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The Industrial TransformationTowards the Circular Economy

Dynamics, Drivers and Constraints

Time: Mon 2023-02-20 09.00

Location: F3, Lindstedtsvägen 26 & 28, Stockholm

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Language: English

Subject area: Industrial Economics and Management

Doctoral student: Armaghan Chizaryfard , Skolan för industriell teknik och management (ITM), Politecnico di Milano, Department of Management, Economics and Industrial Engineering., Industrial Economics and Management (Dept.), Sustainability, Industrial Dynamics and Entrepreneurship

Opponent: Associate Professor Allan Dahl Andersen, University of Oslo, Technology and Culture, TIK Centre for Innovation

Supervisor: Professor Cali Nuur, Skolan för industriell teknik och management (ITM); Professor Paolo Trucco, Politecnico di Milano, Department of Management, Economics and Industrial Engineering; Associate Professor Emrah Karakaya, Skolan för industriell teknik och management (ITM)

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This research was jointly conducted in Politecnico di Milano and KTH Royal Institute of Technology.


The notion of the circular economy has recently been posited as a vital strategy to mitigate climate change. At the industrial level, the circular economy envisions socio-industrial transformation to closed-loop material systems. Presently, however, discussions of the circular economy do not include an evolutionary view of how industrial transformations may give rise to the changes in institutions and industries, as well as technological innovation. In particular, the existing assumptions in the literature have lacked an understanding of the industrial transformation mechanisms at the value chain and supply chain levels. Moreover, the interplay between actors’ transition strategies and the circularity of material and economic value have mostly been overlooked in static analyses. To that end, I aim to achieve the following objectives in this thesis: (1) framing the transformation forces and opportunities that drive the industrial transition towards a circular economy; (2) providing an understanding of the challenges in managing the transformation mechanisms towards the circular economy and how they influence supply-chain-related decisions; and (3) examining the dynamics of the material and financial flows within evolving supply chain systems enabling or constraining the circular economy strategy of incumbents.

Using a mixed-method research approach, in this thesis I expand the boundaries of the theoretical foundation of the circular economy by putting an evolutionary perspective at the center of the transition for both the ecological and industrial sides. The findings indicate that actors adopt different strategies to overcome the transition tensions and capture opportunities based on their perceptions of short- and long-term disruption impacts on their businesses. In addition, actors’ value chain positions influence the implications of transition tensions on their businesses and the complementarities required to overcome them (such as technologies, operational skills and business relationships). This means that actors experience different behavioral and transition dilemmas along the upstream and downstream of the value chain. Above all, the evolving external business environment plays a vital role in actors’ ability to adapt to structural changes and capture business opportunities. When firms adopt circular economy principles at the supply chain level, they constantly revise their assumptions about their financial performance and the possibility of reusing products based on the strategic decisions of other supply chain members. Thus, the circularity of material and financial flows reaches beyond the boundaries of individual firms, and the outcomes of interactions between actors’ circular economy strategies may not necessarily enhance and sustain the circularity of material and economic performance for all actors along the supply chain.

This thesis contributes to the theoretical foundation of the circular economy by conceptually framing the industrial transformation towards a circular economy from a systemic and evolutionary perspective. Consequently, it contributes to the current circular economy discourse by expanding the ecological view to an evolutionary view of industrial transformation. Moreover, this study sheds light on the fact that the transformation to the circular economy at the supply chain level comes with dynamic changes in actor positions and roles over time. Transition at the supply chain level is more than just a static view of the optimization of material flows. The research provides implications for policymakers considering the impacts of the upcoming industrial transition to the circular economy at the sociotechnical system level, which requires dynamic business positioning by industrial actors. The results may serve to help actors understand that the interrelationships, misalignments and interplay of their strategies towards the circular economy reach beyond the linear approach of managing customer and supplier relationships.