Exploring how Barriers to Circular Business Models can be Overcome on a Macro and Micro Level : -a Swedish Textile Industry Perspective

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Exploring how Barriers to Circular Business Models can be Overcome

on a Macro and Micro Level

-a Swedish Textile Industry Perspective

BACHELOR THESIS WITHIN: Business

Administration

NUMBER OF CREDITS: 15 ECTS

PROGRAMME OF STUDY: Civilekonomprogrammet

& Sustainable Enterprise Development

AUTHORS: Gabriel Jonsson, Louise Fredriksson &

Rebecca Lööv Miljevic

TUTOR: Ulla Anneli Saari JÖNKÖPING: May 2020

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Acknowledgements

We would like to direct gratitude toward all the people who have been involved and supported the development of this report. A special thanks to our tutor Ulla Saari who has guided us in the most dedicated and best way possible.

Furthermore, warm appreciations and thanks to all the companies who participated in this research, it could not have been done without you.

We would also direct thanks to our families and friends for their love and emotional support during the entire process of this research.

Lastly, we would like to thank each other for the good cooperation and for always doing our best, even on the rainy days.

--- --- --- Gabriel Jonsson Louise Fredriksson Rebecca Lööv Miljevic

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Bachelor Thesis in Business Administration

Title: Exploring how Barriers to Circular Business Models can be Overcome on a Micro and

Macro Level - a Swedish Textile Industry Perspective

Authors: Gabriel Jonsson, Louise Fredriksson & Rebecca Lööv Miljevic Tutor: Ulla Anneli Saari

Date: 2020-05-18

Key terms: circular economy, circular business models, the Swedish textile industry,

barriers, drivers, enablers

Abstract

Background: The resource demanding textile industry has long been linked to the linear

economy, an economy contributing to negative effects on the environment. However, there is an alternative to the linear economy, namely the circular economy. In a circular economy, a closed-loop design is promoted in order to eliminate the negative effects of the linear economy. However, in the context of the Swedish textile industry, there is a lack of case studies on the topic and especially regarding experienced barriers to a circular business model as well as drivers and enablers needed to overcome these barriers.

Purpose: The purpose of this research is to support the development of the Sustainable

Development Goal 12: sustainable production and consumption. This is done through exploring the experienced barriers to circular business models among companies in the Swedish textile industry at a macro and micro level, but also drivers and enablers in order to overcome these barriers.

Method: This research follows an interpretivist view and an inductive approach based on a

cross-case analysis of five companies. The research is qualitative and semi-structured interviews were conducted with open questions. The identified themes were analysed and interpreted with a careful awareness of the trustworthiness and ethical considerations.

Conclusion: The result showed five barriers which appeared to be the most common across

the companies. Namely, technological un-readiness, circularity costs, market unacceptance, financial shortage and knowledge gap. For these barriers, possible solutions in the form of drivers and enablers were identified. According to the findings, the identified drivers and enablers which have the greatest potential of positive impact on the barriers were as follows: knowledge sharing, collaboration, regulatory changes, more research and refocus of efforts.

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iv Table of Contents Table of Contents iv 1. Introduction 1 1.1. Background 1 1.2. Problem 2 1.3. Purpose 2 1.4. Research Question 3 1.5. Perspective 3 1.6. Delimitations 3 1.7. Terminology 4 2. Frame of Reference 5 2.1. Sustainability 5 2.2. Circular Economy 6

2.3. Macro Level Framework 7

2.4. Micro Level Framework 8

2.4.1. Linear Business Models 8

2.4.1. Business Model Innovation 8

2.4.2. Circular Business Models 9

2.5. Barriers to Circular Economy 9

2.5.1. Macro Level Barriers 10

2.5.2. Micro Level Barriers 11

2.6. Drivers & Enablers to Circular Economy 11

2.6.1. Drivers to Circular Economy 12

2.6.2. Enablers to Circular Economy 12

3. Methodology and Method 14

3.1. Methodology 14 3.1.1. Research Paradigm 14 3.1.2. Research Approach 15 3.1.3. Research Design 15 3.2. Method 15 3.2.1. Data Collection 16 3.2.2. Interviews 16 3.2.2.1. Interview Questions 17

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v 3.2.3. Data Analysis 17 3.2.4. Trustworthiness 18 3.2.4.1. Credibility 18 3.2.4.2. Transferability 19 3.2.4.3. Dependability 19 3.2.4.4. Confirmability 19 3.2.5. Authenticity 20 3.2.6. Ethical Considerations 20 4. Empirical Findings 21 4.1. Company Z 21

4.2. Nudie Jeans 23

4.3. XV production 25

4.4. Stormie Poodle 29

4.5. Renewcell 30

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5. Analysis 33

5.1. Macro Level Barriers, Drivers & Enablers 33

5.1.1. Political 33 5.1.1.1. Responsibility Distribution 33 5.1.2. Economic 34 5.1.2.1. Financial Mechanisms 34 5.1.2.2. Financial Irregularity 35 5.1.3. Social 36 5.1.3.1. Knowledge Gap 36 5.1.3.2. Market Unacceptance 37 5.1.4. Technological 40 5.1.4.1. Technological Un-readiness 40 5.1.5. Environmental 42

5.1.5.1. Rigidity of the Juridical System 42

5.1.6. Legal 43

5.1.6.1. Import & Export 43

5.2. Micro Level Barriers and how to Overcome them 44

5.2.1. Key Partners 44

5.2.1.1. Knowledge Gap 44

5.2.1.2. Collaboration 45

5.2.1.3. Chain Coordination Mechanisms 46

5.2.2. Key Activities 47 5.2.2.1. Communication Fear 47 5.2.2.2. Logistics 48 5.2.2.3. Remake 49 5.2.3.1. Knowledge Gap 50 5.2.3.2. Financial Shortage 51 5.2.3.3. Material Shortage 52 5.2.4. Cost Structure 54 5.2.4.1. Circularity Costs 54 5.2.4.2. Recycling Costs 56 5.2.5. Value Proposition 57

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vii 5.2.6. Customer Relationships 58 5.2.6.1. Circularity Adjustments 58 5.2.7. Customer Segment 59 5.2.7.1. Knowledge Gap 59 5.2.7.2. Customer’s Priorities 60 5.2.8. Revenue Streams 61 5.2.9. Company Structure 62 6. Conclusion 63 7. Discussion 66 7.1. Theoretical Contribution 66

7.2. Implications for Leaders 66

7.3. Limitations 66

7.4. Further Research 67

8. References 68

9. Appendices 74

9.1. Interview Questions - English 74

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1. Introduction

In the introduction, the research topic is presented by introducing the reader to the background, problem and purpose of the research. This is followed by the perspective,

delimitations and lastly terminology that could be useful for the reader throughout the report.

