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 onlyeconomic 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 productefficiency, it remains a main challenge for organizations to create a win-win situation