Circular Supplies (e.g. creation of products which x
(Changes the Resource Recovery (e.g. creation of new products to x
Remanufacturing (e.g. implementation of new x
products which can be built from the reusable parts
of the original product)
Process Circular Supplies (e.g. use of renewable energy for x
Innovation the production line)
(Changes the
process)
Product Life Extension (e.g. gather used products x
the product)
Case Alpha engages in the circular economy approach through the use of circular
supplies at product level. The organization implemented a closed-loop production
process therefore a company-own collection process has been established to collect
worn-out products for recycling purposes. Whilst a lot of products lose their quality
when recycled e.g. with cotton the organization is able to close the loop with poly-
ester. In cooperation with their partner Case Alpha is able to recycle polyester in a
way that it retains the quality so it can be reused in the apparel industry.
The next circular economy approach is resource recovery which means that
the organization works together with a partner to use leftovers from production
to make new products. Since 2011, Case Alpha’s partner has swept the floors of the
cutting rooms in their factories in China and Malaysia to save the cotton scraps
left after production. Through this process hundreds of tons of useable cotton have
been saved. The leftovers from approximately 16 ‘usual’ shirts results in one ‘reclaim
cotton’ shirt. Since the partner is one of the biggest garment manufacturers in the
world, the procedure ends up saving a massive amount of resources. Case Alpha
uses the reclaimed cotton which is neither bleached nor dyed and mixes it with
virgin organic cotton to create products out of it. In addition to reclaimed cotton,
the organization uses reclaimed wool in their manufacturing process. Another
4.3 Case Alpha 57
manufacturing partner uses discarded sweaters which are shredded into usable
fiber and used by the organization to manufacture a new product.
The category resource recovery also contains the use of recycled material. The
organization together with its supplier produces apparel made out of 100 percent
post-consumer recycled plastic bottles and minimum 50 percent recycled content.
There is a plan to create a fabric out of 95 percent post-consumer waste (clear plastic
water bottles) and 5 percent fabric cut waste.
Circular economy approach number three is remanufacturing where the company
puts effort into repurposing used and returned products. In this case, down jackets
are repurposed and turned into new products. Damaged or used down is usually
very difficult to clean which often makes it economically unprofitable for people or
organizations to do so. The result is that these kinds of products often get disposed
and end up in landfills. However, the organization in case Alpha partnered with
a designer and artisan in a project to find uses for these jackets which have been
collected in the regular recycling program of the organization. The results of this
collaboration are handmade scarves which are only available as limited editions as
they rely on certain amount of down jackets being returned. Through this project
the organization was able to turn waste into new products and to gain additional
economic value out of it.
Circular supplies on process level describes the commitment of the organiza-
tion to use renewable energy sources in their production process. The company
produces approximately 5 percent of their energy consumption on site. The main
site of the organization which is in California has 498 solar panels installed which
reduce the overall demand of electricity from the grid.
The last circular economy approach is product life extension. This describes the
efforts of organization Alpha to extend the lifecycle of their products by offering a
repair service for worn clothes, reselling used clothes in good condition and pub-
lishing easy online tutorials for repairing minor holes in clothes and maintenance
guides. The organization offers a repair service for which it employs 45 full-time
repair technicians and has pursued initiatives to further promote this service. In
2014, the organization started a ‘repair truck’ which tours several locations in the
US carrying out free repairs and demonstrating to customers how to repair their
clothes by themselves. Prior to this, in 2012, the organization introduced the re-
selling of used products in good condition in its stores. Customers can bring their
used apparel to the store and in return receive a gift card for half the value their
item has. The used items are professionally cleaned and sold in a specific section
of the store. The online tutorials created by the organization are sorted by product
(outerwear, bottoms, tops, etc.). They allow customers to learn how to fix minor
57
clothes repair issues and how to take care of their product i.e. water and stain
repellant to ensure it has a long life.
4.3.2 Motivation to engage in Circular Economy
Since its formation in 1973, the company’s vision has been ‘to use’ the organization
to inspire others to save and foster the environment. No harm should be done to
the environment through their production process or products. This vision drives
case Alpha’s commitment to sustainability. The motivation is a very personal one
and stems from the company founders love of the environment. The founder and
all of his employees were and still are outdoor athletes at the time the organization
was founded. Since it was in nature that they performed their sports this instilled
in them the need to protect the environment in which they practiced and played
their sports. The interviewee states: “Well at the time the company was formed all
of us were outdoor athletes so we were committed to the protection of the outdoors
which is where we did our sports.”
Organization Alpha’s founder and employees were spurred into action by a
conflict that arose with the city council regarding a development project right be-
hind the organization’s office. The city council proposed a project to straighten the
city’s river in a way that would have destroyed all wildlife. One citizen’s decision to
protest against the city council and draw attention to the consequences for wildlife
and nature led to the termination of the project. Furthermore, it encouraged the
founder to support both individual and non-profit organizations working to protect
the environment and conserve biodiversity.
It is interesting to note that organization Alpha did not mention any commercial
motivation for its commitment to circular economy.
4.3.3 Challenges for the Implementation
With implementing such a comprehensive circular economy approach the organi-

zation has encountered several challenges.
The first challenge is the lack of customer education which the organization
discovered through their recycling initiative. Since 2008, all company-own stores
offer a service whereby they take back used clothes for recycling purposes. Although
this initiative has been running for approximately six years, its take-up by custom-
ers is low. Approximately 1 percent of the recycled polyester used in production
could be provided through this activity. The reason for this low participation is,
4.3 Case Alpha 59
according to the interview partner, lack of information about the service offered
and recycling and reusing clothes. What is needed is customer education to raise
awareness that apparel is something which can be recycled and doesn’t need to end
up in landfills. The company representative describes the challenge as follows: “Do
you know what is needed? To educate more people about thinking of clothing and
apparel as something you can recycle instead of having it end up in landfill.”
Furthermore, the organization identifies its main challenge as being higher
prices for recycled resources specifically recycled polyester. The organization has
to absorb the additional costs in order to stay competitive and to be attractive to
their customers. As said by the interview partner, the majority of customers are
not willing to pay more just because a product is circular. Hence, a circular product
has to be comparable in features, price etc. with other conventional products of
a similar type. Circularity is an additional feature of a product but for the main
customer group it is not the crucial factor in their buying decision, as this quote
reveals: “But right now that’s not the case and we have to absorb those additional
costs. And we have to absorb them because we have to remain competitive. There are
not enough people that are willing to pay more.”
Another challenge identified by the organization Alpha is the lack of govern-
mental support. According to the interview partner, externalities of the production
process should be internalized through appropriate policies. Air pollution, waste
generation or resource consumption are externalities which are currently not ad-
equately considered in the formulation of governmental policies. Internalization
would make products made in a ‘conventional’ way (with virgin resources so not in
line with the circular economy concept) more expensive and less attractive to the
customer. This challenge was explained by the interviewee as follows: “The t-shirt
that is made with cotton that is farmed using huge amounts of water and pesticides
is unsustainable. This t-shirt should cost more than a t-shirt that is made with cot-
ton grown organically, a cotton that is watered by rainfall only, a cotton that uses
non-toxic dye, a cotton that is reclaimed and recycled. This t-shirt should cost less.”
4.3.4 Economic Impacts
There are several economic impacts on the business of the organization as a result
of implementing changes to achieve a circular economy.
The first impact is the higher costs for recycled resources. These costs cannot be
reflected in price of the product because the organization has to stay competitive.
The company has to absorb these additional costs, as explained in the following
quote: “We have to absorb additional costs. We have to absorb them because we need
59
to remain competitive and also there are not enough people who are willing to pay
more.” Through mixed calculation other products produced by the organization
‘subsidize’ the circular economy products. The organization is able to do this because
its products are high-end apparel and therefore are located in the high price segment.
Due to the higher prices of recycled resources, the company currently has no
plans to increase the amount of recycled polyester in its product portfolio. Nev-
ertheless, the company has a strong commitment to caring and protecting for the
environment. The company foresees the price of petroleum and other virgin re-
sources increasing in the future. It has identified a potential competitive advantage
in acquiring knowledge of how to handle these recycled resources before prices for
virgin ones increase.
Another positive effect is customer appreciation. The number of organization
Alpha’s customers who value its commitment to circular economy and return their
products to be recycled is low. However, the organization does attract a certain
group of buyers who have a special interest in ‘green’ products. These customers
which might otherwise have not been interested in the brand have a positive effect
on the economic performance of the organization.
The final impact is the additional revenue gained through the reselling of used
down jackets that have been to returned to the store after customers have had
their use out of them. These jackets are cleaned, repaired and resold generating an
additional income stream for organization Alpha.
To summarize, the approach of case Alpha is quite comprehensive and includes
multiple circular economy approaches. The change towards a circular economy as
well as the integration of a closed-loop production into the manufacturing process
for all consumer goods is mandatory in the eyes of the interviewee.
4.4 Case Beta

4.4 Case Beta
Case Beta has adopted two circular economy approaches (see Table 8). The orga-
nization is implementing the circular economy approach circular supplies at both
product and process level.
4.4 Case Beta 61
Table 8 Overview of circular economy approach of case Beta

Beta
Innovation are fully circulatable)
product) use up leftovers from the production line)
(Changes the
process)
the product)
The first circular economy approach the organization has chosen to implement
is circular supplies on product level. After prototyping for almost two years, the
organization launched its first biodegradable product line in 2006. A biodegradable
product line means that the customer is able to dispose of the product into his/
her own compost and the materials will be fully biodegradable. The organization
has no plans to retrieve its products at the end of their lifecycle to ensure that they
are properly composted or that the materials used to make its products are reused.
The second circular economy approach the organization has decided to imple-
ment is circular supplies on process level and it is using renewable energy. All
energy consumed on the main production site is produced in the company’s own gas
turbines and two cogeneration units (in German: Blockheizkraftwerk). Moreover,
the organization has been producing solar energy since 2007 at a total of 6000m².
This energy is used by the organization itself as well as provided to the general grid.
61
At the very beginning of the interview, the partner made clear that the idea to en-
gage the organization in the circular economy did not come from the organization.
It was approached by Prof. Braungart, who asked if the organization was willing
to participate in the first Cradle-to-Cradle initiative in Germany. When asked by
Prof. Braungart, the initiator of the Cradle-to-Cradle concept, the organization
agreed to participate as both a manufacturer and a distributor. However, it was
Prof. Braungart and his team that were responsible for finding suppliers for the
production process. In the following section, the reasons why the organization
chose to participate in the initiative are explained.
The first motivating factor for the organization is that it expected to reinforce
its positive brand image as a result of its commitment to the initiative. Being the
first organization to engage in this concept would hopefully draw positive attention
from customers. The organization felt that existing customers especially those who
didn’t know the brand well would now definitely have a positive impression of it.
Furthermore, the interviewer acknowledged the fact that for a certain buyer group,
sustainability and more specifically circularity play an important role in their buying
decision as described here: “It is positive publicity because we have been pioneers in
this area and today the customer is appreciating this” (see Appendix: German Quote 1).
In addition, the competitive advantage gained was another reason to engage
in the circular concept. Case Beta is the only organization in Germany to have all
stages of its circular production process take place inside the country. The cost
of production in Germany is far higher than in countries such as China or India
which results in the price of the product being more expensive. This means that
the organization has to offer products that are more innovative than those of its
cheaper competitors. The CEO describes the situation as follows: “I decided that we
need to offer this because I am not able to compete with the prices of my competitors.
Importers who manufacture somewhere in Bangladesh are always cheaper but I have
to offer innovative things” (see Appendix: German Quote 2).
It becomes clear that this organization did not engage in the concept because
of genuine care and concern for the environment but rather to improve its brand
image and to differentiate its product line from competitors by introducing a unique
characteristic to its products.
4.4 Case Beta 63
The organization began its transformation towards circular economy ten years ago
during which time it has identified two main challenges of implementing the concept.
The first challenge is finding suppliers who are willing to invest the time and
money in the development of required substitutes. Developing an environmentally
safe product which is biodegradable and not harmful to the health of the customer
requires new chemicals for dyes, yarns etc.. At present there are no substitutes
available and therefore research and development are highly necessary. As they
consume both time and money it is difficult for the organization to find reliable
suppliers who are willing to provide these resources. Low production volumes make
the manufacturing process expensive and therefore unattractive to most suppliers,
as the interviewee explained: “It took some time to find suppliers who were willing
to cooperate on this issue. Many suppliers weren’t willing due to low production
volumes” (see Appendix: German Quote 3).
The second challenge which the organization is facing is technological limita-
tions. Currently, only very basic apparel can be produced due to the requirement
of biodegradability. Hence, features such as zippers, glitter print, special buttons
cannot be added to the product. The very basic look of the product means that it
only attracts a small group of customers. In order to increase the group of custom-
ers attracted to the product, technological innovations are necessary to enable the
organization to satisfy customer requirements. The interviewee stated that, “We
are currently not able to use zippers, glitter or other effects (…) there is definitely a
lot of development necessary” (see Appendix: German Quote 4).
The company identified higher costs due to required double production as an

economic impact of engaging in circular economy. The interviewee views the
situation as follows: “We are not interested in increasing our commitment because
currently we have double effort. Due to increased prices, it is necessary to have both
cradle-to-cradle certified and conventional products in our portfolio” (see Appendix:
German Quote 5). The price of circular products is higher than conventional ones
and therefore attracts a limited number of customers. Hence, the organization is
producing pieces from the circular product line as conventional products. This al-
lows the organization to offer these products at a cheaper price and ensures it meets
customer’s demands. However, the double production involved creates additional
effort for the organization and results in higher production costs.
63
A positive impact the organization identified is the constant revenue stream.

Since starting the circular product line eight years ago, sales quantities have been
growing, as explained by the CEO: “(…) we started with smaller quantities which
we have never had to decrease. Sales quantities haven’t made a huge increase but
they are growing at a steady and slow rate” (see Appendix: German Quote 6). The
production units remain low but due to constant growth the organization predicts
positive developments in the next years. Having this constantly growing product line
ensures the diversification of its product portfolio and reduces the risk of failure.
A third effect the organization sees in engaging in circular economy is the
competitive advantage gained particularly with regards to competitors from low-
wage countries. The biodegradability of the products the organization in case Beta
produces is where its competitive advantage lies. The CEO explained in the following
quote why having this competitive advantage is important to him as CEO of the
organization: “It is important for me as a German manufacturer to be the first to offer
Cradle-to-Cradle products before any competitor from China offers such products”
(see Appendix: German Quote 7). Since every step of the organizations production
process takes place in Germany, the prices of its products tend to be higher than
those from its competitors in low-wage countries. A unique characteristic such as
biodegradability is a valuable attribute which differentiates from the products of
cheaper competitors.
The final benefit the organization sees is the acquisition of new customers
who are attracted to the products circular and biodegradable features. As the first
textile company in Germany to offer this kind of apparel, customers who care
about the environment will value the organization’s commitment to protecting the
environment. “You know, there are customers who appreciate this commitment” (see
Appendix: German Quote 8).
The organization in this case didn’t exhibit any intrinsic motivation to engage
in the concept of circularity. Nevertheless, it was willing to take the risk to engage
in this new concept by investing in protoyping for two years. The organization was
one of the first in the textile industry and also in the country to engage in circular
economy and because of this it received a lot of attention. This was a motivating
factor in the organizations decision to engage with the idea. The selling of biode-
gradable products at a time when no other organization was offering such products
created a steady revenue stream for the organization.
4.5 Case Gamma 65
4.5 Case Gamma

4.5 Case Gamma
The circular economy approach adopted by case Gamma involves the organization
investing in circular supplies at both product and process level.
Table 9 Overview of circular economy approach of case Gamma1

Gamma
Product Circular Supplies (e.g. creation of products which are (x)1
Innovation fully recyclable)
Remanufacturing (e.g. implementation of new prod-
ucts which can be built from the reusable parts of the
original product)
Innovation your production line)
(Changes the Resource recovery (e.g. integration of recycling
process) material into the production process)
the product)
Case Gamma selected the circular economy approach circular supplies at product
level and implemented a closed-loop production for their parquet. The organization
created a product which greatly improved the process of removing parquet at the
end of its first lifecycle. The R&D team made a mat which is applied to the parquet.
The mat is glued to the floor instead of gluing the parquet directly to the floor. This
not only facilitates the removal of the parquet but it also ensures the reusability of
1 (x) Indicates that a certain business model is currently in its test phase and therefore
has not yet been fully implemented.
65
the parquet through a gentle removal process. About 80 percent of the parquet can
be reused at least two to four times. The interview partner explained it as follows:
“When we take back the planks we are able to reuse approximately 80 percent of them.
Only the corners are not reusable” (see Appendix: German Quote 9).
Fig. 4 Visualization of closed-loop production process of case Gamma

(Based on figure in Product Profi le, 2015, p. 6)
The only non-reusable parts of the parquet are the corner pieces because they are
usually sawed to ensure an optimal fit. Not only can the parquet be reused but so
can the mat which is glued to the floor. It could be used again when laying new
parquet. Alternatively, the mat can also be removed and reused by the supplier in
the manufacturing of new mats.
The organization has not yet decided how to close this cycle. It is still undecided
how the reuse of the parquet is managed and by whom. Four options have been
considered:
1. The organization could remove the parquet and then take it back into their sites
to refurbish and resell it.
4.5 Case Gamma 67
2. If the customer was moving home he/she could remove the parquet and take
it with him/her.
3. Give responsibility to a third party to remove, refurbish and reuse the parquet.
4. Lease parquet instead of selling it.
The advantage of option one is that the organization is able to recover the high-qual-
ity parquet and resell it, only having to make minor additional efforts to refurbish
it. Option two gives the customer the choice of a second use for the parquet. The
organization would not have to make any additional efforts but at the same time it
would receive no benefits e.g. through reselling the refurbished parquet. The last
option is probably the most economically reasonable particularly in situations where
the parquet is far away from production sites. In these cases, it might neither be
economically nor ecologically reasonable to transport the parquet several hundred
kilometers to refurbish and resell it. A third party should be considered to remove the
parquet and reuse it. As with option two, this option requires no additional efforts
but results in no additional benefits for the organization. A fourth option considered
to close the loop and to retrieve the parquet is to lease the parquet rather than sell
it. The interviewee describes the idea as follows: “This means we give customers who
decide that they no longer like their flooring the option to have it removed and we pay
for 10 percent to 15 percent of the parquet” (see Appendix: German Quote 10). The
benefit of this approach is that the organization is able to rescue the parquet at the
end of its first life-cycle to refurbish and resell it. Furthermore, this option results
in lower costs for the customer and provides him/her with the choice to change the
parquet after having it for a couple of years. This approach is still being developed
and therefore has not yet been implemented by the organization.
To summarize, the circular economy approach selected by case Gamma is
working for the organization. However, many questions still have to be answered
before the circular economy approach is implemented fully. The loop can be closed
but just how has not yet been decided and the infrastructure to do so is lacking.
The second circular economy approach chosen by the organization is circular
supplies on process level. This means the organization uses renewable energy in
its production process and has environmentally compatible water management.
The reasons why the organization chose to invest in the concept of circular economy
and close-loop production are manifold.
67
The first motivation is that the concept aligns with the company’s mission state-
ment. Since its formation in 1947, the organization’s mission has been to ‘design
living space consciously’. The organization does this by manufacturing products
which do not harm the environment nor the health of the customer e.g. through the
emission of toxic fumes. Designing products to reflect the organization’s mission
statement meant the organization had already embarked on the first step towards the
Cradle-to-Cradle concept. Hence, achieving a certification required no big changes
to the organization’s products, as explained by the interviewee: “Getting products
certified within half a year was only possible because creating ecological, toxic-free,
healthy products has always been important to the organization. This meant our
products already fulfilled all requirements (…)” (see Appendix: German Quote 11).
Another reason for the organization to engage in the concept is the increased
usability. What prompted the organization to develop the product were not envi-
ronmental concerns but simply the need to facilitate the removal of the parquet. Up
until this point, the only way to remove the parquet from the floor resulted in it being
destroyed. Removing parquet was an exhausting job and reusing it was absolutely
impossible therefore the objective for the R&D team was to develop something to
facilitate removal. The result was a mat which is applied under the parquet. This
mat not only facilitates the removal of the parquet but also allows approximately
80 percent of the wood to be reused. This new product significantly increased the
customer value while also being environmental beneficial.
Furthermore, the organization identified a competitive advantage/positive
brand image which is the third and last motivation. When the interview took
place, case Gamma was the only organization in the parquet industry engaging
in this concept and their products were the only ones offering the features and
benefits of a Cradle-to-Cradle certificate. By following the company-own mission
and pursuing the Cradle-to-Cradle certification for its products the organization
ensures that it is one to two years ahead of legislative regulations. This avoids dealing
with these regulations at the same time as all their competitors do and leads to a
positive brand image. The company representative explains it as follows: “With our
product development we are always ahead of our competitors which is a big advantage
(…). Of course this is also very important for our resume and the brand name of our
organization” (see Appendix: German Quote 12).
4.5 Case Gamma 69
The first challenge is that technological limitations hinder an exhaustive substitu-

tion of conventional materials with certified non-hazardous ones. Currently, the
organization is not able to exclusively use non-hazardous, non-toxic, environmen-
tal-friendly components in their manufacturing process. To develop the required
substitutes, close cooperation with suppliers is necessary because they are the ones
developing the environmental-friendly substitutes. The requirement for a successful
substitution is that the developed components have the same characteristics and
quality as the conventional ones. This requirement is challenging for the organi-
zation and its suppliers and is limiting the substitution of conventional products,
as the following quote reveals: “In general, obtaining a silver certification is enough
for us but if you have reached the technical boundaries and there are no substitutes
available it is annoying” (see Appendix: German Quote 13).
The second challenge is the higher prices for recycled resources. There is a large
quantity of virgin wood available which means low prices. This exacerbates the com-
petitiveness of recycled resources. It is still cheaper to purchase new wood instead
of using recycled wood. Hence, economically it is not reasonable to close the loop
and to refurbish and reuse wood, as described by the interviewee: “This approach
only exists in theory. Today, it is economically unreasonable to use recycled resources.
It might be ecologically reasonable but in the wood industry we are sustainable, and
we have more wood in the forests than we need. More trees are growing back than
we are using” (see Appendix: German Quote 14).
The next challenge is the missing recycling infrastructure for parquet. Currently,
there is no infrastructure that ensures the reuse of the reusable parquet. The product
itself is reusable but the options available to close the loop and retrieve the parquet
are economically unreasonable. An infrastructure involving third parties to remove
and reuse the parquet is necessary. The interviewee explains it as follows: “We expect
that in ten years from now we will have a functioning recycling infrastructure and
that there will be organizations removing it [the parquet]. These organizations will
remove the parquet and refurbish it and this will be paid for by the organizations
or us. Ecologically, it is not reasonable to drive 1000 km to remove the parquet. The
ecological advantage would be lost” (see Appendix: German Quote 15).
The long lifecycle of parquet makes it difficult for the organization to test concepts
in order to develop an infrastructure. Case Gamma expects the first customers to
return their certified parquet in approximately ten years from now.
The last challenge the interview partner mentioned is the requirement to move
from niche to mass market. Expanding the amount of circular products in the
portfolio of the organization requires high investments in new, additional machines.
69
However, producing only a limited amount of certified products due to capacity

constraints means that the product is more expensive than others in the organiza-
tions portfolio. The interviewee describes it as follows: “But this is not working for
this component because the volume is too low. Currently, we are hesitating to decide
whether or not to use this component for all our products because it would be a big
investment (…) if the volumes would increase we would make the investment” (see
Appendix: German Quote 16). Only if the prices of these products are the same as
the prices of conventional products they are attractive to the mass market. However,
in the current situation the sales figures are too low for the organization to make
a decision as to whether or not it should invest in new machines. The organization
will closely monitor sales figures in the upcoming years before making this decision.
Despite the challenges described above, the organization realized several positive
effects through the implementation of circular economy.
The first impact is a competitive advantage. The organization is first mover
within the parquet industry when it comes to circular economy. Its products not
only attract customers because of their environmental-friendliness but also because
they are reusable.
Another positive impact adding to the competitive advantage is that the cus-
tomer has the option to lease the parquet for a certain amount of time and then to
return it afterwards. With trends and demands changing at a faster rate, people
might not want to keep the same floor for 20 or more years and therefore value the
option of leasing instead of owning the parquet. The interviewee explained it as
follows: “We would like to do that [offer the option to lease the parquet] and if it [the
leasing] would fit adequately we would do it because it is a benefit for customers …”
(see Appendix: German Quote 17). However, leasing as a business model has not
yet been established by the organization.
A second impact mentioned in the interview is the additional revenue. However,
in case Gamma it is important to note that this impact is only theoretical since the
organization doesn’t yet live the concept. Currently, the idea is that the removed
parquet can be reused with no or only minor additional effort to refurbish it. Hence,
the organization has the possibility to sell the parquet after refurbishing without
purchasing new resources. The interviewee stated: “If we would have such products
in the portfolio we could easily remove them from the floor and sell them elsewhere
not at the original price but we would expect around 70 percent of the original price.
If that worked, the expenses for the wood would paid twice which is good for us” (see
4.6 Case Delta 71
Appendix: German Quote 18). As mentioned above, the current challenge is that
there is no infrastructure established that enables the organization to retrieve the
removed parquet. Only when this challenge is overcome and a global, cost-efficient
infrastructure has been established can this potential benefit be realized.
The third impact is a positive brand image. Although brand image is not one of
the main motivators, the interview partner expressed that their circular economy
approach fits perfectly into the organization’s corporate identity and therefore gives
customers a good impression of its corporate values. As the interviewee said: “(…) but
I think it is helpful to have it for our public image” (see Appendix: German Quote 19).
A negative impact is the higher prices for circular resources which has already
been mentioned. To fulfill the requirements of circularity, often substitutes for
conventional components, e.g. in the case of parquet the oil, the glue or the varnish
etc. are required. These substitutes usually need to be developed specifically for the
organization. This additional effort is mostly carried out by suppliers. The develop-
ment effort combined with the low production quantities lead to higher prices for the
resources and therefore make the resulting product more expensive. The company
representative explained it as follows: “Cradle-to-Cradle leads to increased resource
prices. Often innovation and new developments are necessary, production volumes
are low and transport logistics are unclear (…)” (see Appendix: German Quote 20).
To summarize, it is important to note that this organization is at the beginning
of its transformation towards circular economy. Several questions especially re-
garding the end of the product lifecycle remain open. However, the organization
has already reaped benefits and believes further positive effects for their business
will be realized as implementation continues. Its commitment to circular economy
will become stronger and the theoretical concepts it is currently developing shall
be brought to life within the next years.
4.6 Case Delta