1.1. Background

The production since the industrial revolution has been characterized by a linear production model, where manufacturers and consumers have contributed to the belief that nature is a resource which can be used for economic gains at no constraints (Pitt & Heinemeyer, 2015). This has led to the planetary processes e.g. climate change and loss of biosphere integrity, have reached their risk zones at a macro level (Rockström et al, 2009). The exposure of risks at a micro level and the ecological footprint will also increase as the socio-economic standard in developing countries increases, which enables overconsumption (Ellen Macarthur Foundation, 2013).

The textile industry is one of the most resource demanding industries globally (European Commission, 2020a). With its high levels of pollution, intense water use and the demand for fast fashion with clothes produced at low costs in developing countries and sold at low costs in developed countries. This leads to consumers buying and throwing away clothes at a larger scale (Remy, Speelman & Swartz, 2016). The climate changes this current behaviour is contributing to will ultimately limit the virgin materials available (European Environment Agency, 2015). It will therefore be difficult to continue this type of consumption without changing the current production and consumption (Ellen Macarthur Foundation, 2013). This is a debated topic and the literature is offering an alternative to linear production as a solution, namely the circular economy (CE). This is in its most simple definition an industrial economy which replaces the linear economy with restoration, renewable energy, reuse and elimination of waste through a closed-loop design of materials, products and business models.

In the Swedish textile industry, there is a need to change the way actors behave to make a transformation towards a CE possible. This is because Sweden is contributing to the textile industry’s negative effect on the environment. The lack of circular practices among firms leads

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to a lot of textile being disposed rather than trying to prolong the life of the product (Ekström & Salomonson, 2014). A minority of Swedish actors within the textile industry have started to act when it comes to circular practices (Kungl.Ingenjörsvetenskapsakademien, 2019

).

However, the CE is on the radar in the country where the government has given a number of organisations such as Smart Textiles, Research Institute of Sweden & TEKO a mission to lead and establish the platform Textile & Fashion 2030. This is to lead the textile industry in Sweden towards a more sustainable and CE and to achieve the Sustainable Development Goals (SDG) goals in Agenda 2030.

1.2. Problem

For Sweden to proceed to a CE and leave the linear economy behind, the literature argues that there is a need for many aspects in the current economy to change, e.g. value chains, consumer behaviour and legislation (European Commission, 2014). Innovation in business models are also mentioned as a key element when it comes to implementing circularity organisations (Geissdoerfer, Marioka, de Carvalho & Evans, 2018). A paradigm shift in this area is required to prevent negative environmental effects (Wells, 2013). If the society wants to leave the linear production, a solution can be to replace the traditional business models with what is called circular business models (CBM) (Bocken, de Pauw, Bakker & van der Grinten, 2016; Evans et al., 2017). However, this is not an easy task. Hvass and Pedersen (2019) presents several challenges and barriers in the transformation to a CBM. While some of these can be overcome, some of them are more difficult and without control for organisations. In the context of the Swedish textile industry, there is a gap in the literature. This since there is a lack of case studies on which barriers companies are facing and what drivers and enablers that are needed for overcoming barriers in CBMs from the perspective of the Swedish textile industry.

1.3. Purpose

The broader purpose of this research is to ease the transition for companies to a CE and create a pathway for sustainable development through addressing the ecological part of the triple bottom line and the SDG goal 12 in agenda 2030.

More specifically, the purpose is to explore barriers to CBMs within the Swedish textile industry and also drivers and enablers, which can act as possible solutions to overcome these

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barriers. This will be explored from an industry perspective and will be examined both on a macro and micro level. The aim with this purpose is to support the industry when aiming to operate according to a CE. Lastly, the aim is also to provide authorities with the industry's perception on what actions that could be taken on a macro level to support the industry to become more circular.

1.4. Research Question

To meet the purpose of this research, the following research questions has been developed:

RQ1: What are the Swedish textile industry’s experienced barriers to circular economy? RQ2: How can the Swedish textile industry’s experienced barriers to circular economy be overcome?

1.5. Perspective

This research is studied from an industry perspective. The motivation for this is that although consumers have a role in making the transition towards a CE possible, it is still the industry who has the main responsibility to also affect consumers. This is something the European Commission (2014) emphasizes since authorities’ actions and suggestions for implementing circularity is mainly aimed at companies and industries.

1.6. Delimitations

This thesis is limited to the Swedish textile industry. The companies included in this research do not necessarily manufacture in Sweden. However, all fulfil the criteria of being owned and managed within the Swedish context. All companies included have also implemented circularity to various extents. Furthermore, since it is difficult to measure to which extent companies are circular, this research will not take level of circularity into consideration. Nor will the research differ between different sized companies.

Additionally, CE is a broad concept which covers many different aspects. However, this research will not cover all aspects. Detailed technological descriptions and calculations, financial calculations and calculations of environmental impacts will be excluded. Social aspects will also be excluded, as it is not included in the concept of CE.

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1.7. Terminology

Closed loop-design: waste serves as an input which in the extent minimizes the resource use (Ellen Macarthur Foundation, 2013)

Economy of scale: The relationship between the size of an industry and the lowest production cost of a product. Often, the more output the more reduction in average cost per produced product (Economy of scale, 2011).

Paris agreement: An agreement setting out a global framework aiming to prevent climate change (European Commission, 2020b).

Cognitive dissonance: When beliefs or assumptions get contradicted by new information, a mental conflict is created (Cognitive dissonance, 2019).

Linear economy: An economy that assumes abundant resources with high availability, easy to source and that resources are cheap to dispose (European Commission, 2014).

A large-sized company: A company with more than 250 employees (Tillväxtverket, 2020).

A medium-sized company: A company with 50-249 employees (Tillväxtverket, 2020).

A small-sized company: A company with 0-49 employees (Tillväxtverket, 2020).

Brown products: Brown products refers to less sustainable products compared to green alternatives (Franco, 2017).

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2. Frame of Reference

In this section the reader will be guided through the literature review which will be presented together with the frameworks necessary for this research.

