Categorization of manufacturing companies’ readiness profiles for the transition to the circular economy: A multidimensional cluster analysis

Abstract

The circular economy (CE) field has moved from purely conceptual research into empirical studies. However, the literature does not provide generalized conclusions regarding the overall state of CE transition in manufacturing companies. Existing studies lack a perspective in explaining differences among companies planning or already transitioning to the CE because most empirical research so far is based on single or few case studies, generally assuming that the transition to CE, once undertaken as a purpose, moves along a continuum from a linear model to a circular one. This paper identifies differences among manufacturing companies planning and transitioning to CE and conceptualizes readiness profiles along eight dimensions of change identified in the literature as essential to CE implementation in organizations. A cluster analysis of a sample of manufacturing companies from different sectors, sizes, and locations identified five readiness profiles: the laggards, the explorers, the frontrunners, the strategizers, and the information oriented. The results show that companies may follow different approaches when exploring the potential of CE in their businesses. While some companies decide to explore and experiment across all dimensions of change, others follow a more strategic or operational approach, suggesting different states in which companies find themselves. The findings offer evidence of the change happening across the manufacturing industry and how CE transition unfolds in practice, extending existing literature by providing more overall conclusions on how the transition might unfold in manufacturing companies and different states that companies might be regarding the multiple dimensions of change that should be considered.