4.6 Case Delta
The organization’s product range comprises of yarns and fabrics for the production
of working clothes, protective wear and corporate wear. The organization operates
in a business to business environment and usually has no direct contact with the
end-consumer. The usual business chain is as follows: the clothes manufacturer
sells his products to a laundry business who rents the clothes to the end-consumer.
The end-consumer can be a major industrial corporation, hospitals or other public
71
consumers such as the police force, military personnel or others. During the life-
cycle, the laundry business is responsible for cleaning and maintaining the clothes.
The laundry business is responsible for disposing of the clothes at the end of their
product lifecycle. This usually done by incinerating them.
At the time Case Delta was interviewed (end of 2014), it was in the very early stages
of its transition to circular economy. The organization began this transition in 2013.
Case Delta has adopted two circular economy approaches as depicted in Table 10.
Table 10 Overview of circular economy approach of case Delta

Delta
(Changes the
process)
the product)
The first circular economy approach the organization chose to implement is

circular supplies on product level. This means that it introduced a closed-loop,
biodegradable product line. The organization invented one yarn and one fabric
both of which are biodegradable. Hence, these two components are compatible for
a closed-loop production and are part of the biological cycle. To close the loop, the
organization collects its products after approximately 50 cleaning cycles and takes
them to an industrial composting facility. At the composting facility, the products
are transformed into humus which can be used as a nutrient for new resources.
4.6 Case Delta 73
All raw materials, chemicals and dyes used in the production process are declared,
defined, rated and safe for the biological cycle.
The second circular economy approach taken by the organization is circular
supplies on product level. The organization uses renewable energy in its produc-
tion process and has implemented an extensive energy management system to
significantly reduce overall energy consumption. Since figures revealing the share
of renewable energy could not be found anywhere on the organization’s website,
it is presumed that the organization meets the requirements needed to receive a
Cradle-to-Cradle gold level certificate. This means that 50 percent of the energy
used in the final manufacturing stage has to be renewably sourced or offset with
renewable energy projects.
A primary motivation mentioned by the interviewee is the increased customer

value of circular products. At the beginning, the objective of the organization was
to increase the transparency of their products. By this, it meant that customers
should be aware of the materials the organization’s products are made of and
more importantly that these products do not contain any harmful or hazardous
ingredients. This objective lead the organization to introduce the blue sign standard
for their products. This standard specifies all ingredients a product is allowed to
contain and ensures that hazardous ingredients are excluded. The benefit for the
customer lies firstly in the transparency of the product components and secondly
in the certainty that no toxic or health-harming substances have been used in the
production of this product.
Another motivation is the intended cost savings through adequate resource
management and the use of renewable energy. Not only has the transformation
towards using renewable energy been an objective for the organization in the last
few years but also the reduction of energy consumption. An extensive and certified
energy management system was implemented in 2009 to save energy, water and
other resources required to reengineer processes and also to invest in new machines.
These investments in saving energy and money are beneficial in the long run.
The last reason for transitioning towards circular economy is the personal
conviction of the CEO that circular economy will become more important in the
future. He is of the opinion that circularity of products will be an important issue
not only for the textile industry but for the economy as a whole. He feels that it is
important for the organization to be a step ahead and this was the reason he started
the transition towards circular economy. He did not want his organization to be left
73
behind and so he chose to engage with the concept early on. This gave case Delta
time to test the concept and to see what works and what does not. “This is what
drives me. I am convinced that this is something very important for us. We can enter
a whole new economy. We are able to re-engineer things from the 20th century in the
21st century” (see Appendix: German Quote 21).
The main challenge identified by case Delta is higher prices for circulatable resources.
Currently, circular economy products are not able to compete with conventional
products pricewise due to higher resource prices. Components specifically made to
substitute other conventional components in a product are expensive. One reason
for this is low production volumes, as described by the interviewee: “We try to reach
the same price level but we are not able to do so because the Polymer is specifically
produced for us, in a very small quantity. In 2015, the first 200 tons will be produced.
This means the production volume worldwide is 200 tons in comparison to a product
like Polyester which has a production volume of 5 million tons. It is impossible to
compete with this product” (see Appendix: German Quote 22).
Only if more manufactures demand the substituting component and the produc-
tion volumes increase there is the possibility that prices may decrease. A consequence
of higher prices is that although today polyester can be replaced by biodegradable
material, only a limited amount of organizations are willing to do so. The higher
costs are a barrier to entering the market for many companies. Engagement in this
issue by a large number of organizations is required to increase demand and the
production volume and to reduce prices. The company representative explains it
as follows: “The Polymer has a higher price because we only produce 200 tons per
year. If we produce 2000 tons it would become 1/3 cheaper. If we produce 10000 tons
the price of Polymer would be 40 percent less” (see Appendix: German Quote 23).
The other challenge the organization faces is technological limitations. One
example is the polymer the organization uses. At present, this polymer is made out
of petroleum, yet it is possible to produce this substance out of cornstarch. Only
one company is capable of doing this but further research is necessary to avoid any
conflicts with the food supply chain.
Further challenging is the need to increase the number of real substitutes. The
decision to invent a biodegradable product line instead of a product line belonging
to the technical cycle has been driven by the fact that the latter would impose major
limitations on the production process, which this quote explains: “Of course there
is an idea to have products being in material circles endlessly but this is only possible
4.6 Case Delta 75
if we leave them ‘untouched’ e.g. without any color. This would be a major limitation
for us and that is the reason why I think that the technical cycle might be difficult
to implement” (see Appendix: German Quote 24). Only neutral, undyed fiber can
enter the technical cycle in order to be refurbished and reused. Hence, the current
limitation is that to ensure a circulatable product only undyed fabric can be sold
which doesn’t seem to be appreciated by the customer.
The first effect is the satisfaction of customer needs. Sustainability and especially
circularity are important issues for customers in the business to business environ-
ment. For business customers there are three basic aspects which are important in
their buying decision: price, quality and further functionalities. Circularity is part
of the category ‘other functionalities’ and thus is one of the main decision criteria
for business customers. Hence, only by offering products with special characteris-
tics such as biodegradability or a Cradle-to-Cradle certification are the customers’
needs satisfied. The interviewee describes it as follows: “In the business to business
context price is an important aspect in the buying decision but also quality and other
functionalities are taken into consideration, e.g. sustainability plays an important
role” (see Appendix: German Quote 25).
A second economic effect is the competitive advantage. The organization is a
first mover within its industry and therefore the biodegradability of its products is
a unique characteristic. A product which is biodegradable and can be composted
without producing any harmful residues for the environment is also a product
without any health-damaging ingredients or pollutants for the customer.
Summing up, this organization has to make some decisions, which are whether
or not to take their circular economy fabrics from niche to mass market or end its
commitment due to a lack of customers. The main challenge is the higher costs
of circulatable resource prices. This challenge has to be resolved in order for case
Delta to continue its commitment to circular economy. However, the organization is
dedicated to finding a way to further increase its commitment to circular economy,
as is evident in this statement: “I can tell you the market has no mercy. But right
now I strongly believe that there is a place for us in the market. With our size we will
find the right place in the market and we will reach this place within the next one or
two years” (see Appendix: German Quote 26).
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4.7 Case Epsilon

4.7 Case Epsilon
The organization started to implement the circular economy approach about five
years ago and therefore already has some experience in this area. The circular
economy approach of the organization in case Epsilon can be clustered into four
circular economy approaches. All four circular economy approaches and the specific
initiatives of this organization are explained below.
Table 11 Overview of circular economy approach of case Epsilon2

Epsilon
Product Circular Supplies (e.g. creation of products which (x)2
(Changes the
process)
(Changes or adds Product as a Service (e.g. sell the products access, (x)
the product)
The first circular economy approach the organization of case Epsilon has applied is
circular supplies on product level, more specifically the implementation of circular
product lines. In 2010, the organization began to implement the Cradle-to-Cradle
concept and today has three circular product lines. These product lines contain
2 X in brackets means that a certain business model is currently in test phase but not yet
fully implemented.
4.7 Case Epsilon 77
components belonging to both the biological as well as the technical cycle. Except for
the foam all components are circular. Hence, they either go back into the technical
cycle and can be reused without any loss in quality (e.g. aluminum, plastic or steel)
or are biodegradable and therefore elements of the biological cycle (e.g. fabric).
The next circular economy approach the organization implements is circular supplies
at process level. The organization uses renewable energy in their manufacturing
process and has implemented a closed water cycle to cool down the production
machines. By doing so, the organization saves around 40 percent of drinking water.
A third circular economy approach the organization is engaged in is product
life extension. The lifecycle of its products has been extended. For example, its
chairs are made entirely of replaceable components. If a chair is broken, instead
of having to purchase a new chair customers are able to order the part of the chair
that is damaged. This circular economy approach is not only beneficial for the
environment due to material savings but also for the customer.
The fourth circular economy approach adopted is product as a service which in
case Epsilon is the leasing of office chairs and furniture. The organization offers
the option to lease chairs or furniture instead of buying it. Usually the organization
leases their products for two to five years. At the end of each leasing contract the
customer decides whether he/she wants to purchase, renew the leasing contract or
return the chairs.
The first motivation to engage in circular economy is the company’s mission state-
ment. Early after founding the company, issues such as the reasonable handling of
resources or producing healthy, non-toxic products became important and part
of the company’s mission statement. The organization wanted to ensure that its
products did not include toxic and hazardous ingredients to human health and the
environment. Consequently, when familiarizing itself with the Cradle-to-Cradle
concept and the closed loop manufacturing process the organization saw a perfect
fit with its mission statement, as described in this quote: “Then there was this new
concept from California ‘Cradle-to-Cradle’ or circular economy. We were always
looking for certificates to certify sustainable production. This idea of Cradle-to-Cradle
or circular economy impressed us and fitted with what we were already doing” (see
Appendix: German Quote 27). The Cradle-to-Cradle concept not only helped the
organization to carefully examine every step of its production process to ensure
it was eco-friendly and only contained non-hazardous ingredients it also resulted
77
in a certificate provided by a third party. This certificate enables the organization

to make their commitment transparent to their customers.
The second motivation is the belief in the benefits of the concept. This led to the
implementation of the Cradle-to-Cradle concept instead of the many other concepts
that exist. Reason is it ensures reusing material that retains its quality when used
over and over again, as explained in this citation: “The objective was to be able to
recycle and reuse material without losing it quality. This was what motivated us
and is why we produced our whole product portfolio according to this standard after
2010” (see Appendix: German Quote 28). The Cradle-to-Cradle concept includes
the whole lifecycle.
Furthermore, the organization sees great benefits for themselves, the environment
and the customers in pursuing this concept. The benefit for the organization stems
from the reusable resources which can be refurbished and reused endlessly without
almost any additional effort. For the environment, the benefit is that the ingredients
are either biodegradable or reusable and so further exploitation of nature can be
avoided. Customers benefit from healthy products and potential cost savings, e.g.
when giving back the old product and buying a new one at a lower price.
The first challenge which has been mentioned several times throughout the interview
is lack of customer education. Prices for circular products tend to be higher than for
conventional products. Reason for that are e.g. development effort, low production
volumes or higher prices for the resources. Currently customers are unaware of the
benefit of circular products and are not willing to pay more for them. Therefore,
customer education is necessary to highlight the benefits of a circular product,
such as pollutant free, non-toxic and only non-hazardous ingredients in order to
justify higher prices. The company representative forms it as follows: “The problem
is that customers are not educated. When I am talking to potential customers and I
confirm that cradle-to-cradle products are absolutely free of toxic material (…) they
become interested” (see Appendix: German Quote 29).
Another aspect why educating customers is important is that today several
different certificates exist in the context of sustainability and green production, as
described in the citation: “In addition, there are too many certifications like ‘Blauer
Engel’ and so on which suggest all [products] are ecological and sustainable. Because
there are so many certifications, it is difficult to know what exactly each certification
stands for and how it can be manipulated” (see Appendix: German Quote 30). Without
any deeper knowledge about them it is hard to identify any differences. To avoid
4.7 Case Epsilon 79
confusion on customer side regarding certificates it is necessary to provide more

insights on the concept.
A second challenge the organization is facing is difficult collaboration with
suppliers, as stated by the interviewee: “The biggest challenge was to convince our
suppliers to disclose their list of ingredients” (see Appendix: German Quote 31). In the
evaluation process for a Cradle-to-Cradle certificate all ingredients in a product have
to be analyzed. Hence, for the certification process suppliers have to disclose the
ingredients and exact formulas for all components of the product. At the beginning
not every supplier was willing to do so. Several discussions as well as long term,
trustful relationships are necessary to convince suppliers to take part in this process.
The last challenge is the low price level for virgin resources. Using circular re-
sources in the production process and reusing them is more expensive than buying
and using virgin resources. Recycling a chair today means losing money for the
organization just for the fact that virgin resource prices are currently at such a low
level. Due to the longevity of the products the organization expects the first chairs
to be brought back for recycling in 10-15 years and by then the situation regarding
the resource prices could be different. The interviewee sees it as follows: “Currently
it is cheaper to buy new resources. In 10-15 years that will be different. Let’s look at the
example of aluminum: the major part of the expenses of aluminum is energy for the
extraction. Today energy is quite cheap but in 10 years it will not be cheap anymore.
Costs for electricity will increase which means that prices for resources will rise” (see
The first impact the organization expects is potential savings through reused re-
sources. The organization anticipates the price of virgin resources to increase. If
this happens, the organization will realize a huge benefit in the reusing of materials
used to make their products. By collecting old chairs at the end of their lifecycle, the
organization sees a chance to obtain easy access to reusable resources. The interview
partner said that “there is growing interest in the option to return products after 10-15
years. This means our warehouse is currently the customer” (see Appendix: German
Quote 33). Organization Epsilon is convinced that customers will return their chairs
at the end of their product lifecycle and believes that minimal effort is required to
refurbish resources in order to be able to reuse them to produce a new chair. This
benefit currently only exists in theory because the chairs are highly durable and
consequently none have been brought back to the company so far.
79
The second positive impact is the competitive advantage the organization believes
it has in that its products are circulatable, a unique characteristic. Although there
is still some customer education required, the organization sees itself as market
leader. For customers whom this characteristic as well as the fact that non-toxic
and healthy materials are used to make the product are important the product will
be an attractive purchase.
Another positive impact is the long term customer relations that are built as a
result of implementing the circular economy concept. The organization is planning
to offer major discounts for customers who bring back their chairs at the end of
their lifecycle and buy a new one. The interviewee explains the idea as follows: “The
customer is benefited in that when he/she returns a chair and buys a new one, the
materials are reused and he/she only has to pay 10 percent of the cost of materials” (see
Appendix: German Quote 34). Hence the customer saves money when purchasing
a new chair and the organization is able to establish a customer relationship based
on the long-term. This benefit is dependent on the future development of resource
prices. If the prices of virgin resources rise it will be beneficial for organizations
to use recycled materials.
Case Epsilon has yet to fully implement its circular economy approaches because
it is still developing its ideas regarding the latter stage of the product life cycle.
When it comes to the customer returns process there are questions that remain
unanswered such as what is the benefit for the customer when he/she returns the
product and how can the organization ensure the chair is returned at the end of its
lifecycle. However, the organization is optimistic and therefore it is going to certify
every new product line in the future.
4.8 Case Zeta

4.8 Case Zeta
Case Zeta started its ‘closing the loop strategy’ in 2013. Its objective was the im-
plementation of closed material loops through sustainable product innovations.
The entire approach of the company can be classified into four different circular
economy approaches (as depicted in Table 12). The circular economy approaches
chosen are circular supplies on product and process level, resource recovery and
remanufacturing.
4.8 Case Zeta 81
Table 12 Overview of circular economy approach of case Zeta

Zeta
(Changes the Resource recovery (e.g. creation of new products to x
Remanufacturing (e.g. implementation of new x
(Changes the
process)
the product)
The first circular economy approach selected is circular supplies on product level.
Case Zeta has implemented a closed-loop (Cradle-to-Cradle certified) product
line. This means that all components used for the production of this collection can
be reused at the end of their lifecycle. Components either belong to the biological
or technical cycle as is compulsory in the Cradle-to-Cradle concept. This concept
has already been explained in chapter 2.3.1 of this thesis. The Cradle-to-Cradle
collection of case Zeta includes apparel, footwear and accessories. The initiative
requires customers to bring back their clothes to the company-own stores where
recycle bins collect worn out products and distribute them accordingly. Products
belonging to the biological cycle are sent to an industrial composting facility while
the ones belonging to the technical cycle are sent to recycling partners. The recyclers
disassemble the products into their components, and then process them into raw
material which is sold to make new products.
Two examples of the circular economy approach resource recovery are the use of
recycled resources and the valorization of cutting waste. The organization integrated
two different recycled materials into their products. These were recycled polyester
and recycled thermoplastic polyurethane (TPU) which is a material commonly
81
used in sporting goods or footwear. Organization Zeta mainly uses recycled TPU
for the production of their football cleats which consist of approximately 50 percent
post-industrial TPU. The resulting product has no performance limitations and in
terms of quality is on the same (high) level as traditional cleats.
In addition to the deployment of recycled material, in 2013 the company saved
in cotton cutting waste which would otherwise have been disposed or down-cycled.
Through this initiative the organization managed to lower its virgin cotton con-
sumption without compromising the quality of their products. The organization
also reuses the following: cones from yarn manufacturers, the cardboard boxes
used to send out its products and wooden pallets. The organic waste from the
organization’s canteen is used to generate compost and therefore serves as input
to build new resources or to produce natural gas. Metal parts such as broken or
unusable needles or machinery are recycled into new metal usage.
Remanufacturing is another circular economy approach the organization
applies to move further towards a circular economy. Hence, the organization is
repurposing cutting waste to manufacture smaller items.
Furthermore, the organization engages in circular economy on a process level
when using partially renewable energy for its production which is part of the
category circular supplies. As stated above, organic waste from the organization’s
canteen is recycled to produce natural gas. Since 2013, the rate of renewables in the
total energy consumption has remained stable but the total amount of consumed
energy has increased by 7.5 percent due to increased business activity.
Three drivers for engaging in circular economy were identified by the interview
partner. The first is interest in the possibilities of a new concept. Case Zeta embarked
on sustainability initiatives many years ago and has kept an eye on the growing
interest in upscale recycling, resource efficiency, circular economy and closed-loop
production systems. The objective was to test the possibilities, benefits and conse-
quences of circular economy for the organization itself but also for the industry.
The following quote describes this motivation: “We wanted to try recycling collection
to learn what benefits it might bring, and we also wanted to try a Cradle-to-Cradle
process” (see Appendix: German Quote 35).
The second driver is an expected first mover advantage. For the organization,
circular economy is seen as a promising concept for the future, as the following
quote shows: “The business case [for implementing circular economy approaches]
is becoming more interesting and the organization with the first mover advantage
4.8 Case Zeta 83
will benefit from it [engaging in circular economy]“ (see Appendix: German Quote
36). As one of the first companies in the industry to invest in it, several advantages
are gained, such as know-how advantage, technological advantage and trustful
partnerships with required suppliers.
The third driver is the expected benefit of price stability particularly for price
variations in the cotton industry. The interview partner expressed an expectation
to obtain some measure of stability by using recycled resources. Bearing the future
development of prices in mind, the usage of recycled material might even avoid
future price instabilities, as stated here: “On the other hand when we look at the
increasing prices of cotton: I think it was two or three years ago when prices for cotton
doubled therefore it is in our own interest to look for alternatives such as secondary
resources or recycled resources to gain price stability and to try to avoid an increase
in prices” (see Appendix: German Quote 37).
One major challenge for case Zeta is technological limitations that don’t allow for
certain materials to be kept in a cycle without losing their quality. This is the case
for dyed polyester. Polyester itself can be recycled without losing its quality but as
soon as it is dyed it is almost impossible to get it neutral or white. The interviewee
explains this challenge as follows: “Currently we are not able to introduce polyester
into the cycle of material. In theory, it is possible but we have difficulties with coloring.
It is impossible to whiten dyed polyester” (see Appendix: German Quote 38).
The next challenge for the organization is lack of customer education. The ma-
jority of customers do not know about the advantages of circular economy products.
The experiences of case Zeta show that the main factors influencing customers when
deciding to purchase a product are price and design. Sustainability features are seen
as add-ons but only if the price and design of the product meet the expectations of
the customer. Only a minority of customers buy products based on their sustain-
ability features. Hence, customers need to be made aware of the additional benefits
of circular products. “On the other hand our research shows that design and price
are the main criteria in the buying decision. Sustainability or recycled resources are
only valued as add-ons but never as main criterion for mainstream customers” (see
Another economic challenge is the high expenses incurred in the recycling of
products. It is expensive for organizations to collect worn out apparel and then to
sort it according to what condition it is in before shipping it to recycling companies
which are located mainly in Asia. The financial costs of the process mean that it is
83
not commercially reasonable. As a result, organization Zeta is collaborating with