The frame of reference for this research was developed through a traditional literature review. This summarizes an amount of literature with the aim to draw conclusions about the chosen topic (Jesson, Matheson & Lacey, 2011). The authors of this research searched information about the topic with a few specific and carefully selected keywords. A large number of peer reviewed articles was initially selected and skimmed through. In the next stage, only the most relevant articles were kept with the intention of getting a thorough and current picture of the research topic. To ensure that the literature was up to date, the literature collection was focused on articles which were up to five years old. However, older articles were included when found as sources in the literature, especially when articles were frequently mentioned. The underlying argument to this focus is that the Paris Agreement was agreed upon in 2015 (European Commission, 2020b). One can assume this accelerated the development of the literature in the field since it put pressure on society to pay more attention to sustainable development.

2.1. Sustainability

To create sustainable development is undoubtedly a difficult task. The term sustainable development is a very broad and complex term and many attempts have been done to define it.

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However, one of the most famous and accepted definitions worldwide, is the one created by the World Commission on Environment and Development (Elkington, 2006). The commission defines the term as the “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987, p.41). In the report by Brundtland, social and economic dimensions were raised. However, it was Elkington (2006) that integrated them into a framework called triple bottom line (TBL). The traditional view of a company is that value only is created in one dimension i.e. the economic dimension. However, the concept of the TBL suggests an updated view, which can support the development of sustainable capitalism. In the TBL, the author adds the social and ecological dimension and suggests that companies have the capacity and should, therefore, aim to create value in all the dimensions. On a global level, the SDGs have been developed to create sustainable development whereof goal 12 focuses on sustainable production and consumption (United Nations, 2019).

2.2. Circular Economy

The concept of CE is inspired by several theoretical frameworks such as the closed-loop economy in the 1980s (Stahel, 1981), industrial ecology (Frosch & Gallopoulos, 1989), Cradle-to-Cradle (McDonough & Braungart, 2002) and performance economy (Stahel, 2010). CE is presented as a more sustainable alternative to the current linear economy dominating production flows today. The concept is promoted by the European Union (EU), national governments and several companies around the world (European Commission, 2014; Ellen Macarthur Foundation, 2013). Although the literature can vary in terms and models explained, the main idea of a CE presented is that instead of using the traditional “take-make-dispose” linear economy where most resources and materials end up in landfills, a cyclical model is used. Resources are then in a constant flow and where resources are reused rather than destroyed. Korhonen, Honkasalo and Seppälä (2018) explains that the main ambition is to retain the value in resources by making the lifecycle as long as possible. However, it is the Ellen Macarthur Foundation (2013) that in recent years has popularised the concept of CE.

CE is based on a collection of sustainable practices and ideas, a few of these practices are mentioned in previous sections. These work as a guideline on how to implement a CE both at a macro and micro level. However, one of the most recurrent practices in the literature are the

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R principles. Zhijun & Nailing (2007) introduced the 3 R’s which are Reduce, Reuse and Recycle. These principles are not only a definition of the CE concept, but also three terms that should be applied in the whole cycle of production, consumption and return of materials and resources. Furthermore, PBL Netherlands Environmental Assessment Agency(2017) discusses the 9 R’s which are an extended version:

(1) Refuse raw material use (2) Reduce raw material use

(3) Reuse products by for example second-hand (4) Repair products

(5) Refurbish products by restoring an old product

(6) Remanufacture by using parts of an old product for a new product (7) Repurpose by using an existing product for a new purpose

(8) Recycle materials by processing them

(9) Recover energy by incinerating left-over flows.

A company who aims to implement circularity in their business model could choose to use all or some of these options or gradations to extract as much value as possible from their resources and be circular (ibid.).

2.3. Macro Level Framework

PESTLE is a framework that can be used for a strategic analysis of the macroenvironment in which a company operates (Jeffs, 2008). The analysis aims to scan the different dimensions of the macro environment with the purpose to find important factors that can impact an organisation’s operations. External factors can be key drivers of change which can be both positive and negative for an organisation. The acronym stands for; political, economic, social, technological, legal, and environmental.

When looking at the political dimension of the macro environment it is important to consider a wide range of different factors. This may include how the politic impacts the economy, e.g. taxations, tariffs, governmental stability, etc (ibid.). The economic dimension includes factors e.g. consumer spending, inflation rates and level of employment, etc. The social dimension includes socio-cultural influences e.g. culture, attitudes among the population and demographic

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factors. Furthermore, the technological dimension focuses on technological developments and innovation. The environmental dimension considers issues that are related to the environment. This may include laws and regulations on waste disposal and recycling. It can also include laws on how products should be designed and which materials and chemicals that can and can’t be used. The legal dimension is linked to the political factors. The areas to consider in this dimension which have a large impact on organisations are employment law, consumer law and corporate law (Elearn, 2009).

2.4. Micro Level Framework

2.4.1. Linear Business Models

A business model can be defined as “the rationale of how an organisation creates, delivers, and captures value” (Osterwalder, 2010, p.14). Business Model Canvas is a framework that describes how a traditional and linear business model can be designed. The Business Model Canvas is built on the following 9 blocks that describes how to create and capture value:

● Segmentation defines the group of customers that a company aims to create value for. ● The value proposition describes the actual value that a company aims to create for the

customer.

● Channels describe where a company places the product to ensure that the customer will encounter it.

● Customer relationships differ for different segments.

● The revenue stream is what the business gets in exchange for the value that is created for its customer

● Key resources required depends on the kind of value that is being created.

● The key activities constitute the activities that a company needs to carry out in order to create the value for the customer

● Key partners are other organisations that the company is dependent on for different reasons.

● A company's cost structure includes all the costs related to the value creation.

2.4.1. Business Model Innovation

In recent years the traditional view of companies has been questioned in the sense that boundaries have been pushed on what companies can and should contribute to the world

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(Elkington, 2006). The traditional view is that there is only a single bottom line, the economic one. This view reduces companies’ performance to only consider its financial performance (Elkington, 1998). However, in recent years the concept of the TBL has blossomed which challenges the traditional view by adding the social and ecological dimension. The three dimensions together creates a holistic view of a company and its performance. This raises the question of how a company can design its business model to contribute to the society and perform in all dimensions. In order to move towards new ways of operating and creating value, the concept of business model innovation becomes very relevant as it is seen as a key tool to create changes in organisations (Geissdoerfer et al., 2018).

