From Sustainable Global Value Chains to Circular Economy

Broadening our Sight for North/South Inclusion

Professional Development Workshop 10078

Academy of Management Annual Meeting 2020

Sponsor: ONE (primary) and AFAM, IM, OSCM, SIM, STR (co-sponsors)

Abstract: Sustainability in global value chains (GVC) has become an established research field in many management-related disciplines. The growing interest in the circular economy concept pushes these conversations beyond established boundaries. The realization of interconnectedness urges researchers to broaden their sight by establishing multidisciplinary collaborations. In today’s literature the conventional linear economy model (i.e., take, make, dispose) still prevails, leaving many questions unanswered. Circular economy models, with their reorganized production and consumption processes, offer new sources of value based on new forms of production and use of products (i.e., waste as supply, cradle-to-cradle) through different innovation, manufacturing, and consumption activities (i.e., reuse, reduce, recycle) and new remuneration approaches (e.g., performance-based pricing). While the concept of better connections between output and input flows at all production or consumption levels is receiving increased acceptance, it remains unclear how to make this change happen on both corporate and public policy levels, and without furthering the north/south divide. Various scientific communities developing circular economy models contribute different perspectives to this conversation, with promising opportunities for research. This PDW takes up the discussions facilitated by various academic (e.g., Academy of Management, Society for the Advancement of Socio-Economics) and governmental organizations (World Bank Group, 2020) on advancing research on the circular economy to a new level. Participants will work with prominent scholars from different disciplines in open workshops to develop ways to address these challenges. The PDW ends with a future research-oriented discussion with all participants, based on results generated in three parallel workshops.

Welcome, Format and Next Activities

, Joerg S. Hofstetter, KEDGE Business School, France: youtu.be/HEnt4dFlphE

Introduction

by Valentina De Marchi, University of Padova, Italy: youtu.be/I-05Rg2s-Ts mediaspace.unipd.it/media/t/1_i0ub511z

Key Note "Connecting Output with Input Needs in a Global Circular Economy"

by Joseph Sarkis, Worcester Polytechnic Institute, USA: youtu.be/XnwAewAp14c

Key Note "Beyond Today’s Business Logic for a Global Circular Economy"

by Nancy Bocken, Maastricht University, The Netherlands: youtu.be/CVG56pYCLr0

Key Note "Inclusion of South Countries in North-dominated Circular Economies"

by Patrick Schröder, Chatham House, UK: youtu.be/fB29ztfWxVE

Roundtable 1 "Connecting Output with Input Needs in a Global Circular Economy":

Challenger, Aldo Ometto, University of Sao Paolo, Brazil: youtu.be/rvz6PXjcluk

Challenger, Katharina Spraul, University of Kaiserslautern, Germany
Challenger, Kannan Govindan, University of Southern Denmark, Denmark
Challenger, Robert Klassen, Western University, Canada

Roundtable Plenary, chaired by Sanjay Sharma, University of Vermont, USA: youtu.be/pAPairJP-jc

Roundtable 2 "Beyond Today’s Business Logic for a Global Circular Economy":

Challenger, Stephen Vargo, University of Hawaii, USA: youtu.be/BCt-86SHZvE

Challenger, Weslynne Ashton, Illinois Institute of Technology, USA

Challenger, Paul Dewick, Keele University, UK

Roundtable Plenary, chaired by Nicole Darnall, Arizona State University, USA: youtu.be/HcEELbZ3gEU

Roundtable 3 "Inclusion of South Countries in North-dominated Circular Economies":

Challenger, Julian Kirchherr, Utrecht University, The Netherlands

Challenger, Peter Knorringa, Erasmus University Rotterdam, The Netherlands

Challenger, Noemi Sinkovics, University of Auckland, New Zealand

Roundtable Plenary, chaired by Sherwat Ibrahim, American University in Cairo, Egypt: youtu.be/Y47woiScYTw

Conclusions

by Anthony Goerzen, Queen's University, Canada: youtu.be/rlwVFFipisw

Please share your views in this forum: jshisvc.wixsite.com/website/forum/welcome-to-the-forum/please-share-your-views-on-this-pdw

The PDW will address the misalignment of organizational systems and the limited coverage of existing management approaches to today's global value chains seeking transition towards a circular economy model. Scientific knowledge offering guidance in this aspirational transition is scarce and scattered. The process and mechanisms that engender environmental sustainability are particularly relevant in developing countries, where the social and environmental impacts of participating in GVCs often have negative repercussions on socio-economic outcomes (Clarke & Boersma, 2015).

