Fostering circular economy through open innovation

Fostering circular economy through open innovation: Insights from multiple case study

Circular Economy is a transformative concept gaining traction among policymakers, researchers, and businesses committed to sustainability. This approach emphasizes a regenerative system of production and consumption where resources are reused, reducing waste and minimizing environmental impact. The paper “Fostering Circular Economy through Open Innovation: Insights from Multiple Case Studies” by Francesco Antonio Perotti, Augusto Bargoni, Paola De Bernardi and Zoltan Rozsa offers an in-depth look at how open innovation strategies can promote circular economy practices.


Introduction

Circular economy represents a highly discussed topic that has attracted the interest of policymakers, foundations, researchers, and companies committed to a thriving and sustainable future. Sustainable-sensitive organizations are translating their practices and processes to align with circular economy principles, creating circular business models. Companies play a crucial role in this transition by innovating business models to manage resources efficiently, produce cleaner, and create long-lasting, recyclable products.


Despite the progress, significant challenges remain. Climate change, resource depletion, food security, and biodiversity loss continue to pose threats. Currently, only 7.2% of the global economy is circular, a figure that needs to double by 2032 to avoid climate collapse. Global food waste from households and the agri-food industry amounts to approximately 1 billion tonnes annually, highlighting the urgent need for effective recovery practices within the circular economy framework.


Theoretical Background

Circular economy offers an effective approach to achieve environmental regeneration and sustainable development. However, barriers to developing circular business models are prevalent. Sustainability-oriented innovations require substantial knowledge and collaboration, necessitating partnerships with other organizations to develop circular processes and products. Inter-organizational and cross-industry interactions facilitate circular business development, but the literature lacks comprehensive insights into stakeholders’ relationships and collaborative mechanisms essential for developing collaborative circular business models.


Strategic alliances enhance circular practices by fostering supply chain collaboration and alignment in technical and processual coordination. Resource sharing, such as knowledge, helps companies move beyond competition to establish a collaborative environment. Open innovation practices, including inbound, outbound, and coupled strategies, support circular businesses in overcoming technological and technical barriers to circular process implementation and product development.


Case Study Methodology

This study employs an explorative multiple case study methodology to investigate two different inter-organizational collaborative approaches. Data were collected from 13 organizations involved in two collaborative networks aimed at establishing upcycling practices to recover waste from the food and beverage industry. A critical realist philosophical positioning underpinned the data collection and analysis, providing a comprehensive understanding of the collaborative mechanisms and the role of stakeholders.


Findings

The study outlines the nature of two distinct collaborative approaches to pursuing a regenerative production system through open innovation strategies: a circular supply chain and a circular ecosystem architecture. Key findings include the characterization of the coordinator and orchestrator roles in collaborative CBMs.


Circular Supply Chain: This approach involves integrating circular principles into the supply chain, focusing on resource efficiency and waste reduction. Companies within the supply chain collaborate to innovate processes and products, ensuring sustainability throughout the production lifecycle.


Circular Ecosystem: This model emphasizes a broader network of stakeholders, including suppliers, manufacturers, consumers, and policymakers, working together to create a regenerative system. The ecosystem approach highlights the importance of cross-industry collaboration and stakeholder engagement in achieving circular economy goals.


    Implications for Practice

    This study provides valuable insights for managers of sustainability-oriented companies seeking to implement upcycling practices. The findings highlight the effectiveness of open innovation strategies in fostering circular business development. By leveraging critical resources and diverse expertise, companies can drive circular-oriented innovations and overcome barriers to circular business model implementation.


    Case Study: Circular Economy in the Food and Beverage Industry

    To illustrate the application of open innovation in fostering a circular economy, consider the food and beverage industry, which faces significant waste management challenges. Traditional linear models in this industry often result in substantial waste, from production to consumption stages. However, adopting a circular approach can drastically reduce waste and improve sustainability.


    Collaborative Networks

    In the case studies examined, collaborative networks played a crucial role in developing circular practices. These networks included various stakeholders such as food producers, packaging companies, waste management firms, and research institutions. By sharing knowledge and resources, these stakeholders were able to develop innovative solutions for upcycling food waste into valuable products.


    For instance, one network focused on transforming fruit and vegetable peels into biodegradable packaging materials. This not only reduced waste but also provided an eco-friendly alternative to traditional plastic packaging. Another network explored the conversion of brewery waste into animal feed and bioenergy, demonstrating the potential for circular processes to create multiple value streams from waste.


    Technological Innovations

    Technological advancements are essential for implementing circular economy practices. The case studies highlighted several technological innovations that facilitated waste recovery and recycling. For example, advanced sorting technologies enabled more efficient separation of different types of waste, making it easier to recycle and upcycle materials.


    In addition, biotechnological processes were employed to convert organic waste into bio-based products. Enzymatic treatments and microbial fermentation were used to break down complex organic matter into simpler compounds that could be used as raw materials for new products. These technological innovations not only improved resource efficiency but also opened up new business opportunities within the circular economy framework.


    Policy and Regulatory Support

    The successful implementation of circular economy practices often requires supportive policies and regulations. Governments and regulatory bodies play a critical role in creating an enabling environment for circular business models. The case studies underscored the importance of policy frameworks that incentivize waste reduction, recycling, and the adoption of sustainable practices.