2.4.2. Circular Business Models

Traditional business models have gained critique in the last decade because it places too much focus on the customers and the financial performance (Pedersen, Gwozdz & Hvass, 2018). However, new innovative business models are under development which aims to incorporate wider perspectives and other types of values (Rosa, Sassanelli & Terzi, 2019). Within the category of business models, CBMs can be seen as a new and innovative sub-category. They differ from traditional linear models, in the sense that it strives to keep value in products even after the product has been used. This enables companies to create new market offerings out of waste. The concept of CBMs can be defined as follows, “A circular business model is how a company creates, captures, and delivers value with the value creation logic designed to improve resource efficiency through contributing to extending useful life of products and part,s e.g., through long-life design, repair and remanufacturing, and closing material loops” (Nussholz, 2017, p. 12). From this it can be concluded that CBMs address the ecological part of the triple bottom line. Given its frequent mention, one of the most prominent actors within the field of CE is the Ellen Macarthur Foundation. The foundation suggests that a CBM can be created by using the framework of the Business Model Canvas as a base and then adding circularity by putting a circular lens to it (Ellen Macarthur foundation, 2016).

2.5. Barriers to Circular Economy

Barriers in this research refers to different factors which act as hinders to a CE. These barriers can directly or indirectly hinder circularity and can appear on different levels in society. To divide the levels and easily illustrate on which levels the barriers identified are located, the well-known macroeconomic and microeconomic levels have been chosen. The micro level

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represents the consumer and company level and the macro level represents the national and regional level (Ghisellini, Cialani & Ulgiati, 2016).

2.5.1. Macro Level Barriers

The need for a customer demand on the market for products put out by businesses is essential for any business’s survival. Pal, Shen and Sandberg (2019) view the current customer and market unacceptance towards CE textile products as a barrier.

Sandvik and Stubbs (2019) identified technical inhibitors for a CE, arising from a case study with Scandinavian textile businesses. The main issue found was regarding technical inhibitors and concerned the sorting and recycling of fabrics. Namely the separation of blends, the separation of additives and trims, the restoring of quality and that all processes need to be sustainable. Franco (2017) also finds technical barriers in terms of recycling and production, mainly naming energy and water considerations. She elaborates further on the ecological and social issues with contamination due to e.g. chemicals, which arises during production. These technical barriers are referred to by Pal et.al. (2019) as technological un-readiness.

For new technologies to be developed or new materials to be found investment is needed. Fischer and Pascucci (2017) identify the current financial mechanisms which are based on a linear economy as a barrier to get these investments. The financial barriers referred to are mainly regarding joint investments to develop new technologies. The investments needed are considered to be of high risk. CBMs often also contain long-term payment plans and are often built as service business models, while assessment for funding is based on linear business models.

The traditional way of contracting is also something which hinders the emergence of new institutions to conduct CE activities (ibid.), as when adopting CE specific outputs may be hard or impossible to identify. Contracts therefore need to be more flexible and more collaborative, this is “constrained by the rigidity of the actual juridical system which is limiting the possibilities to create co-ownership when it comes to materials to be used by several partners in the chain” (Fischer & Pascucci, 2017, p. 25). Lastly, the current structure of the logistics sector can be viewed as a barrier to transitioning towards a CE on an institutional level (Van Buren, Demmers, Van Der Heijden & Witlox, 2016).

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2.5.2. Micro Level Barriers

Companies need to know more about customers' motivation for buying used clothes in order to be able to sell (Pal et al., 2019). Machado, Almeida, Bollick and Bragagnolo (2019) means that consumers who shop second-hand do so for different reasons, naming financial aspects as one reason but also ethical reasons and to move away from consumerism.

As Sandvik and Stubbs (2019) mention, the financial aspects of recycling needs to be considered. It is also underpinned by Franco (2017), that recycled materials need to have the same or higher functionality as brown options and be produced at a lower or equal cost to be financially beneficial to produce.

Chain coordination mechanisms are a necessity to transition towards a CE according to Fischer and Pascucci (2016). Whether this is by the current supply chain conducting a reverse flow or if it is by or including external actors. However, the main issue for a working chain coordination mechanism is the uncertainty regarding previously used materials in terms of quality, price and availability (Franco, 2017; Henninger, Bürklin & Niinimäki, 2019; Pedersen, Earley & Andersen, 2019; Paras, Curteza & Varshneya, 2019). This is classified by Pal et al. (2019) as supply chain ineffectiveness. Franco (2017) found that companies’ willingness to innovate or change depends on where in the supply chain the company is, which should be considered when collaborating. When collaborating, parties ought to be equal to attain good partnerships i.e. both parties should put in equal amounts of work or capital to develop innovative solutions.

2.6. Drivers & Enablers to Circular Economy

There can be many ways to overcome a barrier. In the following texts drivers and enablers from the existing literature will be presented which can act as solutions to how barriers to CE within the Swedish textile can be overcome. A driver is an external factor which can act as a key driver to change (Jeffs, 2008), which has been found at a macro level. Furthermore, according to Wynstra, Axelsson and Weele (referred to in Aparecida De Mattos &

Albuquerque, 2018 p.3) “Enabling factors are forces or conditions that affect business model implementation and support the activities needed for future business functionality”, which has been found on a micro level.

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2.6.1. Drivers to Circular Economy

The EU is a major actor who has adopted several initiatives to promote the development of CE. In 2015, the EU revised its legislative framework and adopted a new action plan (Jacometti, 2019). The Circular Economy Action Plan of 2015 contains 54 actions which will contribute to the development of CE (European Commission, 2020a). Another EU initiative regarding the textile industry was adopted in 2017, to strengthen the EU engagement and create a legal framework which will include measures that will increase the transparency and traceability in the textile supply chains (European Parliament, 2017). A third initiative is called the European Clothing Action Plan which has a focus on life cycle assessments for products in the textile supply chains and CE as a tool to make improvements both in the economic, social and environmental aspects (Moorhouse & Moorhouse, 2017). Additionally, Sandvik & Stubbs (2019) suggest an extended producer responsibility to decrease the usage of virgin materials.

