Author(s): Felix Carl Schultz
The Circular Economy (CE) is an emerging paradigm that offers the opportunity to mutually promote sustainability and competitiveness in economic systems (cf. Murray et al., 2017; Elia et al., 2017). A CE requires moving beyond linear industrial models and proposes an industrial system that is restorative and regenerative by design to keep materials at the highest value in cycles (Ellen MacArthur Foundation, 2014; Ellen MacArthur Foundation, 2017). In order to spur a systemic CE, scholars suggest transforming linear value chains into circular ones (Batista et al., 2018; Keijer et al., 2019; Nasir et al., 2017). To realize this transformation of value chain systems (cf. Porter, 1985), appropriate governance structures for a CE are required to enable superior forms of inter-organizational collaboration (Farooque et al., 2019; Fischer & Pascucci, 2017).
To convert linear governance structures into circular ones, various governments have issued policies to support the CE transition (Ghisellini et al., 2016). Although valuable insights of governmental regulation and policy interventions to achieve an adequate governance structure for CE are notwithstanding (Domenech & Bahn-Walkowiak, 2019; Termeer & Metze, 2019; Wicher et al., 2018), scholars dealing with circular value chains emphasize the necessity to investigate opportunities of organizational self-regulation (Bressanelli et al., 2019a, 2019b; Farooque et al., 2019; Winans et al., 2017). Recent literature observes that individual corporations play a crucial role in solving the governance challenge for a successful transition towards the CE (Flynn & Hacking, 2019). Firms need to take governance responsibility (cf. Pies et al., 2009) to improve underlying incentive structures for enabling a functional CE (Fischer & Pascucci, 2017). Nevertheless, a question remains to what extent, and how, firms can contribute to facilitate inter-organizational collaboration via self-governance for a transition away from linear towards circular value chains. Against this background, Fischer & Pascucci (2017) have recently recognized that “the main challenge faced by firms engaged in CE transition is to arrange collaboration and business relations, whilst being constrained by an institutional system that is aligned with the principles of linear economy” (Fischer & Pascucci, 2017). Hence, a successful CE transition requires creating adequate self-governance structures, which enable novel forms of collaboration and competition for various organizations with the aim to successfully orchestrate circular material flows.