The analysis of how production and consumption processes need to be (re)structured is core to transitioning to a circular economy. It requires radical rethinking of how resources in varying conditions are used and moved within different cycles. The role of consumer changes in this environment, engaging actively in value co-creation instead of being only an annihilator of value of final goods. Governments (e.g. European Commission, China), intending to secure economic leadership, drive technology development to enable new organizational forms of value creation (i.e., “Factories of the Future”) within the circular economy context. Corporate leaders, masters of playing the linear model, struggle with envisioning “breakthrough” circular business models.

Spatial fragmentation and functional integration of activities that have taken place at the global level over the past few decades following the linear model led to long chains of actors, some being independent, others interdependent on one another. A special role is played by global lead firms, usually large buyers or manufacturers from the north, who, being the rule-setters (Gereffi et al., 2005), might play a key role in supporting the diffusion of sustainability and other institutions within global value chains (De Marchi et al., 2013). The circular economy entails the potential to impact the governance of industries and global value chains, shifting power across actors, and supporting concentration dynamics. When only few companies possess needed capabilities to provide circular inputs, their bargaining power increases.

Circularity might have an impact on the location of activities, as there is a push for reducing the number of actors involved in making goods or services as well as reducing the distance between those actors. This push can be for technical or economic reasons, but also for value perception purposes - as customers are increasingly valuing locally rooted products. Currently, the south contributes especially raw materials, which in a circular economy will be replaced by re-/upcycled materials, and cheap mass production, which will be replaced by long lasting quality and local maintenance. If the south is to remain and strengthen its position in global trade, it needs to provide unique and needed contributions to value co-creation – beyond low production costs.

Significant resources need to be mobilized and allocated to drive a transition to a circular economy. Both public and private sector investments are required, but the tools to assess which companies or projects to support and to evaluate their impact are nascent. There remains the danger that innovation trajectories will be locked into a direction that could exacerbate power dependencies, extend the gap between progress in high-income and other countries (Schroeder et al., 2018a), lead to rebound effects (Figge & Thorpe, 2019), or fall short in terms of actions required for strong sustainability (Schroeder et al., 2019).

The objective of this PDW is to explore new routes for research on circular economy by moving beyond current perspectives. By providing a platform for discussion, the PDW enables the formation of research groups and networks of experts in the fields of sustainability, business ethics, international management, strategy, innovation, operations, supply chain management, organizational behavior, as well as sociology and economics. Future Earth has established a working group on circular economy, hosted by the International Forum on Sustainable Value Chains (ISVC): sscp.futureearth.org/our-work/working-group-circular-economy/

This PDW shall also refine a call for papers for a special issue targeted at one of the community’s leading journals.

The PDW addresses three main topics that each will be addressed in the panel and the specific workshop. The questions behind each main topic will include, but are not limited to:

(1) Connecting Output with Input Needs in a Global Circular Economy

• How can we create a better understanding between companies with matching input needs and output opportunities to invest into establishing aligned business relationships?

• How can theories be extended towards sub-suppliers, sub-customers, and further potential business partners, thereby moving those value chain members from the periphery (often in the south) to the core?

• How can companies develop a circular mindset that enables them to transition and innovate?

(2) Beyond Today’s Business Logic for a Global Circular Economy

• How can we broaden our sight to better understand how value is (co-)created and shared between the respective actors – from chains to cycles?

• What organizational forms and business models are suited for a circular economy on a global scale?

• How can value be understood in terms of economy, ecology, or society?

• How can innovation trajectories be supported toward a fair and strong sustainable circular economy, which also better integrates the south?

(3) Inclusion of South Countries in North-dominated Circular Economies

• How can we better understand how companies located in developing countries can connect into circular economy models?

• What is the impact of more systemic issues of today’s unequal power relations entrenched in global value chains on the inclusion of those companies in Western- dominated circular economies?

• How can we better determine non-cost-driven value propositions offered by these companies to circular economy business models?

Selected papers of the PDW’s speakers and discussants:

Ashton, W. S., Howard-Grenville, J., & Jacobs, D. (2018). Circular Economy & Sustainability in Theory: Business Models, Economic Impact, & Application. Academy of Management Proceedings (Vol. 2018, No. 1, p. 10635).

Ashton, W. S., Hurtado-Martin, M., Anid, N. M., Khalili, N. R., Panero, M. A., & McPherson, S. (2017). Pathways to cleaner production in the Americas I: bridging industry-academia gaps in the transition to sustainability. Journal of Cleaner Production, 142, 432-444.

Bocken, N. M.P., De Pauw, I., Bakker, C., & van der Grinten, B. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), 308-320.

Bocken, N. M.P., Olivetti, E. A., Cullen, J. M., Potting, J., & Lifset, R. (2017). Taking the circularity to the next level: a special issue on the circular economy. Journal of Industrial Ecology, 21(3), 476-482.