its suppliers to develop better, more commercial options and to expand the use of
recycled resources.
Further, a challenge is seen in the need for a systems approach. Developing a
circular economy as singular organization is not possible. This is why the organiza-
tions addresses this topic in several industry working groups such as the Sustainable
Apparel Coalition. After four years of having a Cradle-to-Cradle certified collection
the lessons learned of case Zeta is that such initiatives are helpful to learn what is
possible and to identify resulting challenges. However, to move the current economy
towards a circular economy it is necessary to work together with competitors and
also other industries to e.g. use the infrastructure of the recycling industry for the
purposes of the textile industry. The company representative stated: “We realized,
after four seasons of the Cradle-to-Cradle collection and related efforts that it is
good to set an exclamation mark and to look what is doable. But if we would really
initiate a circular economy then it would be necessary to do so on industry level and
to cooperate with competitors” (see Appendix: German Quote 40).
The final challenge identified by the organization is the lack of technical innova-
tions. The interviewee states that “In my personal opinion technological innovations
are missing and these are what really make the system work” (see Appendix: German
Quote 41). The organization explains the absence of technical innovations for them
as being the lack of adequate machines supporting the recycling process. Currently,
closed-loop-production systems are still a niche business. However, the organiza-
tion is optimistic that in the future such innovations will facilitate and promote
the issue of using recycled content for the production process. For example, the
recycling of plastic packaging should be improved to enable companies to close
the loop for this material.
The first effect is one which is positive and results from the attraction of new
buyers. The organization states that a certain group of buyers are sensitive to the
issue of sustainability and aware of circular economy and that these play a part
in their buying decision. The interviewee explains it as follows: “For sure there are
customers in our target group who are also concerned about sustainability, who see
it as something positive” (see Appendix: German Quote 42). Zeta’s commitment to
circular economy attracts these customers which generates additional business.
The other effect is the high prices for recycled resources, for example, in the
case of cotton which has a negative impact, as the interviewee told in the following
4.9 Case Eta 85
quote: “We realize that currently recycled resources are more expensive than new/
virgin resources” (see Appendix: German Quote 43).
On the other hand, the organization pays lower prices for recycled resources.
One example is a certain synthetic material which is used for the production of
buckles on bags that can be used in a closed-loop production. Another is recycled
thermoplastic polyurethane which has the same quality as virgin TPU but costs
less. “Recycled TPU performs as well as traditional TPU and realizes clear cost ad-
vantages” (Annual Report, 2013).
In conclusion, the economic impact of the implementation of circular economy
on the organization remains unclear. Positive as well as negative impacts have been
identified but at present it is difficult to say which outweighs the other.
4.9 Case Eta

4.9 Case Eta
The organization has a long tradition in recycling their products and striving for a
closed-loop production system. In 1994, it started a product line which was made
from pure polyester and designed to be recycled. For that purpose, the organization
established an infrastructure to collect the products when they were at the end of
their lifecycle from customers to ensure product components could be recycled.
However, shortly after initiation, the organization faced the challenge of products
not being returned due to their longevity and a lack of awareness amongst customers
that they could return their products to be recycled. Ultimately, this in combination
with the immense effort required to keep the collection infrastructure alive led to
the termination of this initiative a few years later.
In spite of the failure of this initiative, Eta has pursued other ways to implement
circular economy. According to the circular economy framework used for the
analysis, case Eta’s approach can be classified into three business models: resource
recovery, circular supplies on process level and product life extension (see Table 13).
85
Table 13 Overview of circular economy approach of case Eta

Eta
Resource recovery (e.g. creation of new products to x
use up left-overs from the production line)
Product as a Service (e.g. sell the products access,
internalize the lifecycle management)
the product)
The first approach chosen for the implementation of the circular economy concept
is resource recovery. The organization decided to use recycled resources in their
products. In the context of implementing a company-own certificate to rate products
by their eco-friendliness, the material used in the products has been closely recon-
sidered. The result is that a high amount of recycled material (especially polyester)
is used in the production. After terminating their reusable clothing line with a
closed-loop production system, due to a lack of customers returning clothes, the
organization now concentrates on buying recycled material from special suppliers.
Besides recycled polyester and polyamide the organization works with reused PET
bottles which are used in the manufacturing process of their production partners.
Through this process no new fossil oil resources are necessary and approximately
50 percent fewer energy in the production process and approximately 50 percent
lesser CO2 emissions are required.
As a second approach to circular economy, the organization chose the business
model of circular supplies on process level. The organization uses renewable
energy for its production. Since 2009, the energy supply of case Eta is 100 percent
from renewable energy sources.
4.9 Case Eta 87
The third approach towards circular economy is the product life extension which
is achieved through a repairing service for old and broken products to enhance the
product life and to enable a second, third or fourth use for the product.
The motivation to engage in issues such as sustainability, circular economy, and

closed-loop production stems from the personal conviction of the company’s
founder and his love of nature. Furthermore, the company’s products are made
to be used outdoors. The founder’s commitment to the environment is shared by
his employees and customers who care for the environment and strive to save the
natural ecosystem, as this quote shows: “For years, case Eta has been passionately
and actively involved in environmental protection. Why? It runs in our blood: many
‘case Eta-ers’ are committed nature-enthusiasts and feel that it is their obligation to
contribute to protecting the environment” (see Appendix: German Quote 44). This
intrinsic motivation has resulted in the organization having a leading position in
the industry in terms of sustainability commitment.
The second motivation for engaging in the circular economy concept is found in
the corporate’s missions statement. The mission statement is the following: “Case
Eta has set its sights on becoming Europe’s most sustainable outdoor brand, and
not just on paper, but also in objective comparisons that are understandable to the
average consumer” (Quote from Sustainability Report of case Eta).
The organization has a long commitment to sustainability and was one of the first
organizations in Germany to begin the transition towards circular economy. As a
result, it has considerable experience of circular economy implementation and has
been able to identify several challenges.
The first two challenges are recycled resources require high efforts of quality
management to ensure that only healthy and non-toxic substances are contained
and that recycled resources are more expensive than virgin ones. The following
quote taken from the interviewee, documents these challenges: “The more expensive
the virgin resources become the more the price for recycled resources is relativized.
Currently recycled material is more expensive. Furthermore, we have higher expens-
es, e.g. managing pollutants” (see Appendix: German Quote 45). The organization
strongly emphasizes their belief that the existing public waste-disposal infrastructure
87
has to be used for reusing and recycling old clothes. In the eyes of the interviewee,
implementing and running a company-own infrastructure to collect, disassemble
and recycle the products is too cost intense. The downside of using the proven
waste-disposal infrastructure is that the organization has no control nor insight
into what happens with their products at the end of their lifecycle. Consequently,
organizations have to buy recycled resources and make sure that those do not
contain any toxic or environmentally-harming substances. In addition, there is
the challenge of higher prices for recycled material in comparison to virgin ones.
A third challenge case Eta identified is limited options for substitutes to enable
organizations to create fully recyclable products. Substances used for production need
to be recyclable and of the same quality as conventional ones. Today, organizations
are very limited in their options for substitutes, as described in the following quote:
“… but the kind of material which is available, Cradle to Cradle certified, for yarns
and material which can be made out of it is limited to a certain product range“ (see
Technological innovations are necessary to enhance the variety of colors, yarns
and other material used in the production process. To achieve this progress a
systems approach is necessary. Organizations within one industry have to coop-
erate with suppliers, e.g. the chemical industry to work on non-toxic dyer or with
governments to work on legislation in the countries of production as well as in the
country of the retailer.
A final challenge identified by case Eta is the lack of customer education. A
majority of consumers remain unaware of textile recycling and product life ex-
tension through second, third and fourth use. This led the organization in case
Eta to terminate its recyclable clothing line established in 1994. In order to change
customer behavior extensive customer education is necessary.
Case Eta identifies two economic impacts for the organization from the implemen-
tation of the circular economy.
The first is addressing new groups of customers through the circular economy
activities of the organization. Its long history of commitment to this topic enabled
the organization to build trust and create a certain brand image. This attracts not
only the ‘regular’ buyer but also customers that are specifically interested in the
‘sustainable type of business’ the organization is aspiring to become. According to
the company’s representative, the organization “not only created a brand image where
the organization was seen as leading on this issue in the market but also acquired new
4.10 Case Theta 89
customer groups. New customers who are not necessarily interested in an outdoor brand
but are interested in the green lifestyle, LOHAS etc.” (see Appendix: German Quote 47).
Aside from this positive effect, the organization suffered from higher prices
for recycled material compared to virgin resources. The organization estimates
the prices to be approximately 10-15 percent higher than usual. In particular, the
growing popularity of recycled resources has led to an increase in prices over the
last few years, as the following quote shows: “Due to the hype for recycled resources,
which arose a few years ago, recycled resources are usually more expensive. Unfortu-
nately, it is a fairy tale when people say that recycled resources and resulting products
have to be less expensive. Maybe we will get there someday, in 10 years maybe” (see
The commitment to circular economy has had positive as well as negative impacts
for case Eta. The commitment of the organization is a first step within the bigger
picture of moving the economy towards circularity. However, achieving this big
picture is a social challenge which requires collaboration of several stakeholders,
such as governments, organizations, and customers.
4.10 Case Theta

4.10 Case Theta
The organization in case Theta operates in four industries: agribusiness, sugar &
bioenergy, food & ingredients and fertilizer. The organization’s product portfo-
lio contains bottled vegetable oil, margarines, flours, bakery products and even
electricity. The implementation of the circular economy concept was initiated in
2014. Hence, when the interview was conducted the organization was at the very
beginning of its transformation process.
The first circular economy approach chosen by the organization is resource
recovery. The company is able to use leftovers as new input in the production
process. For this purpose, the organization embarked on two joint ventures with
organizations which possess the required skills to transform these leftovers into
valuable output. By doing so, the organization was able to increase the amount
of output with the same amount of input. The objective was to diversify outputs
thereby creating additional income streams which provides the organization with
more security in case one commodity underperforms.
The organization also engaged in the circular economy approach via circular
supplies on process level and produces electricity and uses renewable energy in
89
its production. The organization owns and operates eight sugarcane mills in Brazil
which generate electricity by burning bagasse, a fibrous by-product of sugarcane
processing. The electricity generated is used for the company-own production whilst
the surplus is sent to the national power grid. The rate of self-produced power is
approximately 63 percent (not all sites are connected to and can be supplied by
company-own energy sources). In 2012, 93 percent of the energy consumed came
from renewable energy sources.
The table below illustrates how the circular economy approaches chosen by
the organization in case Theta can be categorized according to the framework
underlying this thesis.
Table 14 Overview of circular economy approach of case Theta

Theta
(Changes the Resource recovery (e.g. creation of new products to x
(Changes the
process)
the product)
Concerning its motivation to engage in circular economy, the interviewee stated:

“The motivation was to minimize costs.” The organization produces commodities
and in this market prices are usually set. This means the only leverage organizations
have to maximize profit is either reducing their input costs or trying to achieve more
4.10 Case Theta 91
output with the same amount of input. The organization’s motivation to engage in
the circular economy concept is to increase output with the same amount of input.
Another driver for the organization is the expected competitive advantage. The
interview partner stated that many companies are pursuing sustainability and that
incremental improvements in efficiency happen almost naturally in the industry
in which they operate. However, investing in circular economy and close loop
production processes is something relatively new in the industry and may bring
‘the required change’ to achieve stability in prices and a competitive advantage.
Although case Theta is at the very beginning of its circular economy transformation
some challenges have already been identified by the interview partner.
The main challenge for the organization is creating a business case for circular
economy, as described by the interviewee: “Something which is currently intan-
gible.” Decisions in case Theta are made based on the economic evaluation of an
investment. A convincing business case has to be presented to the leadership in
order to justify the enormous investments that come with implementing the cir-
cular economy approach. The organization has formed partnerships and pursued
joint ventures in order to bring capabilities in house. These have been necessary to
implement the circular economy approach, however, it was unclear how much more
output can be generated by the cooperation to justify the investment.
The second challenge encountered is unprofessional research within the in-
dustry. This leads to wrong conclusions which in turn result in the formulation of
bad policies. The company representative paraphrased it as follows: “Research and
development is just that. Things will fail. Fishing is not catching.” The interviewee
believes that this challenge will not go away in the future. Since circular econo-
my is an important concept for the industry, policies are needed to support the
implementation of this concept on a larger scale. Only if research is undertaken
properly can circular economy be adequately supported by laws, other governmental
regulations or industry policies etc..
Both motivating factors are also identified as potential economic benefits for the
organization. The first impact is cost savings achieved through increased output but
with the same amount of input. By partnering with other organizations, case Theta
91
was able to add profitable loops to the production process. As a result, ‘waste mate-
rial’ from the original production process was used up to generate valuable output.
Furthermore, the competitive advantage which was the second driver for the
organization to engage with circular economy is seen as an economic benefit. By
going one step further towards achieving sustainability the organization might be
able to attain stability in a volatile market which would give it an advantage over
its competitors.
Case Theta identified only positive impacts as it was able to realize its expec-
tations of engaging in circular economy. Although the organization is still at the
beginning of its move to circular economy, it has already reaped successes and is
therefore willing to increase its commitment.
4.11 Case Iota

4.11 Case Iota
Case Iota has the least experience in the area of circular economy compared with the
other cases in this study. The circular economy approach adopted by the organization
is product life extension. To achieve this, several measures are being implemented.
The organization selects durable and timeless fabrics. Beyond the point of sale,
the organization provides maintenance instructions for its garments to ensure
the typical functionalities which outdoor gear usually offers (e.g. water-repellent).
Besides this, the organization offers a worldwide repair service for its products.
Products which cannot be repaired according to company-own excellence standards
are given as a donation to local partners which run outdoor camps for children.
Products that are donated must be of good quality even though they are no longer
perceived as high quality items. By doing this, the organization ensures a second
life for the product and tries to identify people who can make the most use out of it.
Furthermore, the organization has started to engage in the circular economy
approach remanufacturing. This means the organization attempts to manufac-
ture smaller items out of broken products. At present, the organization is testing
the production of chalk sacks or goggle cases made out of jackets. However, this
circular economy approach has not yet been implemented and is currently in its
test phase. The organization has several ideas for this approach and is testing the
possibilities and what kind of products can be realized.
4.11 Case Iota 93
Table 15 Overview of circular economy approach of case Iota3

Iota
Remanufacturing (e.g. implementation of new (x)3
Process Circular Supplies (e.g. use of renewable energy for
(Changes the
process)
the product)
The organization was able to identify four different motivating factors which led
it to engage in the concept.
The first motivating factor is increased product quality through circularity. The
organization’s mission is to manufacture excellent products. Hence, the interviewee
sees it as part of his role to ensure that no toxic or environmental harmful material
is contained in the products the organization produces: “Environmental aspects
are dimensions of product quality. You can’t call it an excellent product when it
contains toxic material or a stupid piece of engineering which means you can never
do something with it again.” Furthermore, he sees it as his task to avoid designing
products in a way that they end up in landfill. Instead, he strives to facilitate the
ability to reuse and refurbish the product in its design phase.
The second driver for the organization in case Iota is the employees’ motivation
to do good. Many employees of the organization take part in outdoor sports and
fully implemented.
93
are therefore committed to protecting the environment in their daily work, as

described by the interviewee in the following quote: “There are many people that
are very committed to and motivated by outdoor spaces and they are climbers and
skiers and runners and paddlers and they want to do something good for the space
they care about.”
Another reason for engaging in circular economy is the anticipation of regula-
tory changes. The interview partner explained it as follows: “A driver is regulatory
change and being able to anticipate potential changes and regulations and not have
to move retroactively.” Since the organization already voluntarily puts a lot of effort
into implementing the circular economy it is usually several steps ahead when it
comes to changes in governmental regulations. Consequently, it is easier for the
organization to comply with upcoming regulations.
The final driver for the organization is the increased attention to circular
economy from retailers. As a young and growing company, the organization in
case Iota wants to ensure that it does not miss out on engaging in this issue which
is receiving a lot of attention within the industry. The issue of circularity has not
only become important for competitors but also for retailers who expect a certain
amount of commitment to it as explained in this quote: “Retailers are starting to
ask questions about brand image. They want to know what you are doing when it
comes to protecting the environment and how they can count on you to help them
lead on the issue of sustainability.”
In terms of the challenges the organization in case Iota is facing, it hasn’t faced any
specific challenges with the approaches it selected to implement circular economy.
However, the interview partner identified some challenges which he expects to arise
in the future. These challenges are more systemic ones than specifically mapped to
the implementation approach pursued by the organization.
The first challenge is to rethink design of products. Products have to be designed
in a way that they are modular and can easily be reengineered into something else
at the end of their lifecycle. This requires a rethinking in the production of mate-
rials by suppliers, manufacturers and customers. The current situation is that as
soon as a material is sold the supplier does not feel any responsibility for the waste
which might arise at the end of the product life. The interviewee sees the situation
as follows: “I think one of the biggest challenge we face is the economic model where
nobody owns the material (…) this issue with the waste where we don’t legally or
technically have any responsibility for the waste once the consumer has bought it
4.11 Case Iota 95
from us or even once the retailer has bought it from us (…) at each step of the supply
chain, at each level no one feels as though they have a financial commitment to the
material they have sold.” Products are usually useless at the end of their lifetime
and cannot or only with a lot of effort be remanufactured into something new.
To change that, suppliers and manufacturers need to assume responsibility and
ownership for the things which they have produced.
A second challenge the interview partner sees is the establishment of a recycling
infrastructure. The interviewee stated that: “The second one is logistics … I mean
your supply chains are webs that expand and end up with jackets all over the place
and that is really difficult particularly in North-America to decentralize and get
these materials back in a way that you can do something with them.” Especially for
organizations, such as case Iota, which operate worldwide it is a huge challenge to
collect their products from the customer for refurbishing purposes. Customers play
a major role in this context because they need a suitable incentive to value worn
clothes and bring them back instead of just disposing of them.
The last challenge is cross-industrial collaboration which is needed in order to
gain a comprehensive understanding of the chemicals used in the apparel produced.
Close cooperation between the chemical industry and all other industries processing
the chemicals in their production process is necessary. Major differences regarding
chemical regulations across countries complicate the creation of consistent stan-
dards. The company representative explains the challenge as follows: “I think there
are a lot of materials used in the chemical industry and also in the apparel industry
but the latter has a very vague understanding of the toxicity of the materials they
use so e.g. water repellants, anti-odor chemicals. I think the challenge to understand
which materials are good, which are generally benign, and which ones are potential
threats will be an ongoing one.”
The economic impacts that the organization has gained from its circular economy
approach are limited due to the early stage it is at in its implementation of the
concept. Nevertheless, one impact mentioned in the interview is brand trust. By
demonstrating to customers and others that the organization is taking responsi-
bility for the materials used to manufacture its products and the waste it produces
it has built trust, as described in the following quote: “If you are going to look at it
from the purely market-based external perspective, it is about brand trust … It is
about people looking at what case Iota [changed by researcher] does and believing
that the organization is making smart decisions about the materials they use, how
95
they manufacture their products, how they take account for their waste streams (…)
and all of that in my mind reinforces the confidence that somebody has in us when it
comes to the design and manufacturing of garments … So it becomes an opportunity
to demonstrate how the brand is doing its work effectively.” The sincere commitment
to circular economy should mean customers have faith in the reliability of the
products the organization produces. When customers trust the organization, they
will believe in its products.
Case Iota is at the beginning of its transformation towards circular economy.
Several motivating factors have been identified and the organization is planning
to strengthen its commitment towards circularity. The issue is of high importance
to the organization because growing popularity as well as demand of circular
products is expected.
Result of Analysis and Interpretations
5 Result of Analysis and Interpretations 5
This chapter presents, interprets, and discusses the results from the analysis
across all cases. Consequently, each chapter addresses one of the three research
questions. Chapter 5.1 displays the ways in which the circular economy concept
is implemented, chapter 5.2 focuses on the impacts the organizations derive from
the implementation of the concept, and chapter 5.3 investigates the challenges the
organizations face during and/or after the implementation.
5.1 Implementation of the Circular Economy Concept

