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The role of radical innovation in circular strategy deployment
KTH, School of Industrial Engineering and Management (ITM), Machine Design (Dept.), Integrated Product Development. (IPDD)ORCID iD: 0000-0001-6697-9811
KTH, School of Industrial Engineering and Management (ITM), Machine Design (Dept.), Integrated Product Development. (IPDD)ORCID iD: 0000-0002-4488-1028
Tecnologico de Monterrey, School of Engineering and Science, Ave. Eugenio Garza Sada 2501, Monterrey, N.L., México, 64849. (IPDD)ORCID iD: 0000-0002-7717-600X
2022 (English)In: Business Strategy and the Environment, ISSN 0964-4733, E-ISSN 1099-0836Article in journal (Refereed) Published
Abstract [en]

Circular economy (CE) is gaining interest among industrial firms in light of sustainability concerns, and several incumbent firms are integrating it into their strategy. In this study, we scrutinize learnings from three large established industrial firms with a clear CE agenda and that are front-runners in CE strategy deployment. We analyze exploitation and exploration approaches to CE and problematize how these approaches relate to radical innovation, which we argue is critical for achieving CE. Semi-structured interviews (n = 30) were used to collect data. We found several issues referring to

  • (1) challenges and approaches to normative management,
  • (2) how the innovation ecosystem is engaged,
  • (3) how goals and metrics relate to CE, and
  • (4) resources and coordination regarding the CE initiative.

Overall, current exploitative approaches are favored over explorative, mirroring an undesired imbalance between the two. We suggest several ways to counteract this. For example,

  • (1) addressing existing norms so that they align with the ambitions in CE,
  • (2) actively managing collaboration in the innovation ecosystem, including radically new setups of different actors, and
  • (3) that managers need to carefully consider when and how to use goals and measurements in a circular strategy deployment, to foster both radical and incremental innovation.
Place, publisher, year, edition, pages
Wiley , 2022.
Keywords [en]
Circular economy, management, innovation, radical, strategy
National Category
Business Administration Social Sciences
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:kth:diva-312427DOI: 10.1002/bse.3108ISI: 000790746300001Scopus ID: 2-s2.0-85129343807OAI: oai:DiVA.org:kth-312427DiVA, id: diva2:1659005
Projects
CET: Circular Economy Transitions
Funder
EU, Horizon 2020, 776577-2Vinnova, 2020-00713
Note

QC 20220523

Available from: 2022-05-18 Created: 2022-05-18 Last updated: 2023-11-21Bibliographically approved
In thesis
1. Circling the Squares: Radical Innovation and Management Control Systems in the Circular Economy
Open this publication in new window or tab >>Circling the Squares: Radical Innovation and Management Control Systems in the Circular Economy
2023 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

An economic system built upon the sale of tangible goods produced using finite resources is inherently unsustainable. The idea of a Circular Economy (CE) as a viable pathway to sustainability has gained considerable attention from academia, policymakers, and the business community. The CE builds on a new logic in the business environment in which industrial firms operate that requires substantial changes. We face a significant knowledge gap concerning how firms internally manage the implementation and adoption of CE. Filling in this knowledge gap is critical to understanding how to implement CE at large and established firms with a considerable history of a linear logic, which are known to favor incremental improvements to existing business opportunities over radical innovation.

This thesis aims to delve into the managerial challenges that large, established industrial firms encounter when implementing CE principles, and how they address these challenges, particularly through managerial controls. Additionally, it aims to provide insights into how management can facilitate radical circular innovation and support the circular transformation of incumbent firms. To accomplish this aim, existing knowledge on barriers to CE has been synthesized through a systematic literature mapping and a systematic literature review. Next, interviews (n=68) at five large and established industrial firms provide empirical insights concerning the implementation and adoption of CE principles. In addition to the four appended papers, this comprehensive summary theorizes about the empirical findings using literature on radical innovation, sensemaking, and managerial controls. 

Building on the empirical papers, this analysis sheds light on two distinct patterns in how managers frame CE: incremental framing versus radical framing. It is argued that this has considerable consequences concerning with respect to ambitions, operationalization, and the means used to achieve a CE. In addition, the thesis theorizes about the relationship between the management control systems and the prevailing framings of CE. Based on an understanding of this relationship and the tensions and conflicts associated with the different framings, it is argued that managerial controls can act both as barriers to and enablers of CE adoption at incumbent firms. In addition to the practical and theoretical implications of this finding, the thesis pinpoints limitations and assumptions concerning managerial control systems in relation to CE and propose new avenues in light of this. 

