Exploratory Study on Circular Economy Approaches A Comparative Analysis of Theory and Practice

26 2 Theoretical Foundations

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