5.1 Implementation of the Circular Economy Concept
This chapter illustrates the empirical results of how circular economy is implemented
in practice. For that purpose a framework with seven circular economy approaches
has been developed previously in this thesis and applied to all cases. Using the
framework ensured a well-structured analysis process of the implementation
approaches and supported their comparability. However, comparability between
cases remains difficult in this case study because the described approaches of the
organizations to circular economy highly differ. The circular economy concept is
quite unspecific regarding its concrete implementation. It is more an inspirational
source for organizations to change their business in order to decouple resource
consumption from economic growth. Hence, the following chapter is a first step
towards a deeper understanding of circular economy.
5.1.1 Multiple Possibilities for Implementation
How is the circular economy concept implemented? Empirical data of this case
study shows that no two cases have the exact same implementation approach.
98 5 Result of Analysis and Interpretations
This is because the circular economy approaches as described in the framework

in chapter 2.3.7 offer many opportunities for the transformation of the business
towards circular economy. Data shows that three aspects can differentiate circular
economy implementation approaches: type, amount, and maturity level.
According to the framework underlying this thesis organizations can chose
between seven different types of circular economy approaches to implement the
circular economy concept. This offers a variety of possibilities to the organization
and leads to a great range of different implementation modes. Results show that
organizations that have chosen the same approach differ highly in the concrete
implementation, even within the same industry. More differences exist even across
industries. The next section illustrates this fact with an example of the often-imple-
mented circular economy approach ‘circular supplies on product level’.
In case Alpha, the organization established an infrastructure to take back their
circulatable products at the end of the lifecycle and recycle, refurbish, and reuse
the material. Therefore, customers are encouraged to return their worn out clothes
to collection boxes in the company-own stores. In cooperation with recyclers and
suppliers the organization is able to maintain this closed production circle. The
closed-loop production of case Zeta is similar to this one. In contrast, case Beta,
which is in the same industry, didn’t establish a recycling infrastructure. Instead
the organization manufactures biodegradable products, which can be directly
composted by the customer. Hence, no effort for the establishment and maintenance
of the recycling infrastructure is necessary. On the other side, the organization is
limited to material that belongs to the biological cycle and is biodegradable. The
cases Gamma and Epsilon have also chosen the circular economy approach circular
supplies but are both still unaware how to handle the end of the product lifecycle.
While case Gamma is considering the involvement of third parties to remove and
recycle the parquet, case Epsilon is thinking of incentivizing the customers in a
way to ensure their motivation to return the product at the end of the lifecycle.
The section above illustrates that the same approach can be implemented in many
different ways according to the organizational and product characteristics. This
often leads to different experiences, challenges, and impacts derived from the
circular economy concept.
But not only can the type of circular economy approach and its concrete imple-
mentation vary, but also the amount of circular economy approaches chosen by one
organization is a distinguishing characteristic. The implementation of the circular
economy concept is not limited to one approach. It is actually quite the opposite,
as organizations are able to implement multiple circular economy approaches.
There are cases in this study that have implemented up to five different circular
economy approaches, such as case Alpha. But the majority of cases focus on one
5.1 Implementation of the Circular Economy Concept 99
or two approaches and are at a very early stage in their transformation towards a
circular economy. They are still in the process of implementing the circular economy
approaches they have selected. In case Eta the interviewee stated: „Currently almost
80 percent of our clothes are made according to our company-own certification [with
a certain stake of recycled resources] and in the area of handbags and hardware (e.g.
tents, back bags and so on) almost 20 percent include this material. Our objective
is definitely to reach 100 percent” (see Appendix: German Quote 49). The quote
demonstrates that case Eta focuses on expanding its commitment in the selected
circular economy approach instead of selecting additional approaches.
Another potential reason for the limited number of approaches chosen for im-
plementation is a lower success rate of the concept then initially anticipated. The
representative of case Zeta stated: “…we do not plan any further steps particularly
because the level of awareness [of the Cradle-to-Cradle certification] and also the
demand from the customer was pretty disappointing. The topic circular economy will
remain current and we are and will stay involved in some research projects but we are
not planning to expand our initiatives for now” (see Appendix: German Quote 50).
This statement emphasizes a certain disappointment in the concept, which leads
to a current stagnation of the investment and a limitation of the commitment to
the selected circular economy approach.
Maturity level is the third aspect that distinguishes the cases in their imple-
mentation of the circular economy concept. This aspect details the completion level
of the circular economy approach, as some approaches are implemented entirely
and some only partly.
As mentioned previously in cases Gamma and Epsilon, the organizations have
achieved the development of a circular product but do not know how to manage the
end of the product lifecycle. The lacking solution to the problem of the handling of
the end of product life prevents these organizations from fully implementing their
circular economy approach. Case Gamma is considering two options to handle the
end of the product lifecycle: “We do know that this work [removing the parquet from
the floor and refurbishing it] probably has to be done by a subcontractor. But in parallel
we are thinking of innovative administrative systems to offer the possibility to lease the
parquet instead of selling it” (see Appendix: German Quote 51). For Epsilon the situ-
ation is similar, and it is still unclear how the organization will recover the products
at the end of the lifecycle: “There are different possibilities to incentivize customers.
One is to offer a certain amount from the purchasing price in case the customer brings
back the chair after using. When doing this the customer probably will remember to
bring back the chair. That is the first option, another one is to offer different types to
finance, e.g. leasing” (see Appendix: German Quote 52). Both of those circular econ-
omy approaches are highly developed at the beginning of the product lifecycle but
99
have significant weaknesses towards the end of the lifecycle. Both cases do not have
a specific concept of handling end of product life which is an integral component to
close the cycle. However, both organizations claim that their first circular products
reach the end of the product lifecycle in approximately ten years. Hence, there is still
time left to resolve the situation and develop a comprehensive approach.
In contrast, cases such as Alpha, Zeta or Delta have completely implemented
their chosen circular economy approaches.
The differences in the maturity level of the approaches as explained above illustrate
that not every organization that claims to have implemented the circular economy
concept has really implemented it. There are major differences in the maturity level
that are only visible with more scrutiny. For the cases with a low maturity level, key
questions are often unanswered and solutions need to be developed to increase the
maturity level. All affected cases are aware of these weaknesses and are working to
find solutions in order to enhance the maturity level.
5.1.2 Motives to engage in Circular Economy
To answer the question of why organizations engage in a circular economy, this study
analyzes the motivations for the investment in a circular economy. The results show
that organizations usually have more than one reason to engage in circular economy.
A comparison of motivations for the investment in a circular economy with
motivations for the investment in sustainability management shows major similar-
ities. Literature on sustainability management analyzed motives for the adoption
of sustainability actions, and they can be grouped into: market success, legitimacy,
internal improvement and ethical considerations (Windolph et al. 2014; Babiak and
Trendafilova 2011; Darnall; Epstein 2008; Graafland 2006; Bansal and Roth K. 2000).
Market success can either describe an increase in revenue, competitiveness,
brand equity, or innovation (Windolph et al. 2014; Brønn and Vidaver-Cohen 2009;
Epstein 2008; Bansal and Roth K. 2000). Today, the market, particularly consumers,
demands the consideration of certain environmental and social factors. Sustainability
management, therefore, can lead to a competitive advantage (Windolph et al. 2014).
Legitimacy for organizations can be defined as “perception or assumption that
the actions of an entity are desirable, proper, or appropriate within some socially
constructed system of norms, values, beliefs and definitions” (Suchman 1995, p. 574).
Translated into daily practice, this means to not only comply with laws but also
environmental and societal regulations.
Internal improvements refer to improving processes in a sustainability-oriented
way and to reducing costs. Furthermore, increasing eco-efficiency or socio-efficiency
5.1 Implementation of the Circular Economy Concept 101
shall be achieved (Windolph et al. 2014). Literature states that internal improve-
ments also contribute to employee satisfaction and motivation which increases
productivity (Windolph et al. 2014; Ehnert 2009; Carter and Rogers 2008; Moon
2007; Mcwilliams and Siegel 2001; Daily and Huang 2001).
Additionally, multiple studies find ethical reasons responsible for companies
engaging in sustainability initiatives (Babiak and Trendafilova 2011; Brønn and
Vidaver-Cohen 2009; Graafland 2006). Motivations for engaging in sustainability
in this context can be personal moral values, the desire to make a positive con-
tribution to society’s future, or to ‘do the right thing’ (Brønn and Vidaver-Cohen
2009; Graafland 2006).
As a result of this study all identified incentives in the cases of this study are
grouped as sub-categories to the four motives identified in literature as depicted
in Table 16.
Table 16 Results of evaluation of motivation reasons categorized into four

motive groups
Drivers for Sustainability Drivers for Circular Economy
(literature review) (Empirical results)
Ethical considerations • Personal Interest of the founder / CEO
Company-internal • Potential price stability in the future
improvement • Minimize costs
• Employees motivation to do good for the environ-
ment
Legitimacy • Mission of the Company
• Important topic for the industry
• Curiosity for new concept
• Becoming a role model for other companies
• Anticipation of regulatory changes
Market Success • First mover advantage
• Competitive advantage
• Perfect fit to product portfolio
• Increased customer value
• PR initiative
• Increasing retailer attention
• Increased product quality
Market success is the group which has the most coded motives assigned to it.
However, the table above depicts that other reasons play an important role for
101
organizations to engage in a circular economy. Analysis shows that organizations

usually mention more than just one motive.
The variety of motives shows that organizations attempt to benefit from circular
economy in different ways. This is positive not only for the organization but also
for the transition towards circular economy. The variety of motives ensures that
even in the case that one objective cannot be achieved there are still other reasons
for the organization to be further committed to a circular economy.
5.2 Impacts of Circular Economy Implementation

on Organizations
5.2 Impacts of Circular Economy Implementation on Organizations
In this chapter the second research question is addressed in order to answer what
impacts organizations can expect from circular economy. The findings from lit-
erature in chapter 2.3.3 describe a number of benefits that can be gained through
the commitment to a circular economy. This chapter analyzes the empirical data
of this study and compares it to the findings from the literature review.
Fig. 5 Overview of identified impacts resulting from circular economy

implementation
5.2 Impacts of Circular Economy Implementation on Organizations 103
The within-case analysis already revealed that implementation of circular econo-

my can have both positive as well as negative impacts for the organizations. These
can be separated into monetary impacts and other impacts which are not primary
monetary as displayed in the following sections. Figure 5 provides an overview of
the identified results from the empirical data of this study.
The next chapter is structured as following: first, empirical findings on monetary
as well as non-monetary impacts are outlined, and later, a detailed comparison
depicts the differences between findings of this study and in existing literature as
well as an attempt to explain the differences.
5.2.1 Monetary Aspects of Circular Economy
Since more and more organizations engage in circular economy practices, it seems
obvious that positive impacts outweigh the negative ones. However, the data reveals
that the financial aspect of such a commitment is neither clearly negative nor positive.
Therefore, the financial aspect is elaborated in this chapter in order to reveal both
sides of the investment. Table 17 provides an overview of the monetary aspects and
their impact on businesses, which will be described in more detail in the following.
Table 17 List of monetary sub-categories and their effect on businesses
# Monetary Impact Monetary Sub-Category Effect

1 Costs Circulatable Material negative/positive
Costs
2 Costs R&D Costs negative
3 Revenue Acquisition of new Cus- positive
tomers
4 Revenue Sale of Refurbished positive
Products
5.2.1.1 Monetary Impact: Costs

5.2.1.1.1 Sub-Category 1: Circulatable Material Costs
The first monetary effect is the augmented costs for recycled material. This is the
aspect with the most coded statements from the interviews which might give an
indication of the importance for the organizations. The higher prices for recycled
materials play an important role, especially in cases from the textile industry, but
103
also cases from the parquet and office chair industries mentioned the topic as
negative impact on their business as well.
The use of recycled and circulatable resources is commercially not reasonable
for the organizations. Not only purchasing recycled resources is more expensive
than purchasing virgin resources (Case Alpha: “Well that recycled polyester still
costs more than the virgin polyester. So there is no economic benefit there is only a
cost to it now.”), but also production of circulatable material usually costs more
than conventional material, as stated by the interviewee of case Eta: “We have 10-15
percent higher costs due to the other material” (see Appendix: German Quote 53).
One attempt to explain the higher prices are missing governmental regulations,
which ensure the internalization of the total cost of ownership when extracting
virgin resources. As representative of case Alpha states: “The second solution is to
introduce policies that force the true costs of virgin polyester into the market and
those true costs of course include the costs to the planet of the petroleum that is used
in the polyester. As an example, if carbon taxes were to be implemented, they drive
up the cost of petroleum and increase the costs of virgin types of polyester, if carbon
is to the point where recycled polyester will be less expensive.” Another reason is seen
in the low production volumes. Circular economy products still tend to be sold in
a niche market. Only a limited group of customer is interested in these products.
Manufacturers have only small production batches. This means that demand for
the circulatable resources, which have often specifically been developed for one
specific product, is low. Especially when comparing this to the demand for material
such as polyester with multiple fields of application it is obvious that volumes for
circulatable resources are significantly lower and therefore more expensive. As
stated in the interview with case Delta : “Of course we try to get close to the prices
(of virgin resources) but it is impossible because the polymer we have found is only
produced for us in very small quantities, in 2015 approximately 200 tons. That in
comparison to 5 million tons of polyester, it is impossible to compete with that” (see
As shown above, regarding the reason why recycled resources are more expen-
sive than virgin ones, divergent statements have been made, and it is probably a
combination of several aspects that lead to it. On the other hand, two examples
have been discovered in the study how circular economy can positively impact the
costs for resources.
First example is, when organizations use production waste to create new products.
Waste can be used in two different ways: putting the material back into the material
pool, e.g. granulating fabric to reuse it for the production of the same product, or
manufacturing a different, potentially smaller, product. Either way, by considering
this production waste as a valuable resource, more output with the same amount of
input can be generated. Under the assumption of reasonable labor costs, additional
revenue can be created. Case Theta was able to realize this benefit as described by
the interviewee: “Senior leaders need to be convinced with business cases (proof of
concepts) to invest in a ‘Circular Economy’ as economic opportunity. Case Theta
[name changed by interviewer] is already creating two business cases using bacteria
to absorb CO2 and transform it into sugar. Hence, there is more output with the same
amount of input.” The organization was able to create new products from their waste
by creating strategic joint ventures with two other firms. Other organizations such
as cases Alpha, Eta or Zeta started to use their production scrap to manufacture
smaller or different products in order to make use of the leftovers from production.
Secondly, one case has been discovered in which recycled resources are already
cheaper than virgin resources. A representative of case Zeta mentions that they’ve
found one of these exceptions: “But there are examples where we can buy resources
cheaper (…) e.g. recycled TPU is less expensive than the virgin material” (see Ap-
pendix: German Quote 55).
In conclusion, the costs for circulatable material play an important role in the
implementation of a circular economy. Besides the approach of using production
scrap as new input for production (whether granulated or for smaller items), circu-
latable material is still quite expensive for the organizations. Reusing circulatable
material is a substantial part of the circular economy concept. Only if prices for
circulatable material are able to compete with the ones for conventional material
organizations are able to achieve long-term market success.
5.2.1.1.2 Sub-Category 2: R&D Costs

High R&D expenses is another factor that negatively impacts the business result
in the context of a circular economy implementation. The development of circular
products, especially circular materials, requires innovation. Innovating often means
spending years on prototyping products, as shown in case Beta. For the development
of circular products it is necessary to find substitutes for the material currently in
use. Often these substitutes do not yet exist and must be newly developed. Several
cases from the study face this impact as illustrated in Table 18.
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Table 18 Interview comments on high R&D expenses

Case Alpha
“The recycled polyester costs more than virgin fiber polyester. To make the technology
that would be enormous, you know, I have to talk to them [Supplier] to get to know what
figure it was but it was tens and tens of Millions of Dollars. So they had to advertise that
over time and that price sets the cost of recycled polyester.”
Case Beta
“We needed two years until we had suppliers and then we had to conduct many tests to
check the material. The tests have been conducted to check if e.g. coloring with special
color is working properly etc.” (see Appendix: German Quote 56).
Case Gamma
“The resources are getting more expensive because they are new developments most of
the time” (see Appendix: German Quote 57).
Case Eta
“We had almost started the product development of Cradle-to-Cradle certified products
but stopped it because we realized that the effort is too high for the few products resulting
from it” (see Appendix: German Quote 58).
Case Iota
“In terms of what we anticipate for future challenges…I think there are a lot of materials
used in the chemicals industry more broadly but even within apparel that have a very
vague understanding of their material’s toxicity, so with water repellants and anti-odor
chemicals I think there will be an ongoing challenge to understand which materials are
good are generally benign and which ones are potential threats.”
One major challenge identified is finding circulatable substitutes with the same
quality and product features as conventional material. Currently only a narrow
range of material can be substituted due to the limited availability of adequate
material. This leads to major restrictions in the product portfolio for organizations.
For example Case Delta mentioned that products couldn’t be dyed to allow endless
circularity of the products: “Of course there is the idea to have products being in
material circles endlessly but this is only possible if we leave them ‘untouched’ e.g.
without any color. This would be a major limitation for us and that is the reason why I
think that the technical cycle might be difficult to implement” (see Appendix: German
Quote 24). Case Eta describes a similar situation when indicating that the material
currently available to manufacture circular products can only be used for a very
limited product range: “The type of materials which are available, Cradle-to-Cradle
certified, e.g. yarns and products made out of it, can only be used for a very limited
product range. And this range, which is mainly underwear and sportswear, lies not
within our core competencies” (see Appendix: German Quote 59).
The statements above lead to the conclusion that although organizations put a
lot of effort into R&D for circulatable material and products, there is still much
work to do. More variety of material, as well as technological innovations, are
necessary to further enable the transition towards a circular economy. In order to
find adequate substitutes the organizations are required to invest in research and
development together with their cooperation partners. These investments have a
negative financial impact on the organizations.
5.2.1.2 Monetary Impact 2: Revenue

The second financial impact is the additional revenue that can be generated through
the implementation of a circular economy. Additional revenue can result from:
acquisition of new customers, reselling of used products, and getting more output
from the same amount input.
5.2.1.2.1 Sub-Category 1: Acquisition of new Customers

The acquisition of new customers generates additional revenue. Organizations
are able to approach new customer groups that weren’t previously aware of the
brand but are interested in circular economy products. The interviewee of case
Eta describes it as follows: “And we not only created an image to stand for that topic
but we acquired new customer groups, such as those who aren’t typically customers
of outdoor clothes but who have a ‘green lifestyle’. These customers didn’t know our
brand before, but now they know us” (see Appendix: German Quote 60). By searching
for circulatable products the customers come across the brand because it is one of
the leading brands within its industry. Customers appreciate the commitment and
include it in their decision to buy. Interviewee of case Zeta stated: “Certainly there
are many customers within our target group, who have sensitivity for that topic, who
appreciate it” (see Appendix: German Quote 61).
5.2.1.2.2 Sub-Category 2: Sale of Refurbished Products

Second option is creating additional revenue through sale of refurbished products.
If there is only limited effort required to refurbish a circulatable product at the end
of the lifecycle and resell it as ‘new product,’ additional revenue can be generated.
Although, this product might be offered at a cheaper price material costs get paid
twice and the labor costs for preparing the product for resell are by far exceeded.
Representative of case Gamma forms it as follows: “(…) we could remove the products
from the floor and resell them to other customers. Of course not at the original price
but we expect to get approximately 70 percent of the original price. And if that works
the costs for the wood are paid twice, which would be good for us” (see Appendix:
107
German Quote 62). As stated before it is important to note that this circular economy
approach is only theoretical due to the longevity of products. The end of product
life is expected 10-15 years from now, and the organization has not implemented
a proper concept for the upcoming end of the product life.
To summarize this chapter on the monetary impacts of circular economy im-
plementation, it is clear that negative (costs for circulatable material, high R&D
costs) as well as positive (costs for circulatable material, additional revenue) finan-
cial impacts have been identified in the study. While the first aspect, circulatable
material costs, can be positive as well as negative, the second aspect, R&D costs, is
only mentioned in a negative context. Only the third aspect, revenue, has a clear
positive impact. Hence, when looking at monetary impacts, there are more negative
impacts than positive, however it is impossible to tell with the data of this study
if the negative impact is higher than the positive one. To do so, the weighting of
the three aspects need to be known, which wasn’t subject of this study. However,
this is only the monetary perspective and several non-monetary aspects have been
identified which have a clear positive impact on the businesses.
5.2.2 Non-Monetary Aspects of Circular Economy
Trying to find the answer for the question of motivations for engaging in a circu-
lar economy leads not only to monetary aspects, but also to impacts which have
no direct effect on the financial situation of an organization. Data revealed that
organizations see two different non-monetary impacts which both have positive
impacts on businesses. The chapters below provide more details to these aspects,
illustrated in Table 19.
Table 19 List of non-monetary aspects and their impacts for businesses

# Non-Monetary Impact Non-Monetary Sub-Category Effect
1 Competitive advantage positive
2 Reputation Reputation Risk Management negative
3 Reputation Positive Brand Image positive
4 Reputation Brand Trust positive
5.2.2.1 Non-Monetary Impact: Competitive Advantage

The analysis of data for the current study reveals that organizations see the benefit
of achieving a competitive advantage for their firm. Competitive advantage is a
well-known concept in strategy, as well as international business. The strategic
management theories build upon the assumption that organizations are able to shape
market structures in their favor with strategic actions (Eloranta and Turunen 2015).
Considering early work from Porter (1985), competitive advantage can be defined
as follows: “Competitive advantage grows out of value a firm is able to create for its
buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay,
and superior value stems from offering lower prices than competitors for equivalent
benefits or providing unique benefits that more than offset a higher price. There are
two basic types of competitive advantage: cost leadership and differentiation” (Porter
1985, p. 3). In other words competitive advantage for organizations occurs through
a surplus of value in comparison with rivalry firms in the same industry. Distinc-
tive activities and resources are seen as means to create that value (Martin 2014).
First type of a competitive advantage is cost leadership. Results of this study on
competitive advantage achieved through cost leadership are explained under the
monetary aspect ‘circulatable material costs’ in chapter 5.2.1.1. These are that cost
leadership can be obtained in case purchasing recycled resources is cheaper than
purchasing virgin resources. Results show further that cost leadership can result
from using production waste as input for production.
Differentiation as the second basic type of competitive advantage can be achieved
through, e.g. added customer value. Organizations state that their products, either
through being circulatable (technical circle) or through biodegradability (biological
circle), gain additional value for the customer. This additional value results from
the possibility of buying new products at a significantly lower price when buying
it for the second time. This offers customers the possibility to save money when
buying a product from this organization for the second time. Another benefit of
this approach for the organization is the long-term customer relationship that can
be established by incentivizing the return of end-of-life products and selling refur-
bished ones. Case Epsilon is planning to incentivize customers to return their old
product at the end of the lifecycle e.g. by offering the possibility for the purchase
of a new product at a significantly lower price: “When a customer buys sustainable
products, which are reusable, then there is a great chance that, depending on the
development of the material prices, he is able to purchase a top product at a cheaper
price when he is buying it for a second time” (see Appendix: German Quote 63). A
different type of customer value emerges through the production of biodegradable
products. Biodegradability ensures that all ingredients are non-toxic and therefore
non-hazardous to humans’ health. The interviewee of case Delta forms it as follows:
109
“And another added value is that, since our products are developed for the biological
cycle, the chemistry used in the production is suitable for the biological cycle (…)
products contain only natural material” (see Appendix: German Quote 64).
Further differentiation from competitors is achieved if organizations are the
only ones within their industry offering circular products. This unique selling
proposition might be the deciding influence for customers when deciding on the
purchase. Cases, such as Gamma and Delta have realized this benefit, as they are
the only ones offering circular products within their industry. Interviewee of case
Gamma states in this context: “Yes of course the motivation is also that it is the only
product on the parquet market which has this feature [which is circulatable]” (see
Appendix: German Quote 65). The company representative of case Delta sees this as
a clear characteristic to differentiate themselves from the rest of their competitors:
“We replaced the polyester we are using with the new developed polymer, which is
biodegradable; this is our unique selling proposition” (see Appendix: German Quote 66).
Most notably for organizations operating in the highly competitive textile
industry, differentiation from competitors is as an important point. Closed loop
production is an innovation to differentiate from competitors from low-wage coun-
tries. For case Beta, a textile manufacturer who exclusively operates in Germany,
the CEO sees innovation as an obligation to stay competitive: “It is important for
me as German manufacturer to be the first to offer Cradle-to-Cradle products before
any competitor from China offers such products” (see Appendix: German Quote 7).
For the purpose of this research competitive advantage is grouped into the
non-monetary impacts. However, this could be argued because according to Por-
ter’s definition it contains the monetary advantage of cost leadership. The reason
why competitive advantage has been grouped as non-monetary in this thesis is
that the competitive advantage per se has no financial aspect. The consequence
of a competitive advantage might be a financial one but the advantage per se isn’t.
5.2.2.2 Non-Monetary Impact: Reputation

The second non-monetary effect of the circular economy implementation identified
in the data is the creation of positive reputation. Enticing customers to buy a product
requires more than simply physical attributes and functions. Already in the early
1950s, researchers indicated that brand image is an important concept (Dobni and
Zinkhan 1990). In their article from 1955, Gardner and Levy describe brand image
as an enduring motivation to purchase products that have a social, psychological,
and physical nature. Furthermore, products convey a set of feelings, ideas, and
attributes about brands, which influence the customer in their purchasing decision
(Gardner and Levy 1955). Generally it can be said that brand image helps to define
a product or a brand for customers and differentiates it from competitive offerings.
Analysis of the empirical data of this study results in three distinct aspects
related to brand reputation: generating positive brand image, managing risks and
building brand trust.
5.2.2.2.1 Sub-Category 1: Positive Brand Image

