Management Challenges of a Circular Economy

The concept of a circular economy has received an increased interest by public, societal and corporate actors in the last years. The basic idea is that the current linear industrial system, which uses raw materials for... [ view full abstract ]

The concept of a circular economy has received an increased interest by public, societal and corporate actors in the last years. The basic idea is that the current linear industrial system, which uses raw materials for infrastructure, products and services which are disposed after their life time, is changed to a circular system where products, materials and energies are used in cycles as long as possible. The advocates of a circular economy ascribe different benefits coming along with this change from a linear to a circular economy; especially environmental benefits like less/zero waste, increased resource efficiency and less negative impacts in ecosystems, but also societal and economic benefits. However, two research questions require still further attention. First, is circular economy contributing to the vision of sustainable development? Second, which implications for companies come along if principles of circular economy are being applied in our economic system?

To answer these research questions the concept of a circular economy is analyzed from both, a management and a sustainability perspective. By doing so, it is revealed in which way and under which conditions a circular economy contributes to a sustainable development of our societies and which implications the concept of a circular economy has for the management of companies pursuing this idea of circularity (or loop-closing). This analysis follows a pragmatic approach to combine insights from management science, especially strategic management and supply chain management, with sustainability studies. Propositions are developed to explain the relationship between a circular economy and sustainable development as well as business management, these propositions are based on a comprehensive literature analysis. The results of this analysis are relevant for those interested in the links between circular economy, sustainable development and business management. The theoretical contribution is that it is clarified, when and how circular economy can contribute to sustainability and which implications circular economy has for business management. Managerial implications are that managers can identify central issues for the integration of circular economy into their organization.