    For example, some regions have introduced tax incentives and subsidies for companies that invest in circular technologies and processes. Others have implemented strict regulations on waste disposal, encouraging businesses to find innovative ways to reduce waste. Additionally, public awareness campaigns and education initiatives have been launched to promote the benefits of a circular economy and encourage consumer participation.


    Challenges and Opportunities

    While the transition to a circular economy offers numerous benefits, it also presents several challenges. One major challenge is the need for significant investment in new technologies and infrastructure. Many companies may be hesitant to invest in circular practices due to the initial costs and uncertainties associated with new business models.


    Furthermore, achieving effective collaboration among diverse stakeholders can be difficult. Different organizations may have varying priorities and capabilities, making it challenging to align their efforts towards common circular goals. Establishing trust and effective communication channels is crucial for overcoming these barriers.


    Despite these challenges, the opportunities presented by a circular economy are substantial. Companies that successfully adopt circular practices can gain a competitive advantage by reducing costs, improving resource efficiency, and enhancing their brand reputation. Additionally, circular business models can open up new markets and revenue streams, contributing to long-term economic sustainability.


    Future Directions

    The study provides a foundation for future research and practice in the field of circular economy. As the concept continues to evolve, further studies are needed to explore the effectiveness of different collaborative approaches and the role of various stakeholders in fostering circular innovations. Additionally, longitudinal studies can provide insights into the long-term impacts of circular practices on business performance and environmental sustainability.


    In practice, companies should continue to experiment with and refine their circular business models. By leveraging open innovation and fostering collaborative networks, businesses can drive the transition towards a more sustainable and regenerative economy. Policymakers should also continue to support these efforts by creating favorable regulatory environments and promoting public awareness of the benefits of a circular economy.


    Conclusion

    The transition to a circular economy requires a collaborative effort from various stakeholders. Open innovation plays a crucial role in this process by facilitating knowledge sharing, resource efficiency, and collaborative mechanisms. This study contributes to the literature on circular economy by unveiling the role of open innovation in fostering circular business development. For practitioners, the insights offered can guide the implementation of sustainable practices, ensuring a thriving and sustainable future.


    This text is an excerpt from an article published under the following reference: “Perotti, Francesco Antonio; Bargoni, Augusto; De Bernardi, Paola; Rozsa, Zoltan, Fostering circular economy through open innovation: Insights from multiple case study”


    The text can be read in full at this link. Want to learn more about the circular economy and its issues? Visit Tondo’s blog!

    Paola De Bernardi

    Paola De Bernardi is a Professor of Management Control Systems and Circular Economy Management at the University of Turin. Her research activities include several areas including: Sustainable Business Model Innovation; Entrepreneurial University; Impact of digitization andIndustry 4.0 technologies on business models; Alternative food network based on digital platform and many others. From 2019 ... Read more

    Paola De Bernardi is a Professor of Management Control Systems and Circular Economy Management at the University of Turin. Her research activities include several areas including: Sustainable Business Model Innovation; Entrepreneurial University; Impact of digitization andIndustry 4.0 technologies on business models; Alternative food network based on digital platform and many others. From 2019 she led several hackathons like EUvsVirus and European H2020 Knowledge and Innovation Communities (EIT-KIC) Digital Education Hackathon project under the European strategy “Digital Education Action Plan” with the challenge: “DigieduHack 4 Urban Food Circularity”. She is a member of the Accademia Italiana di Economia Aziendale (AIDEA/SIDREA) and a member of the ECESP Leadership Group-Food Waste, Food Systems, Bioeconomy. She has been with EIT Food since 2018, starting as a coordinator for the University of Turin of Global Food Venture (GFV) and Innovator Fellowship Programs. She is leading several education programmes (summer schools, MOOC, Professional Development courses or SMEs, etc.) and is a Mentor for EIT Food Accelerator Network (EIT FAN) since 2020. On behalf of the Department of Management she has been accepted as New European Bauhaus partner. She is designing and developing forEIT NEB community the first Short Open Online Course on New European Bauhaus for the digital platform Future Learn.

    Paola De Bernardi completed her Bachelor Degree in Business Administration from the University of Turin in 1993 and was a scholar and tutor with the Economic Faculty of the University of Eastern Piedmont from 1994-1999. She has been on the Editorial Advisory Board for British Food Journal since 2019 and has worked on several projects such as the MIUR programme, Bando Technological Platform “Industry 4.0”, Food Digital Monitoring” (2018-2020) and the Horizon 2020 “Smart Circular Procurement (CircPRO)” (2018-2023). She has spoken at several Circular Economy events and has many publications such as Entrepreneurial universities; A bibliometric analysis within the business and management domains 2021; The contribution of sensor-based equipment to life cycle assessment through improvement of data collection in the industry 2021 and The relevance of climate-related risks on corporate financial and non financial disclosure in Italian listed companies 2019. See Google Schoolar https://scholar.google.com/citations?hl=it&user=zIVFBYwAAAAJ&view_op=list_works&sortby=pubdate