The creation of a positive brand image is one major positive effect of the imple-
mentation of a circular economy (as stated in cases Alpha, Gamma and Beta). The
engagement in a circular economy completes the company’s visions, and therefore
forms a certain image of how the organization wants to be seen. Some customers
appreciate the resulting brand image and value the commitment in such a way
that they are even willing to pay more for these special products. Representative
of case Alpha describes it as follows: “The only economic benefit we get is that the
customers appreciate our commitment. And again that comes to education: the more
people that are familiar with the program and get involved in recycling, presuming
those people are also willing to pay a premium for a product that uses a closed-loop
recycling technology, the better it is.”
The establishment of such a positive brand image in the market further creates the
advantage of additional customers as mentioned by the interviewee of case Eta: “We
not only created a brand image for being representative for this topic on the market,
but we also acquired new customer groups. New customers who not necessarily are
interested in an outdoor brand but are interested in the green lifestyle, LOHAS etc.”
(see Appendix: German Quote 47).
More citations underlining the fact that the commitment in a circular economy
has a positive effect on the brand image are provided in Table 20.
Table 20 Citations on creation of a positive brand image

Gamma
“I think it is beneficial for our public image to have it. It is not the main reason why
customers buy our products but it is the icing on the cake and expresses how we would
like to be seen by our customers” (see Appendix: German Quote 67).
Zeta
“Of course there is the topic of reputation management and also the positive effect on
the brand image but these topics are very difficult to measure and to express in concrete
figures” (see Appendix: German Quote 68)
Eta
“Today it is for us positive publicity because we have been the first mover and this is
appreciated by the customers” (see Appendix: German Quote 69).
111
5.2.2.2.2 Sub-Category 1: Risk Management

Another aspect related to the brand reputation is reputation risk management.
While it is not new that organizations seek to enhance and manage their repu-
tation risk, it is a result of the analysis of this study that organizations see their
commitment in a circular economy as contributing to this objective. Moreover, a
certain parallel can be identified when considering the academic discourse on the
relationship between reputation risk management and corporate social respon-
sibility (CSR) reporting. The literature distinguishes reputation by the following
three aspects: financial/economic, social and environmental. Furthermore, the
CSR reporting is mainly used to manage the social and environmental dimension
of the organization’s reputation (Unerman 2008). While one stream in literature
states that reputation risk management is a highly complex concept and cannot be
influenced by the organizations, the other sees in reputation risk management an
explanation for CSR reporting (Bebbington et al. 2008).
There is still an ongoing debate on whether reputation can or cannot be directly
managed, however, the results of this study show that corporate managers believe
in the possibility of doing so. With their engagement in a circular economy, or-
ganizations are managing stakeholder expectations. By doing so the corporation
is attempting to demonstrate how well the corporation’s engagement meets the
social and, more importantly, environmental expectations of their stakeholders
which is a common objective for reputation risk management (Unerman 2008).
The citation from the representative of case Zeta describes it as follows: “There is
the reputation topic which plays an important role for us. There is a lot of awareness
on the topic sustainability, and many NGOs such as Greenpeace have their focus on
the textile industry. But we had a stakeholder dialog with Greenpeace and after this
dialog Greenpeace issued a press release on chemicals and pollutants in the textile
industry” (see Appendix: German Quote 70).
The commitment to circular economy and the related in-depth insights into the
topic further prepare the organizations for potential campaigns trying to harm the
perception of the brand. Hence, it facilitates damage control and proves a sincere
commitment to topics such as environmental protection and resource efficiency.
Interviewee of case Eta forms it as follows: “It means we must do less damage
control when there is an NGO campaign trying to harm us as we have something to
prove our commitment over the past years. This is not our main motivator, no carte
blanche, and it doesn’t protect from attacks from the press, but it makes it easier for
us because we have planned ahead in contrast to some competitors” (see Appendix:
German Quote 71).
5.2.2.2.3 Sub-Category 1: Brand Trust

As a last aspect related to reputation, brand trust is identified. Researchers came to
the conclusion that brand trust influences important variables such as consumer
loyalty and purchase intention (Chaudhuri and Holbrook 2001). This literature fact
supports the finding of this analysis that the creation of brand trust has a positive
impact on organizations. By committing to circular economy and implementing the
chosen circular economy approaches organizations show reliability and sincerity.
These are two important facets of trust and therefore might lead to the effect of
purchase loyalty as shown in the results of a study by Chaudhuri and Holbrook in
2001 (Chaudhuri and Holbrook 2001). Case Iota sees a benefit in building trust for
the brand by making smart decisions on material use, taking care of waste streams
and manufacturing their products in a certain way. The corporate representative
forms it as follows: “But in terms of what benefits we can see, primarily this is if you
are going to look at it from the purely market-based external perspective, it is about
brand trust so it is about people saying that looking holistically at what case Iota
[changed by interviewer] does: they are making smart decisions about the material
they use, how they manufacture their products, how they take account for their waste
streams, and what the next life is that their product should be. All of that in my mind
reinforces the confidence that somebody has in us when it comes to designing and
manufacturing garments. So it becomes an opportunity to demonstrate how the
brand is doing its work effectively.”
5.2.3 Discussion on Impacts of Circular Economy
As concluding remark on the chapter of impacts of circular economy implemen-

tation on organizations three dependencies between the impacts, as depicted in
Table 21, are elaborated in this chapter.
Table 21 Dependencies between impacts

# Impact 1 Effect Impact 2 Effect
1 Competitive Advantage Revenue
& Reputation
2 Reputation Competitive Advantage
3 Costs Competitive Advantage
113
It is quite intuitive to realize that some of the impacts influence other impacts. First
example for such a dependency is that both non-monetary aspects (competitive
advantage and reputation) might have a positive influence on the monetary aspect
revenue. To be more precise, in case organizations are able to obtain a competitive
advantage and/or develop a good reputation for their brand this might even increase
the acquisition of new customers which increases the revenue.
Second dependency exists between reputation and competitive advantage. If an
organization creates a positive brand image and builds up brand trust this increases
the possibility for differentiation from competitors and has therefore positive impact
on the competitive advantage.
Third dependency identified in the categories of 5.2 exists between costs and
competitive advantage. In case the costs for circulatable material decreases the
competitive advantage is increased due to increased cost leadership.
The section above shows that the impacts the implementation of circular economy
has on organizations are highly interdependent. These dependencies are also the
reason why the grouping of sub-categories to impacts has not always been distinct
and might be subject to future discussions.
5.3 Practical Challenges for Realizing Benefits

in a Circular Economy
5.3 Practical Challenges for Realizing Benefits in a Circular Economy
The empirical data in this study reveals the many challenges that hinder organi-
zations from realizing the potential benefits of circular economy. The three main
challenges identified are shown in Figure 6 and explained in the following chapters.
5.3.1 Nascent Stage of Concept
The first challenge is that the concept of circular economy is in its nascent stages.
As explained in chapter 2.3.1, broader awareness about the concept of circular
economy started growing in 2009 e.g. with the work of governmental organizations
(e.g. China’s Circular Economy Promotion Law in 2009 or the Communication
“Towards a circular economy: a zero waste program for Europe” by the European
Commission), non-governmental organizations (e.g. Ellen MacArthur Founda-
tion, Zero Waste Europe), and steps taken by commercial retailers worldwide (e.g.
Patagonia, Coca-Cola, Ebay, H&M, etc.).
5.3 Practical Challenges for Realizing Benefits in a Circular Economy 115
Innovation Type Circular Economy Approach Maturity Level

Product Innovation Circular Supplies (e.g. creation of Fully implemented:
(Changes the product) products which are fully recyclable) Alpha, Beta
Partially implemented:
Gamma, Delta,
Epsilon, Zeta
Resource Recovery (e.g. creation of Fully implemented:
new products to use up left-overs Eta, Theta
from the production line)
Remanufacturing (e.g. implementation
of new products which can be built
from the reusable parts of the original
product)
Process Innovation Circular Supplies (e.g. use of renew-
(Changes the process) able energy for the production line)
Organizational Sharing Platform (e.g. enable custom-
Innovation ers to extend the use of their products)
(Changes or adds Product as a Service (e.g. sell the
a business model) products access, internalize the
lifecycle management)
Product Life Extension (e.g. gather Fully implemented:
used products and resell them if Iota
possible, replace certain parts of
the product)
Fig. 6 Overview of identified challenges in the context of circular economy

implementation
Five sub-categories of the ‘nascent stage of concept’ are identified (as depicted
in Figure 6)Figure 6 Overview of identified challenges in the context of circular
economy implementation: difficult quantification of advantages, lack of customer
education, technological limitations, missing economies of scale, and insufficient
practical experience.
The first sub-category is the difficulty in quantifying the advantages of investing
in a circular economy. Decisions made at organizations are based on a robust fact
base such as business-case calculations that show a positive return on investments.
When it comes to the circular economy, organizations often lack the experience
and the data to be able to show the return an investment will deliver. The circular
economy is not yet a proven concept therefore the challenge for organizations is to
formulate meaningful arguments that support the decision made by the leadership
to implement the concept. The interviewee of case Theta explained the challenge as
115
follows: “The key challenge has been in making the case for investment in something
that might currently be intangible.”
The second sub-category is the lack of customer education. As the concept is still
in its early stages of development only a limited number of customers are familiar
with it. Customers are unaware of the benefits of buying circular products, such as
non-toxicity and/or reusability. Organizations believe that if customers were well
educated about circular economy this would:
• Facilitate the realization of the concept because used products are no longer
treated as waste but according to their further purpose, e.g. the organization in
case Alpha stated that: “You know we would hope other companies follow our lead
on this and try to do the same. You know that would help educate more people
about thinking of clothing and apparel as something you can recycle instead of
having it end up in the landfill.”
• Through education, enable the customer to make well informed buying deci-
sions where price is not necessarily the determining factor in this decision. The
organization in case Epsilon complained about uneducated customers who
were making decisions about whether or not to purchase a product solely based
on its price. The interviewee explained that “The problem is that customers are
not educated. When I am talking to potential customers and I tell them that
Cradle-to-Cradle products are absolutely free of toxic materials (…) they become
interested.” (see Appendix: German Quote 29).
• Case Zeta saw that the organizations use of recycled resources and its efforts
to be more sustainable were seen as an interesting feature but of no significant
importance in the buying decision: “On the other hand our research shows that
design and price are the main criteria in the buying decision. Sustainability or
recycled resources are only valued as add-ons but never as main criterion for
mainstream customers” (see Appendix: German Quote 39).
• Help customers to know the difference between the environmental labels and
concepts used and pursued by organizations. At present, there are many different
labels for consumers to navigate which makes it confusing for them. As many
customers are not well versed in these labels and concepts, the differences between
them are often difficult to recognize. Case Epsilon described this challenge as
follows: “In addition, there are too many certifications like ‘Blauer Engel’ and
so on which suggest all [products] are ecological and sustainable. Because there
are so many certifications, it is difficult to know what exactly each certification
stands for and how it can be manipulated” (see Appendix: German Quote 30).
A third sub-category the results of the case study analysis revealed is technological
limitations. As the concept of circular economy is fairly new, organizations and
suppliers have limited time to develop substitutes for the materials they use in the
production process of their conventional products. Currently, organizations have to
deal with many limitations regarding the availability of circulatable resources. Case
Eta encountered an obstacle when the material currently available for biodegrad-
able products did not fall into their core business. This prevented the organization
from investing in this technology altogether: “… but the kind of material which is
available, Cradle-to-Cradle certified, for yarns and other material which can be made
out of it is limited to a certain product range” (see Appendix: German Quote 46).
Circular economy requires that reusable products in the technical cycle be
left undyed because it is impossible to make dyed polyester white again. This is a
serious limitation and prevents organizations from meeting customers’ demands
for colored clothes. For the organization in case Delta, this limitation led to the
decision not to implement products belonging to the technical cycle in the first
place as explained here: “Of course there is an idea to keep products in the material
cycle forever but this is only possible if we leave them ‘untouched’ e.g. without any
color. This would be a major limitation for us and that is the reason why I think that
the technical cycle might be difficult to implement” (see Appendix: German Quote
24). Other organizations are unable to fulfill customers’ requirements for a special
color because there isn’t a huge variety of colors available as in case Beta: “We are
not able to offer all colors, e.g. in the case of police uniforms, a certain blue and a
certain red is required, and both are not part of the Cradle-to-Cradle color palette”
(see Appendix: German Quote 72). Other cases, such as case Gamma, invested in the
production of a circular product but were not able to source adequate substitutes
for certain materials, limiting them in further improving their product towards
closing the loop and improving its toxicity-level.
More research is necessary to further understand material toxicity-levels and
innovation is required to create products with low toxicity-level. Without innovation
and improving the availability of substitutes, organizations won’t be able to pursue
their commitment to a circular economy. However, case Zeta is positive that this
challenge can be solved in the future, as stated by the interviewee: “And I am hopeful
that humanity with all its creativity, and also we with our technologies from the field
of plastic recycling, will find adequate technologies that will facilitate recycling and
keeping material in the cycle” (see Appendix: German Quote 73).
The fourth sub-category is the missing economies of scale of circulatable material.
This is challenging for organizations because the low production volumes increase
the cost per unit. If the material is more expensive per unit, the price of the final
product increases. This reduces the potential group of buyers and consequently
117
prevents circulatable products from entering the mass market. Price is still one of
the main criteria in the buying decision. As long as circular products are not able
to compete with conventional ones price-wise, it will be hard to reach critical mass.
Only if the demand for circulatable resources increases, and production volumes
rise will resources become cheaper. If circulatable resources are cheaper, the price
of the resulting product will be lower or at a comparable level, as described by the
interviewee in case Delta: “This much is certain: prices will adjust in certain areas
when the demand increases. In our case, the polymer we produce is more expensive
because we only produce 200 tons per year. The next threshold to make it cheaper is
2000 tons. If we produced 2000 tons instead of 200 we could reduce the costs of this
polymer at a rate of 1/3. If we produced 10000 tons we could reduce the costs around
40 percent” (see Appendix: German Quote 74).
The last challenge identified and a sub-category of the nascent stage of concept
is the insufficient practical experience with the concept and circulatable products,
due to the longevity of their products. Data revealed that organizations are able
to produce circulatable products but don’t know how to handle them at the end of
their lifecycle. Several questions remain to be answered by organizations in order to
implement the concept comprehensively. Case Gamma is an example of where this
challenge arose. The interviewee said that products are expected to be returned for
the first time in eight to ten years: “From today’s point of view it [circular economy]
is a theoretical approach. We expect the delivery of used floors in 8-10 years, so we
thought far into the future because our products are just very durable” (see Appendix:
German Quote 75).
To sum up, because the concept is still at an early stage and organizations have
only recently started to implement the circular economy approach this presents
a challenge.
5.3.2 Lacking Coordination of Concept Implementation
The second challenge is the lack of coordination in implementing circular economy.

Two sub-categories have been identified (as depicted in Figure 6): missing legal
regulations and poor collaboration within industries and beyond.
What can be done in the face of growing concerns about serious environmental
problems? This question leads to the role of legal regulations in combating environ-
mental problems, a highly controversial topic between economists and non-econ-
omists. Several organizations believe policies and legislation must be introduced
to support the transition towards circular economy. Policies and legislation e.g. to
internalize externalities and force organizations to pay higher prices when using
virgin resources. As a consequence, the prices of virgin and circulatable resources

assimilate and circular products are able to compete with conventional products
pricewise. The representative of the organization in case Alpha explained: “The
second solution is to introduce policies that force the true costs of virgin polyester into
the market. Those true costs, of course, include the costs to the planet of the petroleum
that is used in the polyester. As an example, if carbon taxes were to be implemented,
they would drive up the cost of petroleum and increase the costs of virgin types of
polyester, if carbon is to the point where recycled polyester will be less expensive.”
The demand for governmental action to support sustainable development is not
new. In fact, the idea of incorporating the costs of environmental damage was first
developed in 1912 by Arthur Pigou (Pigou 1912). Other theorists who supported the
concept such as Filipović and Golušin 2015; Pearce 1991; Brennan and Buchanan
1980; Meade 1955 sought to develop it. Market transactions have, at times, indirect
impacts such as pollution that are not reflected in the price of a product. Economists
term these effects externalities. Externalities are the main reason for governmental
intervention in the economic sphere.
One example of externalities is that a manufacturing company usually emits
pollutants into the air. Whilst the organization only pays for material, electricity
and so on, the people living in the surrounding of the site ‘pay’ for the air pollution,
with payments such as health issues and increased medical bills. The reason for
this is that property rights for air are not defined hence, the organization is not
held responsible for the pollution it causes. One way to mitigate greenhouse gases
is the implementation of tradable emission rights for organizations. Other meth-
ods developed to reduce emissions include command and control policies (direct
regulations) and emissions taxes (Uddin and Holtedahl 2013).
A recent study assessing the quality of current methodologies for expressing
environmental tax revenue summarized that an environmental tax reform has the
potential to improve the environmental situation and the economy (Filipović and
Golušin 2015). By shifting tax from labor to resources more jobs can be created.
Although taxation of environmental damage has this potential, strong theoretical
arguments can be made that taxation makes the existing tax distortions worse
(Uddin and Holtedahl 2013; Bovenberg, L., Mooij, R. 1994) or that there is no proof
of a positive effect (Cremer et al. 1998).
Despite the ongoing academic debate about whether or not environmental tax-
ation has the desired effect of supporting sustainable development, the data in this
study reveals that organizations see a need for governmental intervention to support
their transition towards circular economy. Case Alpha (see above quote), as well as
cases Delta and Epsilon, highlight the need for policies either to ensure companies
pay the ‘real’ costs for virgin resources or to support the usage of recycled material.
119
The empirical data in this study suggests that a successful global diffusion of
the circular economy concept should be agreed upon. Regional differences in
understanding the concept might lead to each country developing its own policies
making it difficult for globally operating organizations. This would be problematic
especially with regards to regulations for the use of chemicals. More transparency
is required to enable organizations to make smart decisions.
A study by Jiao and Boons raises the following question: “To what extent does the
concept of circular economy have the same meaning in China as it does in Germany
in terms of actors involved, problem definitions and associated solutions, emerged
objects, and practices?” (Jiao and Boons 2014, p. 23). The interview partner in case
Iota mentioned that it would be difficult for global firms if they had to acquire an
understanding of the differences in regulatory processes relevant to the circular
economy in each country they operate in. He describes the challenge as follows:
“So in terms of future challenges, understanding how those regulatory processes both
in Europe and elsewhere evolve, how they treat the body of science, and what the
findings say versus what the findings do not say. I think that is a very difficult area for
a brand and their suppliers to guess at currently, so there is a lot of decision-making
happening under conditions of uncertainty. Achieving more transparent chemicals
regulatory processes will be a challenge. That is going to be one of the major challenges.”
The second sub-category of this challenge is the poor collaboration within
industries and beyond. Organizations identified the need for a systems approach.
A system in this context is defined as an interrelated set of components that forms
a structure and performs a function. It includes biological systems as well as
engineered systems and social systems (Fiksel et al. 2013). Developing a systems
approach requires an understanding of the dynamic interaction between economic,
environmental, and social systems. Moreover, the potential consequences stemming
from these interactions have to be evaluated in order to develop good policies, and
technological or operating practices. In an optimal situation, all environmental
conditions are synchronized to facilitate the engagement in circular economy.
Whilst several cases in this study identified the need for a systems approach they
also see it as a huge challenge. Many organizations participate in industry groups
to support the implementation of circular economy on an industry level. However,
not every organization within these industry groups is willing to engage in the
circular economy. A representative of the organization in case Zeta describes the
need as follows: “Is this a topic which can be solved by a single organization or is
this something which requires a systems approach? (…) But when we really want to
start a circular economy it makes much more sense to do that on an industry level”
(see Appendix: German Quote 76).
A systems approach requires collaboration on many different levels. Organiza-

tions not only have to cooperate with their competitors, but also across industries.
Further collaboration with governments, NGOs and customers is also necessary
to optimally support the transition towards a circular economy. This collaboration
is time-consuming and therefore many organizations choose not to get involved
in these activities.
Cases Eta and Zeta already collaborate with competitors in an industry group.
The objective of cases Eta and Zeta is to encourage their competitors to engage in a
circular economy. The aim is to jointly develop solutions to change the behavior of
both suppliers and customers. If the cooperation required can be achieved then the
implementation of a circular economy becomes more realistic. It is important to note
that it is extremely challenging for organizations that act globally to engage with
all involved partners. The representative of the organization in case Eta describes
their work in the industry group as follows: “The objective of this industry group
is to connect the industries, to better inform the consumer and to produce products
which are recyclable” (see Appendix: German Quote 77).
The results of this study are similar to those in the literature on sustainability
science. In the academic literature on sustainability science, systems approach
is becoming increasingly important. The objective thereby is to understand the
interrelations between human health, ecology, and economic activity (Barile et al.
2014; Ingwersen et al. 2014; Fiksel et al. 2013).
5.3.3 Increased Entrepreneurial Efforts
The final challenge identified in the data analysis of this study is the increased
entrepreneurial efforts which result from the implementation of circular economy.
This result supports a finding of Geng et al. 2009 which they obtained when they
reviewed the implementation of circular economy in the municipality of Dalian in
China. In their study, the authors conclude that a circular economy can improve
economic and environmental performance in the long term but that activities
undertaken to implement circular economy are costly. They recommend the devel-
opment of financial support mechanisms to support the early stage of the concept
implementation (Geng et al. 2009).
The three sub-categories of increased entrepreneurial efforts identified in this
study are: increased costs for resources, difficult selection and collaboration with
suppliers, and delayed return on investment (please see Figure 6).
The first sub-category, increased costs for resources, has already been mentioned
in chapter 5.2.1.1 and therefore only a brief explanation will be provided. Increased
121
costs for circulatable resources is a challenge for organizations because when resourc-
es are more expensive the final product ends up costing more than the conventional
one. Since price is one of the main criteria in the buying decision for the consumer,
organizations are forced to either cross-subsidize their products or have customers
who are willing to pay more. For organizations, cross-subsidizing circular products
with other conventional products bears the risk of an overall reduced revenue. On
the other hand, if organizations do not cross-subsidize and offer circular products
at a higher price, they face the risk of low customer demand because of increased
prices. The organization in case Alpha decided to cross-subsidize in order to stay
competitive as its representative explained: “But right now that’s not the case and we
have to absorb those additional costs. And we have to absorb them because we have
to remain competitive and there are not enough people that are willing to pay more.”
The organization in case Delta was also able to reduce the price gap between their
circular and conventional products by choosing the materials used to make their
circular economy products carefully. A material which was developed specifically
for a circulatable product and is very expensive is compensated by several circulat-
able but cheap materials so that the end product can be sold at a reasonable price.
The second sub-category is the difficult selection and cooperation with suppliers
which increases the entrepreneurial efforts for organizations. To develop a circular
product or to ensure that a product only contains biodegradable substances it is
necessary to know what the materials themselves are made of. All suppliers have to
reveal their lists of ingredients. Since these lists are often kept as corporate secrets it
can be challenging to convince suppliers to participate. The entrepreneurial effort
of this sub-category lies in the time and cost-intensive work it takes to convince
suppliers or find new ones in case they are not willing to cooperate. The develop-
ment of a circular economy product is research intense. This leads to suppliers
terminating cooperation because they are not willing to invest the time and money
as described in case Beta. In this case, the development of a biodegradable product
took two years of research. Several suppliers were not willing to join the process
right from the very beginning. Others exited the process at a later point due to the
long development cycle. The CEO of case Beta described the situation as follows:
“It took some time until we found suppliers who were willing to cooperate on this.
Many suppliers weren’t willing due to the low production volumes we needed” (see
The last sub-category is the delayed return on investment. The return on in-
vestment is often delayed because the research and development processes are time
consuming and require a lot of support before the product can be released. The return
on investment is often not achieved in the first period after which the investment is
made. This is particularly a problem when products are durable because end of life
lies far in the future and organizations are not able to receive their resources back
until then. In case Epsilon, products are durable and the investment in circulatable
material will only pay back when customers return their products. This is expected
in around eight to ten years. Hence, in this case the organizations stock of materials
is with their customers. For case Epsilon, this is a long-term investment which will
only pay off if resource prices increase and customers return their products at the
end of the lifecycle, as described in this quote, “Currently it is cheaper to buy new
resources. In 10-15 years that will be different” (see Appendix: German Quote 32).
The three sub-categories described above reveal that organizations face signifi-
cant increased entrepreneurial efforts when implementing circular economy. These
risks might prevent other organizations interested in engaging in the concept from
doing so. It is necessary to resolve this challenge in order to support and foster a
transition towards circular economy.
123
Summary and Implications
6 Summary and Implications 6
The following section summarizes the results and insights gained in the analysis
as described in the previous chapters of this thesis. Later, the implications are
presented for both research as well as management practice.
6.1 Summary of Results

6.1 Summary of Results
The objectives of this study are to gain a deeper understanding of circular economy
and its implementation in practice, identify impacts the implementation of circular
economy has on organizations, and investigate the challenges the organizations
face during and after implementation.
In order to answer the first question of how the circular economy is implemented,
a framework consisting of seven circular economy approaches was developed for
this study and used in the case analysis. The first step in the development of this
framework was to identify relevant types of innovation to transform a business
towards a circular economy. The relevant innovation types for the framework are:
product, process, and organizational innovation. In the second step a study from
Accenture (2014) identifying five circular economy ‘business models’ has been used
as inspiration to further specify the framework. These business models were seen
as descriptions of the circular economy on a practical level (business models are:
circular supplies, resources recovery, product life extension, sharing platform, and
product as a service). In order to include these practical descriptions on how the
circular economy can be implemented into a business, they were assigned to the
three innovation types in the framework. The result is a framework consisting of
seven ‘circular economy approaches’ that were used for a profound in-case analysis
and a structured categorization (as depicted in Table 22).