2.6.2. Enablers to Circular Economy

Rizos et.al. (2016) argues that the company's own culture is one of the most important enablers for the development and implementation of a CBM. Networking with other organisations and even competitors can be beneficial when solving complex sustainability issues. Collaboration of various kinds is a way of attaining innovation to enhance sustainability in terms of e.g. technological development, co-transportation, development of new materials or untraditional methods (Franco, 2017; Van Buren et.al., 2016; Fischer & Pascucci, 2017). Pedersen et. al. (2019) also stresses the need for collaboration both within and across organisations when taking on a circular approach. Additionally, Sandvik and Stubbs (2019) offer collaboration as an enabler to solve the complexity of recycling systems. Collaboration can also be beneficial to keep costs down when recycling take-back schemes are implemented, specifically partnering with a professional garment collector (Savaskan, Bhattacharya & van Wassenhove, 2004).

Furthermore, Rizos et. al. (2019) emphasizes the importance of support from the demand network. A demand for sustainable products enables and motivates companies to implement CBMs. Companies need to put in more effort to communicate their circular value proposition in order to engage consumers (Hvass & Pedersen, 2019). While doing so, it is important for businesses to remember that “Consumer demands still focus on price, quality, and style” (Köksal, Strähle, Müller & Freise, 2017, p.21). As well as understanding that different customer segments have different motivations when purchasing related to price, quality or style

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(Machado et al., 2019). Additionally, “Product availability matched with the right level of performance, the right price, and an appealing business model strategy have the potential to activate consumer demand…” (Franco, 2017, p.842). Sandvik and Stubbs (2019) too means that demand can be created.

Hvass and Pedersen (2019) emphasizes the importance of understanding its customers to engage them in the end-of-life processes of products. However, the authors also stress the importance of an extensive communication strategy with an educational purpose. This in order to raise the customers awareness about the importance of CE and their role in it. The authors also discuss incentives as crucial when aiming to engage customers in take back schemes in the end-of-life phase of products.

CE requires a certain kind of design of products. Sandvik and Stubbs (2019) points out that it is important to consider circular thinking already in the design of products. The authors also stress the importance of considering the choice of materials in the design stage. Additionally, the introduction of new materials is suggested, however, no examples are provided. Franco (2017) and Pedersen et al. (2019) too find that materials need to be considered already at the design stage.

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3. Methodology and Method

This part of the research introduces the reader to the methodology and method. This consists of which research paradigm, research approach and research design that are chosen. In the method section, the qualitative method of this research is explained further by providing information of the data collection, interview approach and questions, trustworthiness, authenticity, data analysis and lastly the ethical considerations of the research.

3.1. Methodology

3.1.1. Research Paradigm

Ontology is the fundamental philosophical assumption about how reality is being viewed (Easterby-Smith, Thorpe & Jackson, 2015). Considering the nature of the research questions and the nature of the phenomenon under study, it is logical that the natural underlying ontological assumption for this study is interpretivism. This means that the reality is subjective and there is no universal truth, but instead the reality is created in subjective minds leading to that there are several existing truths, depending on the view of the observer (Collis & Hussey, 2014). This approach makes sense for this study, as the phenomenon under study has a very complex nature. The concept of sustainability, which CE draws upon, is a very complex topic that contains many different aspects. The different sustainability aspects need to be evaluated from different perspectives, and in some cases weighed against each other, as it is currently not numerically measurable.

This leads us then to the epistemological assumption of the study which tells us how the nature of knowledge is being viewed (Easterby-Smith et al., 2015). This is important because it determines how the authors of this research will make sense of the collected data and what will be approved as valid knowledge. Due to the complex nature of this research phenomenon, the collection of data from the participants in the research needs to be interpreted and understood from different perspectives. To get the nuanced and deep picture of the phenomenon under study, the researcher will therefore take on an interpretivist approach. This will allow the authors to interact with the phenomena and thereby, minimize the space between the authors and the research phenomenon. By taking on the interpretivist approach, the authors of this

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research consent to and acknowledge the fact that the participants representing the phenomenon under study are social entities with subjective minds.

The ontology and epistemology explained above together creates an interpretivist research paradigm and philosophical framework. This guides how this research is being conducted.

3.1.2. Research Approach

Due to the nature of the research question and following the interpretivist paradigm, the reasoning of this study is inductive. To answer the research question there is a need for the authors to observe the empirical reality. This research does not aim to test a hypothesis but rather to draw conclusions from observations, which is in line with inductive reasoning (Collis & Hussey, 2014). Through observation, theory is developed. In line with the inductive reasoning, the theory aims to generalise from specific inferences. Despite the research in itself being inductive, there are still some deductive elements, especially in the analysis section, when comparing with previous literature.

3.1.3. Research Design

Following the chosen epistemology, the research design of this research is a case study where a small set of sample cases are researched (Easterby-Smith et al., 2015). Since the purpose of this research is of an exploratory nature, this is an exploratory case study. As this research aims to explore the participants' experiences and thoughts, deep engagement with the participants is needed, to gain in-depth knowledge and understanding. In order to specify further, this exploratory case study is also of an expressive nature, meaning that specific cases are selected because of their specific characteristics in order to generate general principles (Stake, 2006). The authors seek patterns and ideas which also is a part of the case study design (Collis & Hussey, 2014).

3.2. Method

The method which this research is run by is qualitative, as this research gathers non-numerical data (Easterby-Smith et al., 2015). Qualitative methods are also linked with interpretivism reasoning (Collis & Hussey, 2014). Additionally, the exploratory nature of the research also implies that a qualitative research method is suitable (Easterby-Smith et al., 2015). The research

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aims to understand the participants' understanding of the world through the gathering of verbal data. This is conducted to gather understanding that is in-depth, rather than width.

3.2.1. Data Collection

As the research methodology is of a qualitative nature the sampling design of this study will be a non-probability sampling design (Easterby-Smith et al., 2015). As the participants all meet certain criteria’s, necessary to fulfil the purpose of the research, this research uses a purposive sampling method. The criteria’s which the participants had to meet in this research was to be a company operating within the Swedish textile industry with a circular or a partly CBM. The authors conducted an extensive research online, looking at different circular initiatives and organisations as well as informational websites to find circular businesses operating within the given context. The authors reached out to all the companies found. The research was conducted with those who wanted to participate.

3.2.2. Interviews

The collection of data was done through online video interviews. Interviews is a method where questions are used as means in order to explore and figure out what the participants think, do or feel (Collis & Hussey, 2014). Thus, the data collected is primary data. As the topic of sustainability and thereby CE is a complex matter, which consists of different perspectives, the method of semi-structured interviews was used. This aimed to allow the participants to fully describe its view on the topic. In line with the semi-structured method, some questions were designed beforehand to keep the conversation around the intended topic. However, questions were also developed during the interview. Probes were used when there was a need for it, with the purpose to get a deeper understanding of the phenomenon. This method generated in-depth information, however, it was rather time-consuming and labour intense, which is conclusive with the handbook of Adams (2015).

