The introduction chapter describes the problem intended to research, as well as the incentives for the study. Background information about the specific context is presented with a transition to aim and research questions. The chapter aims to get the reader introduced to the theoretical topics of interest.
Recycling creates opportunities for shaping circular business models, even though frames are set by customers’ requirements on good quality and durable materials (Corral-Marfil et al., 2021). A business model describes how a company creates value and also what is needed to create and deliver it (Osterwalder & Pigneur, 2010). The choice of business model can according to Casadesus-Masanell and Ricart (2010), and Teece (2010) be seen as a strategy and in turn may create competitive advantages. Additionally, a circular business model contains concepts in order to reduce waste in a system. Focus is on using products for a longer time, give them new life and offer services instead of using physical material to contribute to sustainable development (Geissdoerfer et al., 2020).
In the research and managerial field, the concept circular economy (CE) is today highly attractive. Circular economy is frequently described by including concepts as reuse, recycle, and reduce (3R) (Kirchherr et al., 2017), originated from Ghisellini et al. (2016). Circular economy is a concept with a holistic view on the economy that focuses on minimising waste and using renewable energy sources to optimise the system. This means having a deeper understanding of sustainability that goes beyond production and consumption (MacArthur, 2013). Furthermore, innovating business models is a central part of CE that aims to create benefits for economies, companies, and consumers (MacArthur, 2013). From this, why is concepts like business model interesting to pay attention to in a bigger context?
Attention on sustainable development (SD) has increased in society today, including in the Swedish stone material industry (SSMI). This is, in a big context, a perspective where everyone needs to participate actively. Companies can for instance contribute by creating opportunities that pushes sustainable development forward. The commitment can be derived from the coalition by the world’s leaders in the agreement of Agenda 2030, consisting of 17 goals (United Nations Development Programme [UNDP], n.d. d). One holistic definition of SD is to develop the society to meet the present needs without
compromising the need of future generations (Elliott, 2012; World Commission on Environment and Development [WCED], 1987, p. 43).
More than half of the population worldwide lives in cities and UNDP (n.d. b) predicts that it will increase to more than two-third until 2050. According to Göransson (2018), Sweden has the fastest growing cities in Europe. This fact put large demand on the infrastructure expressed by the ninth goal of UNDP (n.d. a), to expand and enable this increasing urbanisation (UNDP, n.d. b). From societal strategical and infrastructural perspective, stone materials are an essential raw material. Except from water, stone material is the most used component in society and does not seem to decrease (Göransson, 2018).
Aggregates is the most frequently used stone material all over world and the need of use is increasing with five percent annually (Freedonia, 2017, cited in Göransson, 2018). The concept aggregate is in short, a collective name for stones used as a raw material, and is extracted from so called quarries (Göransson, 2018). Building- and construction industry answers to 40% of greenhouse gases emitted globally (Global Alliance for Building and Construction 2018) where stone material is included. Sweden has a climate goal to be fossil free until 2045 (Fossilfritt Sverige, n.d.), which in turn impacts the stone material industry.
1.1. Incentives and problematisation
Attention on the concept recycling has been high in recent studies within different material industries and countries. Recycling, and in turn CE has been investigated through testing new material mixes that can meet the quality of raw materials (Sohrabpour & Long, 2021; Vijayaraghavan et al., 2017). However, based on Mineral Products Association [MPA] (2022) report, it is remarkable that the amount recycled aggregates in Sweden are behind in comparison to other countries in Europe. Sweden adapts the 3R’s to an extent of about 12%
whilst that share is 26% in the Netherlands and 28% in the United Kingdom, statistics from 2020 with rounding to integers (MPA, 2022). This fact creates incentives for studying recycling in SSMI, since recycling and reusing is necessary parts for achieving CE (MacArthur, 2013).
There are barriers for adapting a circular business model as it requires extensive organisational change (Bocken & Short, 2016), technical capacity as well as innovation ability (Lehtimäki et al., 2020). Strategy is another aspect that impacts such organisational changes. For instance, companies needs to be aware of market forces (Porter, 2008) and rivals behaviour (Coyne & Horn, 2009).
Though, according to Mintzberg and Lampel (1999) strategy is complex to study due to unpredictability. One vital aspect to not forget in order to achieve strategical success is to pay attention to customer perspective, described by Normann (2001).
Overall, the area of circular business models at the Swedish market has not been studied thoroughly, certainly not at the stone material industry. The combination of these areas is therefore another incentive for this study. Further, stone is a non-renewable material, meaning extracted rock cannot reproduce itself. Göransson (2018) though states that the asset of allowed extraction from quarries in Sweden will not be threatened before the next ice age. However, there are other incentives to encourage this industry to increase the recycling level of stone material. Extraction from quarries makes an infinite footprint on nature, by for instance the tremendous emissions. Additionally, during the extraction phase the quarry is unsightly and creates a lot of noise locally (Göransson, 2018). The transformation to increase the level of recycled stone is needed not least since there is shortage in other segments, like the current cement crisis (Byggföretagen, n.d.), where stone is a component.
From a business perspective, profit and gaining competitive advantages is of high interest. Demands from the market have a great impact when implementations generates organisational changes (Teece, 2010; Teece et al., 1997), such as adaption of a circular business model. Rosa et al. (2019) shed light towards the need of research on how to practically change business models from linear to circular. They mean that above all, there are theoretical recommendations for doing such transformation but however the practical part is missing. Together with the earlier described incentives and research gaps, a ground for this research is accomplished.
1.2. Aim
This study aims to explain how circular economy and its 3R’s can pursue sustainable development, by business model innovation.
For answering the aim, strategical and practical recommendations for such transformation in the Swedish stone material industry will be addressed. A market analysis will be performed to investigate prerequisites at the market, which in turn includes practical aspects which Rosa et al. (2019) describes as missing.
1.3. Research questions
In order to tackle obstacles and to utilise opportunities to promote CE in the industry in best way, innovative circular changes in the business models may be needed which have resulted in the following research question:
RQ1: How can circular economy be promoted in the Swedish stone material industry by business model innovation?
The Swedish stone material industry must change, to meet the goals of (UNDP, n.d. d) as discussed. To tackle such challenges, it is of interest to search for the role of strategy and regulations on a market. On one hand, by knowing what obstacles there is, one can easier identify the root of the problem and enable improvement work. In same way, opportunities can support where to put effort for making strategically good decisions on competitiveness. Therefore, the second research question is constructed as follows.
RQ2: How are strategical prerequisites regarding the 3R’s in the Swedish stone material industry related to regulations, and in turn how does it impact sustainable development?
The research questions will be addressed by a qualitative case study to expand the research field with practical contributions in business model transformation.
Another contribution will also be increased knowledge within CE.