126 6 Summary and Implications

Innovation Type Circular Economy Approach
Product Innovation Circular supplies (e.g. creation of products which are fully
(Changes the product) recyclable)
Resource recovery (e.g. creation of new products to use left-
overs from the production line)
Remanufacturing (e.g. implementation of new products
which can be built from reusable parts of original products)
Process Innovation Circular supplies (e.g. use of renewable energy for the pro-
(Changes the process) duction line)
Organizational Sharing platform (e.g. enable customers to extend the use of
Innovation (Changes or their products)
adds a business model) Product as a service (e.g. sell access to the product, internal-
ize the lifecycle management)
Product life extension (e.g. gather used products and resell
them if possible, repair broken products)
The reason for this two-step development of the framework is that according to the
innovation type the resulting efforts, challenges, impacts etc. highly vary. Howev-
er, innovation types are quite generic and, in order to create a direct reference to
circular economy, the business models have been included as further distinction.
Descriptions of the circular economy implementation of each case have been
categorized in the framework. Later, the resulting frameworks per case have been
consolidated into one overview Table 23.
This overview provides a good impression of the particularly popular, as well
as unpopular, approaches. Furthermore, the overview shows that organizations
typically chose more than just one approach to implement a circular economy in
their organization.
6.1 Summary of Results 127
Table 23 Overview of implementation approaches over all cases4

Innovation Circular Eta Alpha Zeta Gam- Delta Ep- Eta Theta Iota
Type Economy ma silon
Approach
Product Circular x x x x x x
Innovation Supplies
Resource x x x x
recovery
Re-manu x x
facturing
Process Circular x x x x x x x x (x)
Innovation Supplies
Business Sharing
Model In- Platform
novation Product as (x)4 x
a Service
Product Life x x x x
Extension
Answering the question which impact the implementation of circular economy has
on organizations four impact-categories were identified: costs, revenue, competitive
advantage and reputation. As depicted in Figure 7, these categories have several
sub-categories and can be grouped into monetary and non-monetary impacts.
Moreover, the impacts are of positive and negative characteristic for the organiza-
tion. Thereby, a positive monetary impact has a positive effect on the results of the
organizations and vice versa. A positive non-monetary impact doesn’t necessarily
have a positive effect on the result of the organization but is perceived as something
beneficial for the organization.
fully implemented.
127
Fig. 7 Impacts of circular economy implementation (results from case study)
The results illustrate negative as well as positive impacts deriving from circular
economy implementation. Especially the impact category costs is mainly negatively
associated. On the contrary, positive impacts are the generation of additional rev-
enue and the non-monetary effects such as competitive advantage and reputation.
When investigating the challenges organizations of this case study face during or
after implementing circular economy four main challenges were identified: nascent
stage of the concept, no sufficient governmental support or supporting policies, the
requirement for a systems approach, and financial risk (as depicted in Figure 8).
186
6.1 Summary of Results 129
Fig. 8 Challenges deriving from circular economy implementation

(results from case study)
The resulting challenges display that organizations see large difficulties in the im-
plementation of circular economy. Due to these difficulties many are disappointed
by the concept and not willing to increase their commitment. Others work on these
challenges in order to resolve them and to realize further benefits of the circular
economy.
129
189
6.2 Implications for Research

6.2 Implications for Research
The findings contribute to several different fields of the current academic research,
which are presented in the following paragraphs. This thesis extends the literature
on circular economy in three important ways: firstly by taking a new regional per-
spective, secondly by showing that the implementation of circular economy not
only has benefits for the organizations but also holds some negative impacts, and
thirdly by extending literature on circular economy challenges by adding new and
confirming well-known ones.
First, the study and especially the case selection of the sample shows that circular
economy already plays an important role in the Western countries, and an academic
exploration of the circular economy concept would be rational. Currently academic
literature almost solely focuses on circular economy in China (Naustdalslid 2014;
Liu and Bai 2014; Su et al. 2013; Geng et al. 2012; Geng and Doberstein 2008; Yong
2007; Yuan et al. 2006). Learning more about circular economy in Western countries
can give important insights, help to deepen the understanding of the concept, and
improve its implementation. This might be especially interesting because of the
differences in market structure between China and the Western world. Research on
circular economy in China revealed that not market pressures, but governmental
regulations, are the primary influences on organizational behavior. This means
without regulations most organizations might not be actively involved in the circular
economy movement (Liu and Bai 2014). This implies a major difference of motives
to engage in circular economy between Chinese organizations and Western ones.
Western organizations, and therefore the organizations of this study, voluntarily
decided to engage in circular economy.
Second, one of the purposes of this study was to explore the impacts the im-
plementation of a circular economy has on organizations. The result of this study
clearly shows that the impacts of a circular economy can be positive as well as
negative. The predominantly higher costs for circulatable resources and the high
R&D costs have been negatively perceived by the organizations of this study. On
the positive side additional revenue, competitive advantage and positive brand
image have been identified. This is interesting considering the existing literature
on circular economy impacts. While literature and reports almost solely focus on
positive impacts for organizations, the results of this study show that organizations
also face negative ones. The discrepancy between the findings in literature and those
in the empirical data of this thesis adds a new aspect to the discussion on circular
economy. Literature might lead to the conclusion that circular economy is a concept
with solely positive impacts. However, this study also identified negative impacts
as well as multiple challenges the organizations face during circular economy im-
6.3 Implications for Management 131
plementations. These aspects haven’t –according to the author’s knowledge- not

yet been pointed out in other studies.
Third, this research project contributes to the literature on challenges of cir-
cular economy implementation. Challenges which have already been repeatedly
described by a number of scholars on Chinese circular economy are: lack of public
awareness, lack of financial support/weak economic incentives, shortage of advanced
technology, lack of reliable information, poor leadership and management, poor
enforcement ability of legislation, and lack of standard system for performance
assessment (Naustdalslid 2014; Liu and Bai 2014; Su et al. 2013; Xue et al. 2010;
Geng et al. 2009; Hong-Chun 2006). Since data has been exclusively collected in
organizations from Western countries, the first contribution is an additional per-
spective in challenges the companies in USA, Canada and Europe are facing. The
comparison shows both analogies and contrasts, which are elaborated on in the
following paragraphs. Common challenges, such as need for augmented awareness
of the concept, increased entrepreneurial efforts, and technological limitation
confirm findings from previous studies. Results show that there is also a list of
challenges that have solely been mentioned in Chinese studies but have not been
identified in the data of this research. When looking at the detailed descriptions of
these topics it becomes clear that all of these challenges go back to the expectation
of highly involved governments (Su et al. 2013). Since these impediments have not
been found in the data of this research project, the assumption suggests that there
is a difference in the role of governments in China and the role of those in Western
countries. Moreover, there are also hindrances that have only been identified in
this research project. These challenges are closely related to the fact that cases in
this study are mainly in an early stage of their transition to a circular economy.
In order to stay competitive, organizations feel the pressure to produce products
comparable to conventional versions in design, quality, and price. In contrast, for
Chinese organizations market pressure is not the primary factor affecting decisions
and behavior (Liu and Bai 2014) which might be a starting point to explain this
difference.
6.3 Implications for Management

6.3 Implications for Management
Besides the more theoretical implications for research described in the previous
chapter and extension of existing literature, several practical findings for managers
can be derived from this study. The results illustrate different approaches towards
131
a circular economy, depicting potential impacts the implementation might have

on the organization and challenges the organization might face.
The elaborated framework consisting of seven circular economy approaches pro-
vides a comprehensible overview of the different approaches to the circular economy
concept. Since the concept itself is more of an inspirational source than one that
provides concrete implementation suggestions, managers might be overwhelmed
by the amount of possibilities available to them. However, deciding which approach
should be implemented is the first step on a transition towards a circular economy.
This study encourages managers to choose an adequate circular economy approach
for their organization by providing examples how other companies implement
circular economy approaches. Analysis of this study shows that eight out of nine
cases implemented at least two circular economy approaches and some up to five.
By demonstrating the impacts that the implementation of a circular economy
can have on an organization, this study provides interested managers with the per-
spective from the practical implementation of a circular economy. In contrast with
previous literature, this thesis also introduced negative impacts and contradicted
one commonly described benefit of a circular economy: cost savings through the
reuse of material. By describing this new perspective on the impacts the implemen-
tation of circular economy can create, practitioners are enabled to manage their
own expectations as well as leadership expectations. The results show that positive
monetary impact can be achieved. Organizations need to acquire new customer
groups (e.g. through the special features of circular products), find ways to make
use of production leftovers (e.g. by using scrap from manufacturing as input for
production processes) or sell refurbished products (e.g. by collecting, refurbishing
and reselling a product after the first life cycle). Besides presenting these positive
impacts, the study identifies non-monetary impacts. These are a competitive ad-
vantage and reputational impacts which can be used as additional arguments to
convince leadership to invest in circular economy.
The identified challenges of this study enable practitioners to a) carefully choose
a circular economy approach and b) prepare to overcome the obstacles. Observing
the challenges in combination with the implemented circular economy approaches
(please refer to the respective within-case analyses for the detailed assessment of
each case) can provide valuable insights on how to face the challenge and success-
fully implement the circular economy approach.
Table 24 illustrates challenges per circular economy approach as described in this
case study. This list of challenges per circular economy approach does not claim to
be exhaustive. The table simply provides an overview of challenges organizations
of this study faced.
6.3 Implications for Management 133
Table 24 Mapping of challenges to circular economy approaches

Circular Economy Examples from the Challenges identified in the Case Study
Approach Case Study
Circular Supplies • Customer education required to ensure
Biological cycle: bio-
(product) degradable apparel product returns
Technical cycle: • Poor collaboration within industries
chairs of which all and beyond, e.g. collaboration with oth-
parts can be disas- er industries such as chemical industry
sembled, refurbished facilitates the development of substitutes
and resold • Technological limitations to substitute
conventional material and enable recy-
cling without loss of quality
• Difficult selection and cooperation with
suppliers for the development of circular
products due to disclosure of product
recipes, intense R&D and new business
model of reverse logistics
• Increased costs for resources, e.g. due to
missing infrastructure for reverse logis-
tics and no transparency on products at
the end of the lifecycle
• Delayed return on investment
• Missing economies of scale, no critical
mass in production and low market
share due to low number of engaged
organizations
• Insufficient practical experience,
especially with reverse logistics and
refurbishing products due to longevity
of products
Resource Recovery Collection of fabric • Poor collaboration within industries
scrap and reuse for and beyond leads e.g. to no transparency
production of toxicity level of reused resources
Purchase of recycled • Increased costs for resources
resources from re- • Missing legal regulations to make reuse
spective suppliers of material commercially attractive
Remanufacturing Reuse of certain parts • Missing infrastructure for reverse logis-
of an apparel product tics and no transparency on products at
which are still in the end of the lifecycle
good condition and
can be reused to
create new smaller
products (e.g. from
jacket to scarf)
133
Circular Economy Examples from the Challenges identified in the Case Study
Approach Case Study
Circular Supplies Integration of renew- • No challenges related to this circular
(process) able energy economy concept mentioned
Closed water cycle
Sharing Platform No examples in data • No examples in data
Product as a Apparel which is only • No challenges related to this circular

Service rented to customers economy concept mentioned
for a certain amount
of time, with mainte-
nance obligation with
the renter
Product Life Offer professional • Missing infrastructure for reverse logis-
Extension repair service for tics and no transparency on products at
products the end of the lifecycle
Offer tutorials how
to treat a product to
maintain product
qualities (e.g. for
functional clothing)
Conclusion
7 Conclusion 7
This final chapter of the dissertation concludes with a critical view on circular
economy. Lastly, the entailed limitations of this study are provided, and, with those
in mind, suggestions for further research are made.
7.1 Critical View on Circular Economy

7.1 Critical View on Circular Economy
The concept of circular economy is more often celebrated than critically interro-
gated. Publications highlight the benefits and only rarely depict the challenges and
weaknesses associated with the concept. In literature, there exists almost no criticism
on the circular economy concept itself. Criticism can only be found regarding the
implementation of the concept (see Gregson et al. 2015). This chapter will introduce
three points bringing the concept itself into question.
First, the circular economy concept requires major changes in the way the
economy is working today. This raises concerns regarding the practicability of the
concept. The implementation of an economy in which products are solely made
out of materials which either are biodegradable (biological cycle) or are reused
(technical cycle) requires a global reverse-logistic infrastructure. Organizations
act on a global-scale and sell their products to customers around the world. In
order to reuse the material, organizations need to acquire possession of it, and a
reverse-logistics infrastructure is necessary. This leads to the next change: a circular
economy needs contributing customers. Only if customers are willing to return the
products despite the effort the concept is able to work. These are just two examples of
necessary changes, but there are plenty necessary changes in order to entirely switch
the economy to a circular one. This is seen as a downside of the concept because it
is very challenging to change the economy as a whole in such a tremendous way.

Second, decoupling economic growth from resource consumption sounds

tempting. In a circular economy material should be re-used over and over again in
order to avoid exploitation of raw material. This means economic growth needs to
be covered by reused material. This only works as long as the efficiency of reused
material is higher than the amount of material needed for economic growth. It
seems unlikely that the amount of reused material suffices for economic growth.
There are major uncertainties such as if material innovations have the ability to
compensate for the increasing demand for reused material in order to enable
growth. Further unknown is the amount of possible lifecycles certain material has
and if customers are going to accept buying products made of reused material. The
uncertainties regarding the ability to grow with solely reused material is seen as
the second downside of the concept.
Third, the concept of a circular economy seems convincing, but benefits for
economy, ecology, and society are not yet proven. One question remains open and
can only be answered after a couple of years: Compared to a linear economy, is a
circular economy really beneficial for economy, ecology, and society? As the concept
is in such an early stage, there is not enough information to answer the question.
Organizations, governments, and society haven’t gained enough experience with
the concept so far. However, a few years from now, an assessment is required to
answer the questions raised above. Besides the potential benefit, literature and this
study also identify enormous challenges that have to be overcome. Transforming
today’s linear economy (‘take, make, and dispose’) into a circular economy requires
high efforts (e.g. switching costs, innovation costs) and the assessment of benefits
vs. costs. In order to assess advantages and disadvantages of a circular economy in
comparison to a linear economy, it is necessary to include the three dimensions:
economy, ecology, and society. A cost-benefit analysis is required for each of the
three dimensions to answer the question.
In order to evaluate the economical dimension, a look at the organizational
performance is useful. Profitability measures are the most commonly used financial
measures to assess a company’s performance (Brown and Laverick 1994). To assess
the environmental dimension, one option is to calculate the carbon footprint of a
circulatable product. Carbon footprint is commonly used to define the amount of
direct and indirect CO2 emission associated with human production and consump-
tion activities (Wiedmann and Minx 2008). While this measure is limited to CO2
emission, there are also other options, such as a life cycle assessment or evaluation,
which is a combination of life cycle assessment and economic valuation. The life
cycle evaluation includes both environmental and social impacts in the evalua-
tion (Craighill and Powell 1996). Methods measuring the well-being of societies
(societal dimension) are, for example, the gross domestic product or the OECD
7.2 Limitations and Opportunities for Future Research 137
Better-Life-Index. Observing the development of these measures can provide an

indication of the general well-being of a society. However, there are many different
causes leading to the effects, and it is impossible to directly link the development
to the implementation of circular economy.
Independently from the method, a major challenge for conducting those cost-ben-
efit assessments will be the data accuracy, confidentiality, availability, and quality
of the assessments. The reason for this is that there are many impacts, especially for
the dimensions ecology and society, which are difficult to quantify in both physical
and monetary terms. The bottom line is that there is currently not enough data to
evaluate whether the circular economy is better than a linear economy.
7.2 Limitations and Opportunities for Future Research

7.2 Limitations and Opportunities for Future Research
In this chapter limitations will be presented for the research methodology and the
sample. Starting with the methodology for this thesis in line with other qualitative
studies and inductive research approaches, a number of limitations apply. Due to the
early stage and the exploratory nature of the research topic the dissertation needs
to be regarded as an initial step and starting point to gain a deeper insight into the
circular economy concept, especially due to its implementation in Western countries
as opposed to China, where much work has already been done in the academic field.
The research methodology applied in this project bears the risk of a potential bias
that might occur at different phases of the research project. Conducting the study
means that the researcher selected the cases, asked the questions in the interviews,
and analyzed and interpreted them mainly alone. Although, triangulation was a
measure to reduce the potential bias (as described in chapter 3.1.2), the central role
of the researcher has to be recognized as an influence on the study. A setting with
multiple researchers could support future qualitative research.
Moreover, sampling implies some limitations, which shall be described in
the following. As is quite common in research projects conducting case studies,
a theoretical sampling approach has been chosen. This leads to some boundary
conditions for the developed results.
First, the study is focused on industries producing consumer goods (clothing,
parquet, office chairs, and agribusiness), which are industries in which products are
of lower value and relationships between businesses and consumers are common.
The low value of products might influence certain circular economy decisions
of the organization and have an impact on the challenges the organizations are
facing. Thus, future research should broaden this perspective and investigate the
137
concept in other industries such as medical imaging equipment (e.g. x-rays, MRI
and ultrasound) or the automotive industry where products are of higher value
than the products in the industries selected in this case study.
Second, experience with the concept varies (e.g. some cases just started to engage
in circular economy and one case started ten years ago), and thus cases might face
different impacts and challenges from the implementation. However, an equal-
ized level of experience could not be realized in the case selection due to limited
availability of potential cases for this research project. To exclude these possible
variations due to level of experience, a homogenous sample would be required.
Hence, future research could follow up to explore if experience really influences
impacts and challenges by selecting more equalized samples on experience level
(e.g. the more experience an organization has with the circular economy concept,
the more positive impacts is it able to realize or if challenges change over time or
remain the same).
Third, the selected cases have their headquarters in four different countries
(Canada, USA, Germany, and Switzerland). Circular economy is a concept in which
legislation plays an important role in the transition towards circular economy. Legis-
lative frameworks show major differences within the countries of the selected cases.
This might have an influence on the findings. Again, the reason for this selection
was the difficulty in selecting adequate cases. However, looking at future research
avenues, a comparison including the legislative framework of the countries might
bring interesting insights and contribute to a better understanding of the concept.
Fourth, the research comprises of a comparatively small sample size of nine
cases with one interview per case supplemented by case documents. The research
approach was highly valuable to gain a detailed understanding of the implementa-
tion of a circular economy, the impacts, and the challenges. However, large-scale,
quantitative empirical studies would be necessary to validate the findings.
This study concludes that circular economy is a promising concept for organi-
zations and is an inspirational source for organizations to re-think their products,
processes and business models. Circular economy hasn’t gained the interest of many
Western researchers so far. It promotes smart growth highly independent from
scarce resources. However, this independence is raised to question in chapter 7.1
since there are high uncertainties if the economic growth can be fed by the amount
of reused material. By fostering competition and encouraging organizations to
innovation the concept might be beneficial for organizations, environment, and
the society. However, it is necessary to evaluate and quantify these benefits in a
few years from now because the major changes the implementation of the circular
economy concept requires might offset its advantages. Benefits should be evaluated
on the three levels: economy, ecology and society in order to come to a conclusion
7.2 Limitations and Opportunities for Future Research 139
regarding the impact of the implementation of circular economy. Today, lacking

experience with the concept inhibit a meaningful evaluation.
In conclusion, further research should continue to test and validate the findings
in large-scale empirical studies, covering more industries, countries, and levels of
experience. To generalize the results corroborating studies are necessary in order
to challenge and extend the findings of this study.
139
Appendix
8 Appendix 8
8.1 Semi-structured Interview Guideline in German

8.1 Semi-structured Interview Guideline in German
Einleitung:
• Persönliche Vorstellung
• Zweck und Zielsetzung der Erhebung (nicht zu detailliert wg. Bias)
• Ziel des Interviews (kein richtig-falsch; Bericht persönlicher Eindrücke)
• Aufzeichnung (anonymisiert; Geheimhaltung)
Ziele der Studie:

I. Vertiefung des Verständnisses der Motivation, des wirtschaftlichen Nutzens
und der Herausforderungen die mit der Umstellung auf Circular Economy/
Kreislaufwirtschaft und ähnlichen Konzepten entstehen
II. Identifikation von Erfolgsfaktoren bei der Umsetzung von Circular Economy
Ansätzen
Einordnung der Studienteilnehmer

• Welche Aufgaben und Verantwortlichkeiten haben Sie derzeit und seit wann
sind Sie in der Firma?
• Können Sie mir ein paar Kennzahlen zu Ihrer Firma geben, d.h. wieviel Mitar-
beiter, Umsatz, Gewinn
1. Allgemeines
1.1 Was ist Ihr Verständnis von Circular Economy/ Cradle-to-Cradle/ Nach-
haltiger Innovation?
1.2 Wie würden Sie den Ansatz Ihrer Firma zu Circular Economy/ Cradle-to-Cra-
dle/ Nachhaltige Innovation beschreiben? Konzentriert sich Ihr Ansatz auf
einen bestimmten Rohstoff- wenn ja, auf welchen?