Finally, the analysis is synthesized into an integrative framework that differentiates three different modes of organizational behaviors within the context of CE transitions: optimizing, transforming, and systems building. This framework integrates the theoretical foundations of the thesis, acknowledges the identified issues, and offers actionable implications for researchers and practitioners.

Abstract [sv]

Ett ekonomiskt system byggt på försäljning av varor tillverkade av ändliga resurser är i grunden ohållbart. Idén om en Cirkulär Ekonomi (CE) har vuxit fram som en möjlig väg framåt och har fått betydande uppmärksamhet från akademin, beslutsfattare och näringslivet. CE bygger på en ny logik i affärsmiljön där industriella företag verkar och kräver betydande förändringar. Det finns dock en betydande kunskapslucka om hur företag hanterar implementering och antagande av CE internt. Denna kunskapslucka är särskilt avgörande att förstå i stora och etablerade företag med en lång historik av en linjär logik, och som är kända för att gynna inkrementella förbättringar av befintliga affärsmöjligheter framför radikalt nya.

Denna avhandling syftar till att fördjupa sig i de ledningsmässiga utmaningarna som stora och etablerade industriföretag står inför när de implementerar CE-principer och hur de hanterar dem, särskilt genom kontrollmekanismer. Dessutom syftar den till att ge insikter om hur ledningen kan underlätta radikal cirkulär innovation och stödja en cirkulär omvandling av befintliga företag. För att uppnå detta mål har befintlig kunskap om hinder för CE syntetiserats genom en systematisk litteraturkartläggning och en systematisk litteraturstudie. Därefter ger intervjuer (n=68) i fem stora och etablerade industriella företag empiriska insikter om implementering och antagande av CE-principer. Förutom de fyra bifogade artiklarna teoretiserar denna kappa kring de empiriska resultaten med hjälp av litteratur om radikal innovation, meningsskapande och kontrollmekanismer.

Med utgångspunkt i de empiriska artiklarna så visar analysen två olika tolkningar eller ”inramningar” av CE inom företagen: en inkrementell inramning och en radikal inramning. Det argumenteras för att inramningen har betydande konsekvenser när det gäller ambitioner, operationalisering och tillvägagångssätt för att nå CE inom företaget. Dessutom teoretiserar avhandlingen om förhållandet mellan kontrollmekanismer och vilken inramning av CE som blir dominerande inom företaget. Genom att förstå detta förhållande och de spänningar och konflikter som följer olika ramverk, hävdas det att ledningskontroller kan fungera både som hinder och effektiva mekanismer för CE-antagande i befintliga företag. Förutom de praktiska och teoretiska innebörderna pekar avhandlingen på begränsningar och antaganden kring kontrollmekanismer i relation till en cirkulär logik, och föreslår nya forskningsspår i ljuset av detta.

Slutligen syntetiseras analysen till ett integrerat ramverk med tre olika mönster av organisatoriskt beteende i en övergång till CE: Optimering, Transformation och Systembyggande. Detta ramverk integrerar de teoretiska grunderna för avhandlingen, pekar på de identifierade problemen, och beskriver innebörden för forskning och näringsliv.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2023. p. 60
Series
TRITA-ITM-AVL ; 2023:36
Keywords
circular economy, innovation, innovation management, sustainability, management control systems, cirkulär ekonomi, innovation, innovationsledning, hållbarhet, kontrollmekanismer
National Category
Other Mechanical Engineering Social Sciences Interdisciplinary
Research subject
Machine Design
Identifiers
urn:nbn:se:kth:diva-339792 (URN)978-91-8040-787-8 (ISBN)
Public defence
2023-12-15, Kollegiesalen / https://kth-se.zoom.us/j/66315078105, Brinellvägen 8, Stockholm, 13:00 (English)
Opponent
Supervisors
Available from: 2023-11-21 Created: 2023-11-21 Last updated: 2023-12-12Bibliographically approved

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Arekrans, JohanRitzén, SofiaLaurenti, Rafael

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