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3.2.2.1. Interview Questions

The interviews took place in April and consisted of one interview per company. The questions (Appendix 1) were sent beforehand to the participants to prepare them and give as deep and nuanced answers as possible. Furthermore, the authors of the research agreed with the participants to record the interviews on two devices that only the researchers had access to.

The authors began to ask the participants more general questions that covered some of the macroeconomic aspects of the research. The interview then moved on to more specific questions at a microeconomic level, based on the different elements of the Business Model Canvas. The questions were designed and structured in this way to allow for the participants to describe how they have put a circular lens on all the elements. The participants were then asked questions about current or previous experienced barriers, followed by a question regarding how these barriers were or could be overcome.

3.2.3. Data Analysis

The process of analysing the data followed the steps described by Braun and Clarke (2006) and their work on thematic analysis. This approach was chosen because of the qualitative nature of the research together with its flexibility, giving the data potential of being both rich and complex.

Starting off with phase one, the researchers listened to the verbal data and transcribed it into text (ibid.). When the transcription was done, the authors had an overall idea about which data

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was important for the research. Phase two then began with the authors individually coding the data in English, comparing and finding common patterns of the codes. This process was repeated in each phase. In phase three, the search for themes amongst the interpreted codes began. This was done with the help of a thematic map to organize the themes based on what was found in phase two. Moving on to phase four, the themes were reviewed and refined in two levels to narrow down and refine findings. This was conducted with the help of thematic maps once again. Level one consisted of trying to find patterns in the themes and level two means to consider whether themes are valid and reflect the meanings of the data set. After this, it was clearer for the authors which of the themes should be kept and not. In phase five, the authors refined the themes even further by determining what aspect of the collected data the themes individually captured. Lastly, the research moved into phase six. This was when all the themes were set, and it was time to tell the story of the data in a valid and convincing way to form and produce the research report.

The themes emerged from an internal analysis of each of the companies, creating many broader themes (Collis & Hussey, 2014). This then made it possible to analyse cross-case and compare similarities and differences between the companies, which gave even more specific themes and patterns in the data that could be analysed.

This process resulted in a large amount of themes within barriers, drivers & enablers. However, due to the extensive frameworks and the complexity of the topic that stretches over the entire society, a large amount of themes were required.

3.2.4. Trustworthiness

To evaluate the analysis the authors undertook the widely accepted criterions suggested by Lincoln and Guba (1985). The criterions consist of credibility, transferability, dependability and confirmability. Due to the qualitative method undertaken in this research it is important to establish trustworthiness as it is generally often challenged by positivists who measure trustworthiness differently (Shenton, 2004).

3.2.4.1. Credibility

By increasing the trustworthiness of the research, credibility is of importance to determine the congruence of the findings in relation to reality (Merriam, 1998). This can be achieved by e.g.

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using triangulation. In this research, investigator triangulation is used, i.e. multiple observers are involved (Denzin, 2009). By having multiple investigators, in this case three, the quality of the interviews got higher. As different investigators had different competencies and therefore were able to ask questions and probes with different angles. After the interviews, the investigators coded the data individually in order to be able to compare the results. By choosing a multiple case-study, the data was also collected from different perspectives of five companies in the Swedish textile industry. A cross-case analysis of the data also resulted in a deeper insight in the Swedish textile industry, compared to if the research would be relying on a single company. This since comparisons were made to find common patterns (Collis & Hussey, 2014).

3.2.4.2. Transferability

Transferability investigates how generalisable the findings of a research are (Collis & Hussey, 2014). The findings of a qualitative research, however, are the findings of a smaller number of samples as well as a result of purposeful sampling and is therefore context dependent (Shenton, 2004). Thereby, the findings are not expected to be highly transferable. The transferability of these findings is estimated to be relatively low due to the specific context of the participants. However, the findings are expected to be transferable to other companies within the given context.

3.2.4.3. Dependability

The dependability of a research spotlights if it is conducted systematically and presented exactly (Collis & Hussey, 2014). Every step taken in the research needs to be well documented for the similar findings to be reproduced, a similar result signals a high dependability (Shenton, 2004). To ensure the quality of the research all data has been stored safely and presented logically in this paper. Additionally, the process of this research has been presented in detail, original recordings or transcripts are available upon request, with restriction where anonymity prevents sharing, and an interview guide has been attached. Thereby, the authors deem the dependability of this research to be high.

3.2.4.4. Confirmability

Confirmability ensures that the authors collected and interpreted data in a non-biased manner (Shenton, 2004). The findings were interpreted by the authors individually and then compared.

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The categorisation of the findings depended on the authors' perceptions. As this can make the research biased, the authors discussed and reviewed the findings with peers and professors, to ensure confirmability. This is especially important due to the methodological assumptions regarding accepting subjectivity of reality.

3.2.5. Authenticity

To assure that the research is credible and trustworthy, the authors followed dimensions of authenticity according to Lincoln and Guba (1985). To begin with, fairness is an important dimension to make sure that the research is authentic. This means that the data collected represent the phenomenon to show different perspectives and viewpoints and by this present the findings in a fair way. The authors followed this dimension by inviting five companies to interpret and contribute to the understanding of the research. But also to participate in the process of building consensus by inviting them to further develop the content during the project. Furthermore, the participants can with the help of receiving and sharing knowledge get an understanding of different perspectives in the industry and also receive an increased knowledge of their own role in the bigger picture. This increases the ontological and educational authenticity.

3.2.6. Ethical Considerations

As the research topic is about the company's circular journeys, the authors have been careful to present the findings in a dignified, yet truthful manner. Due to the delicate topic all participants were presented with an anonymity option, informed about their right to withdraw participation, informed about the publication and who could access the data. To keep the data safe, the authors have stored the data on a USB. Furthermore, the authors clearly communicated the purpose of the research and sent the interview guide prior to the interviews to ensure transparency. Additionally, the authors acknowledge that a passion for sustainability might impact the authors capability of objectiveness in this research. However, objectivity was prioritised throughout the research process as the authors were aware of this potential issue.

The authors do not deem this research as unethical due to the need of more data on CE in general. Additionally, this research also adds a macro level dimension which, to the best of the authors knowledge, have not been investigated to the same extent in the given context before.

