Lehtimäki et al. (2020). Strategic Decisions Related to Circular Business Model in a Forerunner Company: Challenges Due to Path Dependency and Lock-In

Summary: The article examines the strategic decisions made by a pioneering company in the circular economy (CE) sector over 20 years. The study focuses on a company in the construction waste recycling business, and how it navigated challenges related to path dependency and lock-in while implementing circular business models (CBMs). The company explored both closing and slowing resource loops, with efforts to recycle construction waste and create new products from waste materials. However, its attempts to expand into the business-to-consumer (B2C) market by producing recycled consumer products faced significant difficulties. Ultimately, the company refocused on its core business of recycling and waste management for industrial clients.

Usefulness of the results: The study highlights how path dependency and lock-in can hinder innovation in circular business models, even for forerunner companies. Recognizing these barriers can help companies anticipate and overcome challenges when transitioning from linear to circular business models. The study also provides insights into the effectiveness of strategies focused on closing loops (capturing value from waste) versus slowing loops (extending product lifecycles). This is valuable for designing circular economy strategies across industries. Lastly, the findings emphasize the importance of strategic decision-making, organizational capabilities, and adaptability in navigating the evolving regulatory and market conditions that influence circular economy initiatives.

Authors: Hanna Lehtimäki, University of Eastern Finland; Ville-Veikko Piispanen, University of Eastern Finland; Kaisa Henttonen, University of Eastern Finland

Publishing date: 13.10.2020

Format of the publication: Scientific Article

Publishing platform: South Asian Journal of Business and Management Cases (https://doi.org/10.1177/2277977920957957)

More information: ville-veikko.piispanen@uef.fi