Generation Z goes Circular: Participation in Business Models

Abstract

The transition from linear to circular business models has been accelerated in recent years, valuing the role of companies but underestimating consumers' contribution to this transformation. The objective of this study is to explore the willingness of Portuguese Generation Z consumers to participate in the circular economy (CE), with circular habits and the functional value perceived by these consumers of circular products being considered as drivers of this participation. To this end, this study used a quantitative methodology, having collected, by questionnaire, a sample made up of 578 young Portuguese Generation Z and applying the Partial Least Square (PLS) method to a formulated research model. The results reveal that consumers' circular habits positively influence circular products' functional value-price and functional value-quality. In turn, the perceived functional value positively influences consumers' willingness to participate in CE, contrary to circular habits that were not statically significant in influencing this participation. However, circular habits positively influence consumers' willingness to participate in CE when mediated by the perceived functional value of circular products. This study demonstrates, for the first time, that the participation of Generation Z consumers in CE can be signalled through the functional value perceived by consumers of circular products within the scope of signalling theory. It contributes to narrowing the gap in the literature on effective consumer participation in circular business models and on the circular behavior of Generation Z consumers. Furthermore, it is the first study to use five circular habits simultaneously.