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4. Empirical Findings

In this section the overall findings of participants’ experiences are presented. The findings are divided company by company. First, the experienced macro level barriers and suggested drivers are presented, followed by the experienced micro level barriers and suggested enablers.

4.1. Company Z

Company Z is a large retailer operating in Sweden. The company's business model is not completely circular. However, Company Z conducts several circular activities which can be associated with three of the 9Rs, namely reuse, repair and recycle.

During the interview Company Z mentioned barriers within four macro dimensions, namely, political, social, technological and environmental. Regarding political aspects, Company Z considers it a barrier that too much responsibility is placed on the actor closest to the consumer in the supply chain, making circular efforts uneven throughout the supply chain. Regarding the social aspects Company Z expressed that a change in consumer behaviour is necessary in the transition to a CE. Additionally, Company Z is awaiting and expecting a trend shift towards more sustainable options in the future both in terms of materials demanded as well as consumption patterns. Regarding the technological aspects, Company Z finds that there currently is no technology to test chemical content without ruining the garment. Regarding the environmental aspects, the company finds that the chemical legislation Reach, although good for the environment, hinders circular initiatives using post-consumer materials. The certification process of sustainable products is also a barrier for circularity, as the process takes a long time it hinders the design of circular yet trendy products.

Regarding political aspects, more exactly the responsibility placed on retailers, Company Z suggests responsibility to be more evenly spread out across the entire supply chain. Regarding the social aspects, Company Z have witnessed governmental initiatives to educate consumers,

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making information easily accessible, and aiding consumers to make more informed decisions. Company Z expects initiatives like this to speed up the change in consumer behaviour. Regarding technological aspects, Company Z suggests more research on CE to ease the transformation process. About suggestions which fall under the environmental dimension, Company Z suggests more transparency about content of products, especially chemical content. And/or to simply forbid chemicals which are harmful.

When it comes to key resources, materials and financial assets were Company Z’s experienced barriers. Company Z finds that there is a lack of materials which can be recycled from textile to textile. Financial assets are also considered a barrier to implement circularity as it is a costly matter to invest in, in combination with circular initiatives having a longer payment schedule than linear ones. Barriers encountered within key activities were regarding communication. About this barrier Company Z said, “You are a bit scared to get cut, usually the first mover stands out and has to take a few hits as well, so we communicate cautiously”, expressing a barrier in how transparent communication with customers can be. Regarding key partners Company Z found coordination to be challenging, especially as the textile industry consists of a long value chain. Additionally, Company Z thinks there is a lack of actors providing recycled materials.

Up until now Company Z has made no revenue on circular initiatives as it is costly. As previously expressed, the long-term payment plans require much financial assets and are hard to work with for companies who are used to more short-term revenue streams. With circular initiatives it is hard to reach a break-even point, where revenue matches the investment that has been made. With the small scaled circular initiatives there is no economy of scale which too is something Company Z is used to. This makes it more difficult to implement circularity and make a decent revenue. Additionally, Company Z finds recycled materials to be more expensive. Company Z is awaiting a demand for circular products but are also looking for ways to convert the current customers. Additionally, Company Z experiences that the customers often act with a cognitive dissonance when it comes to circular options versus design and/or price. The value proposition is limited by the lack of scale in circular activities which limits the offer range and design options available to customers and thereby, reduces customer interest

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in circular options. Company Z also indicates a barrier regarding the ownership of companies, obligations to shareholders might hinder circular transitions.

Regarding key partners, Company Z promotes knowledge sharing and collaboration. The company believes that a good collaboration is built on good relationships and a common goal. Company Z also points out that companies themselves can demand change in the textile value chain, with or without governmental intervention, as long as the relationships with suppliers etc. are good. In terms of activities, Company Z sees that campaigns or other incentives can increase the return of post-consumer materials. Company Z sees an advantage in sharing knowledge to alter the behaviour of customers. The company also talks about the importance of including circularity already in the design phase. Additionally, an idea about degradable disposable garments are presented as an outside the box way of thinking. When it came to resources, Company Z again stressed the importance of knowledge. More specifically, educating employees further on the topic of circularity.

4.2. Nudie Jeans

Nudie Jeans is a medium sized enterprise operating in Sweden but also in the global market. The company is a retailer of mainly jeans with a business to consumer (B2C) business model and sells their products both in own stores and through retailers. Their vision to close the material loop by practicing circular activities such as reuse, repair and recycle within the 9 R’s and this is achieved by collecting clothes from customers.

For Nudie Jeans, technological aspects are seen as a barrier for the development of circularity in the textile industry. In the repair and reuse activities, there is a difficulty when it comes to mixed materials. These materials are difficult to recycle as current technology is not adapted to work with these kinds of materials. Technology must also be in place to minimize waste and take care of all components of the product. A technological barrier also exists in how to measure how sustainable circular processes are in different aspects. Moving forward to legal

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barriers, importation law and customs does not allow import of second-hand products in some countries, making it a barrier to ship products meant to be recycled or degraded in these cases.

When it comes to helping companies to take on circularity and transform the market, political requirements on a prolonged product responsibility can be implemented. At a social level, norms hinder repair and second hand, as it is not accepted in some customer segments. However, this is not a barrier for Nudie Jeans customer segment. But it could still be possible to change the mindset of consumers by making second hand a role model to raise its status.

The logistics requires many steps when it comes to transport and handling of products for Nudie Jeans with suppliers in other countries. These steps make it less sustainable than if the products were locally produced. It is also a risk for the company to be accused of greenwashing and therefore, it is always needed to be careful on which sustainability information to bring to the public and not. The activities can also become a subject of a cost structure barrier. Logistics and warehousing demand a lot of costs and repair is a high cost for Nudie Jeans. However, these costs are difficult to affect since worse quality can have negative consequences in the long run. Furthermore, reuse is resource demanding and requires a lot of administrative and logistic expenses, which makes their reuse online concept unprofitable. Knowledge is also a barrier when it comes to resources. By collecting clothes and selling in-house as Nudie Jeans does, it can be difficult for staff without textile knowledge to know in what circular flows the garments should be sorted. Furthermore, there is a need to scale up programs such as reuse and repair, something that requires financial resources. Lastly, Nudie Jeans sees themselves as an independent company. They have not searched for external investments and have chosen to not be dependent on others in terms of financing. This is because it can be a risk to be more open to external shareholders, since circular operations could be inhibited.