Bocken, N. M.P., Schuit, C. S., & Kraaijenhagen, C. (2018). Experimenting with a circular business model: Lessons from eight cases. Environmental Innovation and Societal Transitions, 28, 79-95.

De Marchi, V., Maria, E. D., & Micelli, S. (2013). Environmental strategies, upgrading and competitive advantage in global value chains. Business Strategy and the Environment, 22(1), 62- 72.

Dewick, P., & Foster,C. (2018). Focal Organisations and Eco–innovation in Consumption and Production Systems. Ecological Economics, 143, 161-169.

Geissdoerfer, M., Savaget, P., Bocken, N. M.P., & Hultink, E. J. (2017). The Circular Economy– A new sustainability paradigm?. Journal of Cleaner Production, 143, 757-768.

Geng, Y., Sarkis, J., & Bleischwitz, R. (2019). How to Globalize the Circular Economy, Nature, 565 (7737), 153-155.

Geng, Y., Sarkis, J., & Ulgiati, S. (2016). Sustainability, well-being, and the circular economy in China and worldwide. Science, 6278(Supplement), 73-76.

Geng, Y., Sarkis, J., Ulgiati, S., & Zhang, P. (2013). Measuring China's circular economy. Science, 339(6127), 1526-1527.

Goerzen, A. & Van Assche, A. (2019). Global value chain governance: A MNC capabilities view. In Mellahi, K, Meyer, K, Surdu, I, & Verbeke, A. (Eds.). Oxford Handbook of International Business Strategy. Oxford: Oxford University Press.

Govindan, K., & Hasanagic, M. (2018). A systematic review on drivers, barriers, and practices towards circular economy: a supply chain perspective. International Journal of Production Research, 56(1-2), 278-311.

Kirchherr, J., & van Santen, R. (2019). Research on the circular economy: A critique of the field. Resources, Conservation and Recycling, 151 – early cite.

Kirchherr, J., Piscicelli, L., Bour, R., Kostense-Smit, E., Muller, J., Huibrechtse-Truijens, A., & Hekkert, M. (2018). Barriers to the Circular Economy: Evidence From the European Union (EU). Ecological Economics, 150, 264-272.

Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221-232.

Longoni, A., Pagell, M., Shevchenko, A., & Klassen, R. D. (2019). Human capital routines and sustainability trade-offs: The influence of conflicting schemas for operations and safety managers. International Journal of Operations & Production Management, 39, 5, 690-713.

Lüdeke-Freund, F., Gold, S., & Bocken, N. M.P. (2019). A review and typology of circular economy business model patterns. Journal of Industrial Ecology, 23(1), 36-61.

Nogueira, A., Ashton, W. S., & Teixeira, C. (2019). Expanding perceptions of the circular economy through design: Eight capitals as innovation lenses. Resources, Conservation and Recycling, 149, 566-576.

Parmigiani, A., Klassen, R. D., & Russo, M. V. (2011). Efficiency meets accountability: Performance implications of supply chain configuration, control, and capabilities. Journal of Operations Management, 29(3), 212-223.

Schroeder, P., Anantharaman, M., Anggraeni, K., & Foxon, T. J. (eds.). (2019). The circular economy and the global south: Sustainable lifestyles and green industrial development. Routledge.

Schroeder, P., Anggraeni, K., & Weber, U. (2018). The Relevance of Circular Economy Practices to the Sustainable Development Goals. Journal of Industrial Ecology. 23(1), 77-95.

Schroeder, P., Bengtsson, M., Cohen, M. Dewick, P., Hofstetter, J.S., & Sarkis, J. (2019). Degrowth within: Aligning circular economy and strong sustainability narratives. Resources, Conservation and Recycling, 146, 190-191.

Schroeder, P., Dewick, P., Kusi-Sarpong, S., & Hofstetter, J. S. (2018a). Circular economy and power relations in global value chains: Tensions and trade-offs for lower income countries. Resources, Conservation and Recycling, 136, 77-78.

Sinkovics, N., Hoque, S. F., & Sinkovics, R. R (2018). Supplier Strategies and Routines for Capability Development: Implications for Upgrading. Journal of International Management, 24(4), 348-368.

Further References:

Clarke, T., & Boersma, M. (2017). The governance of global value chains: Unresolved human rights, environmental and ethical dilemmas in the apple supply chain. Journal of Business Ethics, 143(1), 111-131.

Figge, F., & Thorpe, A. S. (2019). The symbiotic rebound effect in the circular economy. Ecological Economics, 163, 61-69.

Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104.

World Bank Group (2020). World Development Report 2020 – Trading for Development in the Age of Global Value Chains. Washington D.C.

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