142 8 Appendix
1.3 Gibt es etwas woran Sie sich bei der Einführung orientieren? (Guidelines,
Beratung, NGOs) Was sind wichtige Partner bei der Einführung?
1.4 Ist das Engagement im Bereich Nachhaltigkeit Teil Ihrer Unternehmens-
strategie? Auf welcher organisatorischen Ebene ist das Thema aufgehängt?
2. Motivation/ wirtschaftlicher Nutzen

2.1 Warum glauben Sie oder die Geschäftsführung dass dieses Thema wichtig
ist?
2.2 Ex ante: Welchen wirtschaftlichen Nutzen haben Sie vor der Einführung
Ihres Ansatzes von Kreislaufwirtschaft erwartet?
2.3 Ex post: Welcher Vorteil/ wirtschaftlicher Nutzen ist tatsächlich entstanden?
2.4 Falls Unterschied zw. 1.6 und 1.7: Was waren Gründe dafür, dass die ur-
sprünglichen Erwartungen nicht erfüllt werden konnten?
2.5 Was sind die größten Kostenpunkte bei der Einführung eines solchen
Ansatzes?
2.6 Überwiegt der Nutzen die Kosten der Investition?
3. Erfolgsfaktoren
3.1 Was waren die Erfolgsfaktoren bei der Einführung? Womit steht und fällt
die Einführung?
3.2 Wenn Sie es noch mal einführen würden, was würden Sie anders machen?
3.3 Was sind Stärken und Schwächen von Ihrem Ansatz?
4. Zukunftsperspektive
4.1 Planen Sie das Engagement in dem Bereich in der Zukunft noch auszuweiten?
4.2 Gibt es noch andere/ ganze neue Ideen um das Thema Kreislaufwirtschaft
weiter voran zu treiben?
4.3 Welche Herausforderungen erwarten Sie in der Zukunft?
4.3.1 In Bezug auf eine Ausweitung der Investition / des Ansatzes?
4.3.2 In Bezug auf Wahrnehmung der Kunden?
5. Ansatzspezifisch
5.1 Arbeiten Sie mit Kooperations-Partnern zusammen um den Ansatz zu
realisieren?
5.1.1 Wie sind diese Kooperationen entstanden?
5.1.2 Welche Selektionskriterien waren ausschlaggebend? Wie und durch
wen wurden die Selektionskriterien festgelegt?
5.2 Recycling/ Wiederaufarbeitung: Wie verhindern Sie Qualitätseinbußen so
genanntes “Downcycling” beim Wiederaufarbeiten von Kleidung?
8.1 Semi-structured Interview Guideline in German 143
5.3 Recycling/ Wiederaufarbeitung: Wie haben Kunden darauf reagiert, dass

Ihre Produkte teilweise aus wiederverwendeten Materialien bestehen?
5.4 Welche Schwierigkeiten hatten Sie im Rahmen der Umstellung?
6 Abschließende Frage:
6.1 Abschließend zu dem Thema “wirtschaftlicher Nutzen einer Investition
in Circular Economy”, gibt es noch irgendwelche Punkte, die wir nicht
besprochen haben von denen Sie aber sagen, dass sie wichtig sind und ich
in meiner Arbeit berücksichtigen soll?
143
144 8 Appendix
8.2 Quotations: Original German Quote and English

Translation
8.2 Quotations: Original German Quote and English Translation
# Original German Quote Translated Quote
1 Heute ist es so, dass ich sage für uns als ein It is positive publicity because
indirekter Werbeträger oder PR- Träger weil wir we have been pioneers in this
da im Prinzip Vorreiter waren und heute ist das area and today the customer is
aber beim Konsumenten, hat das gewisse Werte. appreciating this.
2 Da habe ich gesagt sowas müssen wir bieten, I decided that we need to offer
weil ich kann nicht mithalten mit Preisen wenn this because I am not able to
es heißt wer ist der billigste (…). Das gewinnen compete with the prices of my
Importeure, die dann irgendwo in Bangladesch competitors. Importers who
fertigen lassen, verstehen Sie, aber ich muss manufacture somewhere in
innovative Dinge machen. Bangladesh are always cheaper
but I have to offer innovative
things.
3 Ja gut wir haben dann natürlich lange gebraucht It took some time until we
bis wir dann die Leute hatten und dann ist der found suppliers which were
wieder abgesprungen und nicht….weil wenn Sie willing to cooperate on this.
dem dann sagen, Sie müssen....ich kann dem ja Many suppliers weren’t willing
nicht fünf Tonnen in rot geben wenn ich...ich due to the low production vol-
musste dem ja Kilo-weise das Ding geben also umes we needed.
der musste Kleinserien so wie wir auch fertigen
und da sind ja viele abgesprungen weil die gesagt
haben, lohnt sich nicht und so weiter.
4 Wir können heute noch keinen Reißverschluss We are currently still not able
machen also man wird im Textilen sicherlich to use zippers, glitter or other
versuchen mehr zu machen (…) wir können kein effects (…) there is definitely a
Glitzerdruck oder kein Glitzer oder die ganzen lot of development necessary.
Effekte kann man noch nicht (…) also da wird si-
cherlich das ein oder andere zu entwickeln sein.
5 Aber wir sind jetzt nicht daran interessiert, dass We are not interested in
so schnell zu bringen, weil ich sag mal es muss ja increasing our commitment
auch...es heißt ja dass wir auch doppelt fahren, because currently we have
verstehen Sie, ich muss ja etwas ‚Cradle-to-Crad- double effort. Due to increased
le machen‘ das hab ich auch normal, weil es ja prices, it is necessary to have
auch ein bisschen teurer ist. both cradle-to-cradle certified
and conventional products in
our portfolio.
8.2 Quotations: Original German Quote and English Translation 145

6 (…) so wie sich das entwickelt hat, diese zwei (…) we started with smaller
plus acht Jahre ist es ja auch so, dass ich am quantities and they have never
Anfang, ich sag mal, kleine Stückzahlen und die decreased. The quantities never
wurden nie schwächer, diese Geschichte ist nicht made a huge increase but they
hoch gesprungen sondern die ist ganz auf kleiner grew steady and slow.
Flamme und die wurde nie kleiner, die wurde
immer stetig größer, das ist für mich positiv
gewesen.
7 Das ist für mich als Deutscher Hersteller wichtig, It is important for me as Ger-
dass nicht ein Chinese plötzlich Cradle-to-Crad- man manufacturer to be the
le als erster bringt sondern, dass wenn etwas first to offer Cradle-to-Cradle
Neues ist, sensationell neues oder was eine ganz products before any compet-
neue Geschichte in der Produktion ist, dann itor from China offers such
muss das von uns kommen. Das ist für mich products.
Innovation.
8 Wissen Sie es gibt Kunden, die darauf achten. You know, there are customers
appreciating it.
9 Und wenn wir Dielen ins Werk zurücknehmen, When we take back the planks,
können wir ca. 80 Prozent der Dielen wieder- we are able to reuse approxi-
verwenden, nur die Endstücke nicht, also die mately 80 percent of it. Only the
Abschnitte die so am Ende sind oder was an der parts at the end are not reusable.
Wand vorbeigeht.
10 „Das heißt wir bieten dann ein Konzept an und This means we offer the concept
sagen, so wenn du deinen Boden in 5 Jahren that customers are able to say
nicht mehr magst, dann kommen wir und bauen that they don’t like the floor any
den wieder aus und wir zahlen dir für den alten longer and we remove it and pay
Boden, was weiß ich 10 Prozent oder 15 Prozent, for the parquet 10 or 15 percent.
unabhängig ob du danach einen neuen Boden Independently if you buy a new
kaufst (…). floor (…).
11 Und da natürlich so eine Zertifizierung in einem Getting products certified with-
halben Jahr durchziehen (…) ging aber auch nur in half a year was only possible
weil das Unternehmen extrem ökologisch und because ecology and toxic-free,
wohngesund aufgestellt ist, d.h. unsere Pro- healthy products have been an
dukte querbeet über unser Portfolio haben alle important topic for the organi-
Eigenschaften die das Cradle-to-Cradle Produkt zation already. This means our
auch hat, d.h wir haben hier kein Sonderprodukt products already fulfilled all
hergestellt. requirements (…).
12 Mit unserer Produktentwicklung sind wir im- With our product develop-
mer eben, und das ist ein großer Vorteil, wir sind ment we are always ahead of
schon längst da, wenn die anderen erst anfangen our competitors which is a big
das zu tun. Das ist natürlich für unser Resümee advantage (…). Of course this
und unsren Markennamen unseres Unterneh- is also very important for our
mens enorm wichtig. resume and the brand name of
our organization.
145
146 8 Appendix

13 Weil natürlich ist es in der Konsequenz so, reicht In general, obtaining a silver
uns der Silber-Status aus aber wenn man an die certification is enough for us
technischen Grenzen kommt, weil um die Qua- but if you have reached the
lität des Produktes herzustellen kein Ausweich- technical boundaries and there
produkt da ist momentan (…) ist es ärgerlich. are no substitutes available it is
annoying.
14 Also das ist ein eher theoretischer Ansatz, weil es This approach only exists in
ist heute einfach noch nicht wirklich wirtschaft- theory. Today it is economically
lich das zu tun, es ist zwar vielleicht ökologisch unreasonable to use recycled
aber wir haben Nachhaltigkeit im Holz und wir resources, it might be ecologi-
haben eigentlich immer noch mehr Holz im cal reasonable but in the wood
Wald als wir überhaupt brauchen also es wächst industry we are sustainable and
eigentlich mehr nach als wir eigentlich verwen- we have more wood in the for-
den. ests than we need and more is
growing back than we are using.
15 Wir erwarten dass in 10 Jahren die Recycling In- We expect that in ten years
dustrie so weit ist, dass es Unternehmen gibt die from now we have a working re-
sowas tun. Das heißt die bauen den Boden aus, cycling infrastructure and that
auf eigene Rechnung oder auf unsere oder sonst there are organizations which
wie und stellen den wieder her. Denn es macht are removing it. This means
ja auch ökologisch überhaupt keinen Sinn wenn these organizations remove the
man 1000km damit durch die Gegend fährt weil parquet on their own costs or
damit der Vorteil ja verloren geht, ich mein die on our expense and refurbish it.
Ökobilanz. Ecological it is not reasonable to
drive 1000km for the removal,
then the ecological advantage
would get lost.
16 Das geht aber bei dem Produkt selber jetzt noch But this is not working for this
nicht weil einfach die Menge selber einfach nicht component because the volume
ausreicht aber wir scheuen die Investition zu is too low. Currently, we are
sagen wir werden alle Produkte mit dieser Matte hesitating to decide to use this
ausstatten, weil das ein extremer Investmentauf- component for all our prod-
wand ist(…) aber wenn die Menge extrem steigen ucts because it would be a big
würde, müssten wir da investieren. investment (…) if the volumes
would increase we would do the
investment.
17 Wir wollen das tun und wenn das adäquat pas- We would like to do that and if
sen würde, würden wir das auch machen, weil it would fit adequately we would
das ist ja eine Unterstützung der Menschen die do it because it is a benefit for
dann sagen, die Zeit ist schnelllebig (…) these people who say that time
fast moving (…).

18 Und dann könnten wir, wenn solche Produkte If we would have such products
im Angebot wären, solche Produkte einfach in the portfolio we could easily
rausnehmen und die dann woanders verkaufen, remove them from the floor
dann natürlich auch nicht mehr zum Preis des and sell them elsewhere not at
Originals aber wir rechnen so mit 70 Prozent des the original price but we would
ehemaligen Preises den wir da erzielen könnten. expect around 70 percent of the
Und wenn das passiert, dann sind die Holzkos- original price. If that worked,
ten und so natürlich doppelt bezahlt, d.h. das istthe expenses for the wood
auch für uns ein gutes Geschäft das zu tun. would paid twice which is good
for us.
19 (…)aber ich glaube schon, dass uns das in der (…) but I think it is helpful to
Außendarstellung hilft, das zu haben. have it for our public image.
20 Die Rohstoffe werden durch Cradle-to-Cradle Cradle to Cradle leads to
teurer, weil es in vielen Themen eben Neuent- increased resource prices. Often
wicklungen sind, weil eben noch keine Mengen innovation and new develop-
dahinterstehen, weil die Produktionswege noch ments are necessary, production
nicht klar sind (…). volumes are low and transport
logistics are unclear (…).
21 Das ist auch das was mich treibt, ich bin über- This is what drives me. I am
zeugt das ist etwas ganz wichtiges für uns wir convinced that this is some-
können dadurch in eine ganz neue Economy thing very important for us, we
reinkommen. Wir können das was wir im 20. can enter a whole new economy.
Jahrhundert entwickelt haben, können wir jetzt We are able to re-engineer the
im 21. Jahrhundert neu machen. things from the 20th century in
the 21st century.
22 Und versuchen natürlich uns den Preisen anzu- We try to reach the same price
nähern aber das schaffen wir natürlich nicht weil level but we are not able to do
das Polymer das wir gefunden haben nur für uns so because the Polymer is spe-
hergestellt wird. In winzigen Mengen, so ich sag cifically produced for us, with a
mal wir werden 2015 die ersten 200 Tonnen da- very small volume. In 2015 the
von herstellen daher das sind dann 200 Tonnen first 200 tons will be produced.
weltweit und dann müssen Sie sich vorstellen This means the production
wenn Sie da mit einem Produkt konkurrieren volume worldwide is 200 tons
wie Polyester von dem so grob geschätzt 5 in comparison to a product
Millionen Tonnen produziert werden oder mehr like Polyester with a produc-
da können Sie natürlich nicht konkurrenzfähig tion volume of 5 Mio tons. It is
sein. impossible to compete with this
product.
147
148 8 Appendix

23 Das Polymer das wir dort herstellen das hat The Polymer has a higher price
einfach einen höheren Preis weil wir einfach because we only produce 200
nur 200 Tonnen im Jahr davon haben. Und die ton per year. If we produce 2000
nächste Schwelle um das billiger zu machen tons it would become 1/3 cheap-
wären z.B. nur 2000 Tonnen. Wenn Sie 2.000 er. If we produce even 10000
Tonnen herstellen statt 200 können wir die Kos- tons price would 40 percent less.
ten für dieses Polymer um 1/3 Senken. Wenn wir
10.000 Tonnen herstellen können wir 40 Prozent
senken.
24 „Natürlich ist diese Idee, ich lasse etwas ewig im Of course there is the idea to
Kreis laufen ist da, aber die wird dann nur gehen have products being in material
wenn wir z.B. Produkten nichts mehr zuführen, circles endlessly but this is only
keine Farbe oder so also da müssten wir uns possible if we leave them ‘un-
enorm einschränken und deswegen glaube ich, touched’ e.g. without any color.
dass dieser technische Kreislauf sehr schwer This would be a major limita-
umsetzbar wird. tion for us and that is the reason
why I think that the technical
cycle might be difficult to imple-
ment.
25 Im Business-to-Business Geschäft ist der Preis In the business to business con-
auch wichtig aber nicht nur, da geht es auch um text price is an important aspect
die Qualität und die anderen Funktionen der in the buying decision but also
Ware und dort spielt Nachhaltigkeit schon eine quality and other functional-
Rolle. ities are taken into consider-
ation, e.g. sustainability plays an
important role.
26 Ich sag Ihnen ja der Markt ist letztendlich dieser I can tell you the market has no
gnadenlose Platz der da entscheidet. Aber da bin mercy. But right now I strongly
ich momentan der Meinung es gibt einen Markt belief that there is a place for us
dafür. Für unsere Größe gibt es einen Markt, wir in the market. With our size we
finden den, wir spüren den, der ist da und wir will find the right place in the
können den erreichen in den nächsten ein, zwei market and we will reach this
Jahren. place within the next one or two
years.
27 Dann kam diese Entwicklung aus Kalifornien Then there was this new concept
Cradle-to-Cradle, diese Kreislaufwirtschaft und from California ‘Cradle-to-Cra-
wir haben immer gesucht vielleicht irgendwelche dle’ or circular economy and
Zertifikate, Systeme um eben nachhaltig produ- we were always looking for
zieren zu können und diese Nachhaltigkeit dann certificates to certify sustainable
auch zertifizieren zu lassen und der Gedanke der production. This idea of Cra-
Kreislaufwirtschaft und vor allem auch dieses dle-to-Cradle or circular econ-
Cradle-to-Cradle hat uns ziemlich imponiert omy impressed us and fitted to
und hat am ehesten dem entsprochen, was wir what we were already doing.
eigentlich schon seit längerer Zeit lebten.

28 Der Gedanke ein System zu finden wo man nicht The objective was to be able
sagen wir mal Recycling oder das Material das to recycle and reuse material
man recycelt für eine tiefere Qualitätsstufe nur without losing it quality. This
einsetzen kann also von Cradle-to-Grave (…) was what motivated us and is
sondern das Ziel war es eben das Material zu why we produced our whole
verwenden auf dem gleichen Qualitätsniveau, product portfolio according to
das war da was uns da wirklich motiviert hat in this standard after 2010.
diesem System weiterzufahren und sämtliche
Produkte die wir nach 2010 eben in diesem
Standard zu machen.
29 Das ist das Problem, dass die Kunden nicht auf- The problem is that custom-
geklärt sind, wenn man mit potentiellen Kunden ers are not educated. When
spricht und sagt Cradle-to-Cradle bestätigt, I am talking to potential
dass die Produkte absolut Schadstofffrei sind customers and I confirm that
und nicht irgendeinen Grenzwert den irgendje- cradle-to-cradle products are
mand in einem Büro, in einer Administration absolutely free of toxic material
festgelegt hat berücksichtigt, dann werden Sie (…) they become interested.
überwiegend hellhörig.
30 Dann kommt dazu, das es viele Labels gibt, eben In addition, there are too many
Blauer Engel und und und die alle Ökologie und certifications like ‘Blauer Engel’
Nachhaltigkeit suggerieren. Es gibt einen riesen and so on which suggest all
Wildwuchs, keiner weiß eigentlich was da drin [products] are ecological and
ist und wie man das eben manipulieren kann, sustainable. Because there are
dass man trotzdem ein Zertifikat kriegt. so many certifications, it is dif-
ficult to know what exactly each
certification stands for and how
it can be manipulated.
31 Die größte Herausforderung war, dass wir bzw. The biggest challenge was to
Herr Krälin über EPEA die Lieferanten dazu convince our suppliers to dis-
bringen konnten ihre Geheimnisse einer Insti- close their list of ingredients.
tution offen zu legen. Kann man sich vorstellen
z.B. derjenige der die Schäumkomponenten also
die Komponenten für den Schaum liefert, das
ist sein Geschäftsgeheimnis wie er diese Liquide
zusammensetzt und das jemandem zu geben das
bedeutet schon eine ziemliche Herausforderung
bzgl. Überzeugungskraft.
149
150 8 Appendix

32 Ok im Moment ist es noch so, dass es sicherlich Currently it is cheaper to buy
günstiger ist neuen Rohstoff einfach einzukau- new resources. In 10-15 years
fen, im Moment. In 10-15 Jahren sicherlich nicht that will be different. Let’s look
mehr. Beispiel Aluminium: ein Großteil der at the example of aluminum:
Kosten des Aluminium ist Energie/Strom für die the major part of the expens-
Gewinnung, heute relativ günstig in 10 Jahren es of aluminum is energy/
nicht mehr. Der Strompreis wird sicherlich nicht electricity for the extraction.
fallen sondern der wird steigen, d.h. auch die Today energy/electricity is quite
Preise für die Rohstoffe werden steigen. cheap but in 10 years it will not
be cheap anymore. Costs for
electricity will increase which
means that prices for resources
will rise.
33 Aber es kommt jetzt mehr und mehr das There is growing attention for
Interesse, dass man die eben nach 10-15 Jahren the option to return products
zurückgeben kann, d.h. unser Materiallager ist after 10-15 years. This means
ganz klar bei den Kunden. our warehouse is currently the
customer.
34 Genau, mit dem Nutzen, dass wenn er das nächs- The customer is benefited in
te Mal einem Ersatz davon kauft, das Produkt that when he/she returns a chair
nicht viel teurer ist, weil das Material im Prinzip and buys a new one, the mate-
ja wiederverwendet werden kann, d.h. die erste rials are reused and he/she only
Investition des Kunden ist quasi das Material has to pay 10 percent of the cost
einmal zu bezahlen und dann 90 Prozent bei of materials.
der zweiten Beschaffung des genau gleichen
Produktes als Beispiel ist Material nur noch zu
10 Prozent bezahlen muss.
35 Wir möchten auch mal diese Recycle Kollektion We wanted to try a recycling
ausprobieren, was sind da Mehrwerte aktuell, collection to learn which bene-
auch mal diesen Cradle-to-Cradle Prozess fits it might bring, and we also
ausprobieren. wanted to try a Cradle-to-Cra-
dle process.
36 Dann wird der Business Case sicherlich inter- Then the business case is getting
essanter und dann ist natürlich der vorne dran more interesting and then the
der vielleicht auch den First Mover Advantage organization with the first mov-
bekommt. er advantage will benefit from it.