Regarding key activities, companies need to include a circular mindset already in the design stage of a product and source qualities that are intended to be recycled. To aid this, a circular

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guide tool could work as a common framework for companies. This framework should be built on that every garment should have the ability to be recycled. However, recycling barriers could be avoided by focusing more on other R’s e.g. repair and reuse.

Another enabler can also be to link company activities to customer relationships. This can be accomplished by illustrating the strong consumer power and giving consumers more knowledge about the CE. A large organisation can contribute to a collective contribution towards circularity. To come closer to the customer, Nudie Jeans also raise the awareness about their products and spread the word about circular practices. The company has for example been using mobile repair stations as an activity for individuals living further away. Their retail and repair partners are also used to come closer to the customers which creates a relationship.

It is furthermore of importance to create customer incentives through activities, channels and customer relationships. Nudie Jeans offers a 20% discount to customers who choose to hand in old Nudie Jeans which can be recycled or repaired by Nudie Jeans, something that gives extra revenue streams. Repair services is also a key to create incentives for the customer to return their jeans and to create a long-term relationship which is crucial for Nudie Jeans’ CBM. Providing an attractive value proposition by focusing on quality, identification, style and expression in the design is also of importance.

Furthermore, partnerships are also an essential part of Nudie Jeans’ CBM, especially the fabric suppliers. With the fabric suppliers help Nudie Jeans have been able to conduct circular projects by having different suppliers with different knowledge. It is also of importance that suppliers share the same vision and are willing to do investments in certifications for circular initiatives for Nudie Jeans.

4.3. XV production

XV Production is a small company located in Borås, Sweden. The company has an in-house concept where both design and production are made locally. The company works with producing collections in collaboration with business to business (B2B) customers of different sizes in the textile industry. The focus within the 9 R’s is remanufacture in order to make use

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of already existing material. However, remanufacturing companies usually refer to this as remake.

When it comes to the macro level barriers, consumer behaviour is a social barrier. The consumers of today have a habit of paying less for clothes and then tear and throw them away because of the low value of textiles. Because of this, there is a need for a change at a social level to make consumers think differently when it comes to textiles. This low value of textiles and behaviour is a result of an economic barrier. The textile industry of today takes advantage of the lower wage levels in developing countries where much of the production takes place. Furthermore, XV Production focuses on local production makes the costs higher for them since they have to pay Swedish salaries, which is an economic barrier.

There are also technological barriers which makes it more difficult to be circular on today's market. It is mainly the composition of clothes today, with different materials, that makes sorting and collecting a problem when having a remanufacturing production. There is a need for separation of zippers and buttons but there is no one collecting and sorting these materials today and it is a challenge to know how to take care of this waste. In remanufacturing production, there is sometimes a need for adding small pieces of new fabric, however, remanufacturing is limited by the difficulty to find the original material.

To go forward in the development of a CE, social aspects and the consumer behaviour at a macroeconomic level is discussed. The mindset needs to change where quality should be more prioritized for a longer product lifecycle. For XV Production, compromising on design is sometimes required. However, a higher quality can be accomplished by simplifying the process and making the smaller scale production more effective. Producing less pieces of alike products is also seen as a way to change the behaviour that products need to be identical as in the current mass consuming society.

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Furthermore, the importance of transparency in production is mentioned which is much under the radar today. Political guidelines are then important to make some of the production that is not proper today more visible.

Cost structure is mentioned as important yet a barrier for XV Production. There is a need for change to produce in less quantities than what is seen on the market. However, it is a

financial question since this is more expensive and customers are not only willing to pay for it. Many of the company's projects have a tight budget, especially when it comes to the larger customers. This since B2B customers have much say in that and this is also reflected when it comes to the importance of quality, which is also more expensive.

The cost structure is also reflected in the activities of XV Production. Remanufacturing is a handcraft and the separation of materials is both difficult and costly. The resource question of already existing materials is also a limitation since this reduces the quantities that XV Production can offer in their remanufacturing practices. It is then a financial shortage barrier to scale up the production with the machines used. The company also sees further barriers in the production and in the customer segment since there is a demand for product-lines that look identical. This is a barrier due to the lack of material. The demand from the customers is also a customer relationship barrier since compromises need to be made and XV production and the customers do not always share the same vision. This is mainly because the customers have different priorities of the design, quality and circularity, where the customers often value the design highest. It is also more difficult for larger customers to adjust to circular practices and make these compromises. When it comes to XV Productions own waste, the company sometimes lacks knowledge on how to handle it.

Regarding key activities, systems for recycling need to be developed and to create new fibres. There is also a need already in the design stage to design clothes that can be used in loops. Also, more models could be developed on how to work with circular design as XV Production. As a result, clothes can be designed that can be used for a longer period and are easier to sort and separate. Furthermore, new activities are needed to make it easier to be circular by

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implementing new flows of collecting materials that companies possess by being able to track these materials.

The locality has been an actively chosen activity for XV Production’s CBM. With locality the company has resources and partners near, making it easier to work with transparency. With the value proposition of transparency, prices can also be set at a higher level, helping to get more revenue streams for XV Production.

Focusing on high quality products through key activities, helps XV Production to get a good reputation by showing previous accomplishments. The company is one of few of its kind. Leading by example becomes a channel to make others work with circularity. Alongside leading by example, the company's knowledge enables consulting as a service which encourages others to follow and also to receive more projects and strengthen customer relationships. With this knowledge, the company can also sometimes deal with the compromise barrier so that quality is not suffering because of the design of the products. Additionally, more lectures and seminars as a channel are suggested as a way to spread the concept of circularity.

Moreover, XV Production mentions that the company often has more knowledge about circularity in B2B projects. This means that freedom is needed which is built on trust from the customers. However, even though the customers often do not have the same knowledge as XV Production, the company still believes that it is important to focus the customer segment on customers who are at a similar stage of circularity. For profitability and revenue streams it is also important to have customers who think in the long run.

Furthermore, many companies possess left-over material which is not intended to be used. XV Production receives some of this material which sometimes becomes an extra revenue stream. This since companies can pay XV Production to take care of the left-over materials. To access even more material, a tracing system for left-over materials is suggested as a solution to the problem. Furthermore, to become even more circular, key partners who have been researching CBMs have given XV Production help and knowledge around the topic. Lastly, coordination is an important factor for the company to be at the same level as partners and customers.