Circular economy (CE) entails a radical change in companies because new ways of thinking and doing business are required for value-creation opportunities. There is a lack of empirical studies on how companies themselves see and develop the CE business. Furthermore, the dynamics between the changes required when pursuing a circular business model (CBM) have not been sufficiently studied. This intensive case study examines the strategic business decisions of a forerunner company in CE over 20 years. Questions: What were the strategic decisions related to CE business model in the case company over 20 years? What internal and external factors impacted the strategic decisions and how? Theory: The theoretical framework of this study is built based on CBM strategies and capabilities in the CE business. Basis of the Case: Phenomenon. Type of the Case: An intensive case study of a forerunner company in CE. Protagonist: Not needed. Findings: First, the results of the analysis show that the company engaged in both slowing and closing resource loop business model strategies in the CE market. Second, the results of the analysis imply that the path dependency in the market was too strong, and the company was not able to break the path dependency of the closing loop strategy. Third, the results show that the case company was, however, able to challenge the path dependency and lock-in in the closing resource loop strategy with internal factors that included strategic management capabilities, such as making decisions within the current market conditions, organizational capabilities, such as developing new positions and knowledge, technological capabilities, such as investments on improving and upgrading recycling and waste management, and business model innovation capabilities. Discussions: This study contributes to a call for further research on how companies themselves see and develop CE business. This study sheds light on the ways by which path dependency and lock-in contribute to CBM innovation and can explain a CE strategy failure. Furthermore, this study provides evidence that by drawing on company-internal and company-external factors, a company can challenge path dependency and lock-in and go forward in developing the CE business despite difficulties. For the case company, it was easier to maintain the closing resource loop strategy and stay with the original core business idea of providing recycling and waste management services to construction businesses and selling waste material for energy and heat production than engaging in slowing resource loop strategy. Finally, the results of this study suggest that path dependency theory is useful in projecting future risks in CBM innovation.
Stakeholder literature tends to presume that effective stakeholder dialogue, occurring directly or indirectly, among a focal firm, local communities, governments, and nongovernmental organizations (NGOs) is desirable for successful firm–stakeholder relationships. Even if theoretically desirable, effective dialogue does not always occur. There are two key theory-informing lessons in Botnia’s Fray Bentos successful green field pulp mill investment and start-up in Western Uruguay. First, critics could not halt the project politically supported by Uruguay in an expanding multi-party international dispute. Second, the Botnia corporate communications process did not succeed in building consensus relationships, and attention was not paid to discourse creating shared meanings among all stakeholders. Participatory relationships were few, and successful dialogue was at best limited to supporters. This article uses discursive analysis to examine how newspaper and press release texts and language used therein both shaped and reflected the dynamically changing nature of firm–stakeholder relations in the Fray Bentos dispute. Despite the focal firm’s professed good intentions to create participatory relationships with its stakeholders during the building project, various stakeholders opposed the project and Botnia was caught in the crossfire of heated debate between Uruguay and Argentina. Three different frames changing over time are identified: (a) the investment frame, (b) the conflict frame, and (c) the political frame. The analysis shows that the relationships between the focal firm and stakeholders involved many meanings only partly shared, due in part to a lack of corporate appreciation for the role of language in managing firm–stakeholder relationships.
Purpose
This study examines how technology-intensive small- and medium-sized enterprises (SMEs) engage in open innovation. The purpose of this paper is to add to the literature on open innovation in SMEs, which has received considerably less attention than open innovation in large companies. Also, the study adds on the literature on open innovation in the commercialization phase.
Design/methodology/approach
A multiple case study of 13 technology-intensive SMEs in forestry sector was conducted. The forestry sector in Finland was chosen as a target context, there were many innovative pioneering SMEs operating in the industry and because the sector was going through significant changes.
Findings
Three multi-firm collaboration modes in the commercialization phase were identified: networks with a lead partner, equal partnership, and partnership for external technology commercialization. The study shows that in SMEs, open innovation is used for commercialization rather than research and development. The main conclusion of the study is that the mode of collaboration in commercialization is determined by the core competence of the firm and the strategy for open innovation.
Practical implications
The study results imply that SMEs benefit from opening up their innovation process in the commercialization phase. The firms in this study employed a blend of strategies that capitalized on their internal strengths. They collaborated actively with external firms and outsourced from specialists. This way they were able to compensate for their internal weaknesses and gain competitive advantage.
Originality/value
The study extends our understanding of open innovation by providing a detailed analysis of how open innovation takes place in the commercialization phase of innovation process. Also, the study extends understanding of the strategic use of open innovation in SMEs by showing how SMEs balance the risk of losing their competitive advantage built on innovation and the benefit of creating a broader competence base with partnerships.
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