37 Auf der anderen Seite, wenn wir uns anschauen On the other side when we look
bspw. Baumwollpreise, stark erhöhende Baum- at the increasing prices for cot-
wollpreise seit einigen Jahren, glaub zwei, drei ton: I think it was two or three
Jahre ist das jetzt her, wo die Baumwollpreise auf years ago when prices for cotton
einmal doppelt so hoch waren als davor, auch have doubled. Therefore, it is
da ist natürlich ein ureigenes Interesse auch zu in our own interest to look for
gucken ob man nicht durch die Verwendung von alternatives such as secondary
sekundär Rohstoffen oder recycelten Rohstoffen resources or recycled resources
potentiell, sag ich mal auch da eine Preissicher- to gain price stability and to try
heit erhält oder auf der anderen Seite auch solche to avoid an increase in prices
Preissteigungen vermeiden kann.
38 Wir können bspw. aktuell kein Polyester in Currently we are not able to
den Kleidungskreislauf führen, das ginge zwar return polyester into the cycle of
theoretisch vom Rohstoff her aber wir haben die material. In theory it is possible
Schwierigkeit mit den Farbstoffen. Von daher but we have difficulties with col-
wenn Sie Polyester einsammeln, gefärbtes Po- oring. It is impossible to whiten
lyester, dann kriegen Sie es nicht mehr weiß, Sie dyed polyester.
kriegen da die Farbstoffe nicht mehr raus.
39 Auf der anderen Seite zeigt unser Research, den On the other side our research
wir gemacht haben, dass das Design und der shows that design and price are
Preis die eigentlichen Hauptausschlagkriterien the main decision criteria in the
sind, um sich für Produkte zu entscheiden. Und buying decision. Sustainability
Sustainability oder auch das Thema recycelt and the use of recycled resourc-
Content das ist jetzt ein interessantes Add On es are only valued as add-ons
aber das ist jetzt nicht das Hauptkriterium für but never as the main criterion
den Mainstream Konsumenten. for mainstream customers.
40 Wir sind eigentlich zu der Erkenntnis gelangt, We realized, after four seasons
jetzt auch nach vier Saisons Cradle-to-Cradle of the Cradle-to-Cradle collec-
Kollektion und eben unseren Anstrengungen, tion and related efforts that it
dass es sicherlich gut ist da mal ein Ausrufezei- is good to set an exclamation
chen zu setzen und mal zu schauen was machbar mark and to look what is doable.
ist aber wenn wir wirklich, ich sag mal, in der But if we would really initiate a
Praxis konkret eine Kreislaufwirtschaft induzie- circular economy then it would
ren wollen dann wäre das viel sinnvoller wenn be necessary to do so on indus-
man das auf einer Industrieebene zusammen try level and to cooperate with
macht mit den Wettbewerbern. competitors
41 Also meiner persönlichen Meinung nach fehlt In my personal opinion techno-
es da noch an technologischen Innovationen logical innovations are missing
um das ganze System sozusagen wirklich to really make the system work.
schwimm-fähig zu machen.
42 Es gibt sicherlich viele Kunden auch in unserer For sure there are also custom-
Zielgruppe die da Sensibilität haben für das ers in our target group who have
Thema die das gut finden. a certain sensitivity for that
topic, who see it positive.
151
152 8 Appendix

43 Dann sehen wir schon, dass momentan die We realize that currently recy-
cled resources are more expen-
recycelten Rohstoffe eigentlich teurer sind als die
neuen Rohstoffe. sive than new/virgin resources.
44 Seit Jahren ist Case Eta leidenschaftlich im Um- For years case Eta has been pas-
weltschutz aktiv. Warum? Das liegt in unserem sionately and actively involved
Blut: viele Mitarbeiter von uns Natur-Liebhaber in environmental protection.
und fühlen sich verpflichtet zum Schutz der Why? It runs in our blood:
Natur beizutragen. many case Eta -ers are com-
mitted nature-enthusiasts and
feel that it is their obligation
to contribute to protecting the
environment.
45 Je teurer sozusagen die virginen Rohstoffe The more expensive the virgin
werden umso mehr relativiert sich der Preis für resources become the more is
Recyclingmaterialien aber momentan ist es in the price for recycled resourc-
aller Regel teurer. Zumal wir eben höhere Anfor- es relativized. But currently
derungen haben an z.B. Schadstoffmanagement. recycled material is more ex-
pensive. Furthermore, we have
higher costs, e.g. for managing
pollutants.
46 …aber die Sorte Materialien die da überhaupt …but the kind of material
verfügbar ist, Cradle-to-Cradle zertifiziert, als which are available, Cradle to
Garne und Materialien die man daraus machen Cradle certified, for yarns and
kann. Die taugt einfach nur für so ein begrenztes material which can be made
Produktsortiment. out of it is limited to a certain
product range.
47 Und wir haben auf jeden Fall auch, das ist auch We not only created a brand
ganz deutlich zu spüren nicht nur ein Image image for being representative
geschafft dafür auch wirklich zu stehen am for this topic on the market but
Markt für dieses Thema sondern wir haben auch we also acquired new customer
neue Käufergruppen erschlossen dadurch, neue groups. New customers who
Kunden, Kunden die jetzt nicht so klassisch in not necessarily are interested
diesem Outdoorsegment eigentlich Zuhause in an outdoor brand but are
waren sondern eben eher in diesem grünen interested in the green lifestyle,
Lifestyle, LOHAS usw., die hatten Organisation LOHAS etc..
Eta (name modification) vorher ganz und gar
nicht auf dem Schirm, jetzt schon.

48 “(….) durch den Hype der da entstanden ist vor Due to the hype regarding
wenigen Jahren zum Thema Recyclingprodukt, recycled resources which arose
dass das Recyclingmaterial in aller Regel teurer few years ago recycled resources
ist. Das ist leider ein Märchen, wenn man sagt, usually are more expensive.
ja die Rohstoffe müssten ja eigentlich billiger Unfortunately it is a fairy tale,
sein und deswegen müsste das Recyclingmaterial when people say, that recycled
doch auch billiger sein, da kommen wir vielleicht resources and resulting prod-
auch irgendwann noch mal hin in 10 Jahren oder ucts have to be less expensive.
so. Maybe we will get there some-
day, in 10 years maybe.
49 Wir haben im Moment also in der Bekleidung Currently almost 80 percent of
haben wir fast 80 Prozent nach Firmen-eigener our clothes are made according
Zertifizierung und im Bereich Taschen und to our company-own certifi-
Hardware also Zelte, Rucksäcke und sowas cation [with a certain stake of
da sind es so ungefähr 20 Prozent, knapp da recycled resources] and in the
drunter. Unser Ziel ist absolut 100 Prozent Green area of handbags and hardware
Shape Produkte zu erreichen. (e.g. tents, back bags and so
on) almost 20 percent include
this material. Our objective is
definitely to reach 100.
50 …Da planen wir jetzt erstmal nicht noch weitere …we do not plan any further
Schritte zu unternehmen zumal das auch also steps particularly because
der Bekanntheitsgrad der Zertifizierung und the level of awareness (of the
auch die Nachfrage von Kunden war schon eher Cradle-to-Cradle certification)
enttäuschend, muss man ehrlich sagen. Das The- and also the demand from the
ma Circular Economy und Kreislaufwirtschaft customer was pretty disappoint-
wird sicherlich aktuell bleiben wir sind auch in ing. The topic circular economy
dem ein oder anderem Forschungsprojekt noch will remain current and we are
engagiert und werden es auch weiterhin sein, and will stay involved in some
also da bleiben wir in jedem Fall am Ball aber research projects but we are not
noch eine deutliche Ausweitung der Initiativen planning to expand our initia-
ist erstmal nicht geplant. tives for now.
51 Also wir sind uns da schon sehr wohl drüber We do know that this work
klar, dass das wohl eine Arbeit sein wird die [removing the parquet from
Subunternehmer übernehmen werden. So und the floor and refurbishing it]
parallel dazu denken wir natürlich auch über probably has to be done by a
Verwaltungssysteme nach, die auch sehr innova- subcontractor. But in parallel
tiv sind, weil man könnte sich ja auch vorstellen we are thinking of innovative
wenn Sie Interesse an so einem Boden haben, Sie administrative systems to offer
den ja auch leasen können. the possibility to lease the par-
quet instead of selling it.
153
154 8 Appendix

52 Es gibt verschiedene Anreizmöglichkeiten. Das There are different possibilities
eine ist, dass man sagt Kunde du kannst uns to incentivize customers. One is
den Stuhl zurückgeben, wenn du ihn nicht mehr to offer a certain amount from
brauchst und du bekommst einen Betrag von the purchasing price in case the
X etwa 10-15 Prozent des Original-Kaufpreises customer brings back the chair
als Beispiel. Dann wird sich der Kunde sicher- after using. When doing this the
lich noch daran erinnern, dass der den wieder customer probably will remem-
zurückgeben kann. Das ist das Eine, das Zweite ber to bring back the chair. That
sind unterschiedliche Finanzierungsformen, die was the first option, another
man wählen kann. Das eine ist z.B. Leasing. one is to offer different types to
finance, e.g. leasing.
53 Wir haben in aller Regel so 10-15 Prozent Mehr- Usually we have 10-15 percent
kosten durch die anderen Materialien. higher costs due the other
material.
54 Wir versuchen natürlich uns den Preisen anzun- Of course we try to get close to
ähern aber das schaffen wir natürlich nicht weil the prices (of virgin resources)
das Polymer das wir gefunden haben, nur für but it is impossible because
uns hergestellt wird. In winzigen Mengen, so ich the polymer we have found
sag mal wir werden 2015 die ersten 200 Tonnen is only produced for us. In
davon herstellen daher das sind dann 200 Ton- very small quantities, in 2015
nenweltweit und dann müssen Sie sich vorstellen approximately 200 tons. That
wenn Sie da mit einem Produkt konkurrieren in comparison to 5 Million ton
wie Polyester von dem so grob geschätzt 5 Mil- of polyester, it is impossible to
lionen Tonnen produziert werden oder mehr da compete with that.
können Sie natürlich nicht konkurrenzfähig sein
55 Es gibt schon natürlich auch Beispiele wo wir But there are examples where
dann die Rohstoffe günstiger einkaufen. (….) we can buy resources cheaper
das Thema TPU (…) ist z.B. günstiger beim Roh- (…) e.g. recycled TPU is less
stoff-Einkauf als bei einem konventionellen TPU, expensive than the virgin
da rentiert es sich dann schon material.
56 Wir brauchten zwei Jahre bis die Zulieferer da We needed two years until we
waren und dann mussten wir natürlich auch had suppliers and then we had
Tests fahren damit man sagt ok kann man... to conduct many tests to check
wissen Sie ich kann ja nicht sagen ich verkaufe the material. The tests have been
Ihnen ein rot und dann färbe ich das Ding und conducted to check if e.g. color-
dann kommt es komisch rot raus. Also wir ing with special color is working
mussten ja auch Tests machen und sehen wenn properly etc..
wir das dann färben mit diesen Chemikalien
mit diesem Farbstoff wird das richtig, nimmt
das die Baumwolle an oder die ist ja auch anders
ein bisschen, also da sind verschiedene Tests
gelaufen

57 Die Rohstoffe werden durch Cradle-to-Cradle The resources are getting more
teurer, weil es in vielen Themen eben Neuent- expensive because they are new
wicklungen sind. developments most of the time.
58 Wir waren schon kurz davor sozusagen die We had almost started the
Produktentwicklung von Cradle-to-Cradle-zer- product development of Cra-
tifizierten Produkten zu starten wir haben das dle-to-Cradle certified products
jetzt noch mal gestoppt weil wir festgestellt but stopped it because we real-
haben dass der Aufwand den wir dafür betreiben ized that the effort is too high
müssen, dass der in keinem Verhältnis steht zu for the few products resulting
dem paar Produktion die dann am Ende raus- from it.
kommen, das ist leider die Situation momentan
hier in unserem Umfeld oder mit unserer Supply
Chain.
59 Aber die Sorte Materialien die da überhaupt The type of materials which
are available, Cradle-to-Cradle
verfügbar ist, Cradle-to-Cradle zertifiziert, als
Garne und Materialien die man daraus machen certified, e.g. yarns and prod-
ucts made out of it, they can
kann. Die taugt einfach nur für so ein begrenztes
Produktsortiment, was auch noch nicht mal die only be used for a very limited
Kernkompetenz von uns ist, nämlich Unterwä- product range. And this range,
sche oder so Trikot-Waren. which is mainly underwear and
sportswear, lies not within our
core competencies.
60 Und wir haben auf jeden Fall auch, das ist auch And we not only created an
ganz deutlich zu spüren nicht nur ein Image image to stand for that topic
geschaffen dafür auch wirklich zu stehen am but we acquired new customer
Markt für dieses Thema sondern wir haben auch groups. New customers who
neue Käufergruppen erschlossen dadurch, neue aren’t typically customers of
Kunden, Kunden die jetzt nicht so klassisch in outdoor clothes but who have
diesem Outdoorsegment eigentlich Zuhause a “green lifestyle”. These cus-
waren sondern eben eher in diesem grünen Li- tomers didn’t know our brand
festyle, LOHAS usw., die hatten Case Eta [name before, but now the know us.
changed by interviewer] vorher ganz und gar
nicht auf dem Schirm, jetzt schon.
61 Es gibt sicherlich viele Kunden auch in unserer Certainly there are many cus-
Zielgruppe, die da Sensibilität haben für das tomers within our target group,
Thema, die das gut finden. who have sensitivity for that
topic, who appreciate it.
155
156 8 Appendix

62 Und dann könnten wir wenn solche Produkte (…) we could remove the prod-
im Angebot wären, solche Produkte einfach ucts from the floor and resell
rausnehmen und die dann woanders verkaufen, them to other customers. Of
dann natürlich auch nicht mehr zum Preis des course not at the original price
Originals aber wir rechnen so mit 70 Prozent des but we expect to get approxi-
ehemaligen Preises den wir da erzielen könnten. mately 70 percent of the original
Und wenn das passiert, dann sind die Holzkos- price. And if that works the
ten und so natürlich doppelt bezahlt, d.h. das ist costs for the wood are payed
auch für uns ein gutes Geschäft das zu tun. twice which would be good for
us.
63 Wenn er [der Kunde]aber nachhaltige Produkte When a customer buys sustain-
kauft, die wiederverwendbar sind, bei denen das able products which are reusable
Material wiederverwendet werden kann, dann then there is a great chance that,
kann es gut sein je nach Entwicklung der Materi- depending on the development
alpreise, dass er ein Topprodukt zu günstigeren of the material prices, that he is
Preisen kriegt. able to purchase a top product
at cheaper prices.
64 Und der weitere Zusatznutzen ist, da wir unser And another added value is
Produkt entwickelt haben für einen biologischen that, since our products are de-
Kreislauf ist die ganze Chemie die wir da ein- veloped for the biological cycle,
setzen für biologische Kreisläufe geeignet. (…) the chemistry which has been
Wenn wir von biologischer Kreislaufführung used is suitable for the biologi-
reden, dann müssen die Produkte so sein, dass cal cycle (…) products contain
sie auch von den Zerfallsstoffen von dem was only natural material.
übrig bleibt in der Natur nichts erscheint, was in
der Natur nicht vorkommt.
65 Ja sicher der Treiber ist das, aber es ist natürlich Yes of course the driver is also
im Parkettmarkt auch das einzige Produkt das that it is the only product on the
sowas kann. parquet market which has this
feature [which is circulatable].
66 Heute machen wir das mit Polyestern und weil We replaced the polyester we
wir eben ein anderes Polymer gefunden haben, are using with the new devel-
das biologisch abbaubar ist, wird das erst mög- oped polymer, which is bio-
lich und das ist unser Alleinstellungsmerkmal degradable, this is our unique
selling proposition.
67 (…) aber ich glaube schon, dass uns das in der I think it is beneficial for our
Außendarstellung hilft, das zu haben. Wir sagen public image to have it. It is not
jetzt nicht, dass es eines der Hauptthemen ist, the main reason why customers
warum Kunden zu uns kommen und sagen buy our products but it is the
wir kaufen Case Gamma Produkte [changed icing on the cake and expresses
by interviewer] aber es rundet eigentlich unser how we would like to be seen by
Unternehmen ab so wie wir uns sehen und so our customers.
wie wir gesehen werden möchten.

68 Und auch bei uns also ich sag mal da hat man Of course there is the topic of
natürlich schon auch dieses Thema Reputa- reputation management and
tions-Management und auch irgendwo einen also the positive effect on the
positiven Einfluss auf das Marken-Image aber brand image but these topics are
das sind halt sehr schwere Themen um sie in very difficult to measure and to
Euro und Cent auszudrücken. express in concrete figures.
69 Heute ist es so dass ich sage für uns als ein indi- Today it is for us positive pub-
rekter Werbeträger oder PR- Träger weil wir da licity because we have been the
im Prinzip Vorreiter waren und beim Konsu- first mover and this is appreciat-
menten hat das gewisse Werte ed by the customers.
70 So und dann haben wir natürlich noch Reputa- Well and there is the reputation
tions-Themen, die damit reinspielen. Das wir topic which plays an import-
sagen es gibt eben sehr hohes Bewusstsein zum ant role for us. There is a lot of
Thema Nachhaltigkeit, es gibt ja auch einen sehr awareness on the topic sustain-
hohen Fokus von Nicht-Regierungsorganisati- ability, and many NGOs such
onen bspw. Greenpeace auf die Textilindustrie. as Greenpeace have their focus
Also auch um auf unseren Stakeholder-Dialog on the textile industry. But we
zurückzukommen, wir hatten da vier Leute von had a stakeholder dialog with
Greenpeace mit dabei und danach gab es auch Greenpeace and after this dialog
eine Pressemitteilung von Greenpeace zum Greenpeace issued a press
Thema Chemikalien und Schadstoffe in der release on chemicals and pollut-
Textilproduktion. ants in the textile industry.
71 Dann müssen wir weniger Schadensbegrenzung It means we can do less damage
betreiben, wenn es mal wieder eine NGO Kam- control when there is a NGO
pagne gibt weil wir einfach da aus der Schublade campaign trying to harm us
ziehen was wir da über die Jahre schon alles we have something to prove
gemacht haben bei dem Thema und klar das ist our commitment over the past
natürlich auch keine Hauptmotivation und auch years. This is not our main
überhaupt kein Freibrief oder so, das schützt motivator, no carte blanche and
einen auch nicht vor Angriffen aus der Presse it doesn’t protect from attacks
oder so aber wir haben es auf jeden Fall leichter from the press but it makes it
weil da eben vorausgedacht haben also manch easier for us because we have
anderer Kollege. planned ahead In contrast to
some competitors.
72 Sie können nicht alle Farben machen, ich muss We are not able to offer all
die Polizei wenn wir Polizei-Polohemden ma- colors, e.g. in the case of police
chen, gibt es ein gewisses blau, ein gewisses rot uniforms a certain blue and a
das ist in der Farbpalette vielleicht nicht so exakt certain red is required both are
drin. not part of the Cradle-to-Cradle
color palette.
157
158 8 Appendix

73 Und da habe ich schon die Hoffnung, dass der And I am hopeful that the hu-
Mensch mit all seiner Kreativität und wir mit man being with all its creativity
unseren Technologien auch aus dem Kunst- and we with our technologies
stoffrecycling bspw. was Verpackungsrecycling also from the field of e.g. plastic
betrifft gerade auch in Deutschland oder Europa recycling will find adequate
das wir da über kurz oder lang auch Technolo- technologies, which will
gien finden, die das Recycling und Kreislauffüh- facilitate recycling and keeping
rung erleichtern. material in the cycle.
74 Also klar ist, die Preise werden sich in bestimm- This much is certain the prices
ten Bereichen von allein anpassen wenn die will adjust in certain areas when
Nachfrage größer wird, das ist einfach so. Also the demand increases. In our
bei uns ist es z.B. so, das Polymer das wir dort case, the polymer which we
herstellen, das hat einfach einen höheren Preis produce is more expensive be-
weil wir einfach nur 200 Tonnen im Jahr davon cause we only produce 200 tons
haben. Und die nächste Schwelle, um das billiger per year. The next threshold to
zu machen wäre z.B. nur 2000 Tonnen. Wenn Sie make it cheaper is 2000 tons.
2000 Tonnen herstellen statt 200 können wir die If we would produce 2000 tons
Kosten für dieses Polymer um 1/3 senken. Wenn instead of 200 we could reduce
wir 10000 Tonnen herstellen, können wir um 40 the costs for this polymer at a
Prozent senken. rate of 1/3. If we would produce
10000 tons we could reduce the
costs around 40 percent.
75 Aus heutiger Sicht ist ein theoretischer Ansatz From today’s point of view it is a
bei der ganzen Geschichte dabei. Wir erwarten theoretical approach. We expect
die erste Rücklieferung von Böden in 8-10 Jahren the delivery of used floors in
also das ist jetzt weit nach vorne gedacht, weil 8-10 years, so we though far in
die ebenso langlebig sind. the future because our products
are just very durable.
76 Ist das denn eine Thematik die man als Einze- Is this a topic which can be
lunternehmer am besten lösen kann oder ist solved by a single organizations
das vielleicht eine Thematik die systemische or is this something which re-
Lösungsansätze benötigt? (…) Aber wenn wir quires a systems approach? (…)
wirklich, ich sag mal in der Praxis konkret, eine But when we really want to start
Kreislaufwirtschaft induzieren wollen dann a circular economy it makes
wäre das viel sinnvoller wenn man das auf einer much more sense to do that on
Industrieebene zusammen macht. an industry level.
77 Dann kann man, man müsste und das ist auch The objective of this industry
Ziel dieser Branchengruppe, dass man diese group to connect the industries,
Industrien vernetzt, dass man den Verbraucher to better inform the consumer,
besser informiert, genau dass man dann natür- to produce products which are
lich vorne am Anfang der Kette erstmal Produk- circulatable.
te herstellt die sich überhaupt recyceln lassen.
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4 Case Description and Within-Case Analysis . . . . . . . . . . . . . . . . . . . . . . . . 51

4.7.3 Challenges for the Implementation . . . . . . . . . . . . . . . . . . . . . . . . 78

5 Result of Analysis and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

6 Summary and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Fig. 1 Illustration of circular economy in the context of other new

Table 1 Literature review of circular economy benefits . . . . . . . . . . . . . . . . . . 22

CCS Carbon Capture and Storage

“The future availability of natural resources – defined

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2018 1

1.1 Relevance of Circular Economy

1.2 Research Questions, Scope and Contribution

been selected as the focus industry accompanied by other industries selected to

1. How is the concept of the circular economy implemented?

1.3 Structure of this Thesis

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2018 7

2.1 Roots of Sustainable Development

2.2 Resource Management and Sustainable Development

Therefore, natural capital has to be maintained to remain at the current level of

2.2.1 Sustainable Development, Sustainable Innovation and

well as in structures of consumption and production that were radical, long-term

2.2.2 Sustainability as Limit to Growth?

satisfied with a growing population in the future. However, numerous scientists

economic sector or even for a national economy (United Nations Environment

2.3 Circular Economy

2.3.1 Circular Economy in the Context of other New Economy

As a contrast to the current industrial economy, new types of economies have

A collaborative economy is a decentralized economy with networks of individuals

to-peer financing and www.coursera.org providing universal access to free online

(I) Increase the productivity of natural resources, (II) change to biologically

In a service economy the consumption pattern changes from buying products to

2.3.2 Fundamentals of Circular Economy

process. Furthermore, products shall be used to their maximum capability, e.g.

1. Design out waste,

In the following paragraph a comprehensive overview of the five characteristics

1. In their definition of the circular economy the Ellen MacArthur Foundation

2.3.3 Circular Economy as Economic Strategy –

Table 1 Literature review of circular economy benefits

Non-academic literature on circular economy benefits

Fig. 2 Overview of monetary and non-monetary benefits derived from literature

As presented in Figure 2, cost savings is a monetary category identified in literature.

Furthermore, Kienbaum Management Consulting describes the reduction of ma-

2.3.5 Demarcation to Post-Growth Economics

The concept of circular economy contradicts certain characteristics of today’s in-

2.3.6 Circular Economy in China

The implementation is forced gradually from low-level recycling practices to reduce

enforced by policies and laws. In other countries is a voluntary engagement

• To support the implementation of the circular economy the NDRC initiated

And waste disposal/pollutant emission indicators: Amount of disposed material

1. Inadequate system of indicators

hampering the implementation of circular economy development, 64.29 percent

2.3.7 Conceptual Framework for this Thesis

1. Product innovation is either the development of a new product or a new variant

The extent to which an organization is impacted by changes depends on the type

Combination of Innovation Types and Business Models into one

Table 2 Analysis framework for this thesis