The business model innovation process of MNEs towards a circular business model: Comparison of EM MNEs and DC MNEs
M.Sc. Business Administration – International Management
Student name: Regine Hübner
Student ID: 11236191
First Supervisor: Dr. Francesca Ciulli Second Supervisor: Drs. Erik Dirksen Date of Submission: March 24, 2017
Statement of Originality
This document is written by student Regine Hübner who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original
and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
ABSTRACT
This research investigates MNE’s innovation process towards a Sustainable Business Model, in particular towards a Circular Business Model (CBM). The CBM literature is an emerging research stream and rather less attention has been paid to the SBM literature in the
international business context. Therefore, the research’s goal is to examine how emerging market MNEs (EM MNEs) and developed market MNEs (DC MNEs) are differing in the innovation process. Divergences and similarities are examined by using a longitudinal multiple case study consisting of a sample of four cases of the automotive industry. The data for this paper consists of qualitative archival data, which was thematically coded with Nvivo. The results reveal that DC MNEs implement more preferable Circular Economy activities than EM MNEs ranked by the waste hierarchy, but do not completely support that DC MNEs adopt a CBM earlier than EM MNEs.
Table of Contents
1 Introduction ... 1
2 Literature Review ... 3
2.1 Sustainable Business Models ... 3
2.2 Sustainable Business Model Innovation ... 5
2.3 Sustainable business model innovation towards circular business models ... 6
2.4 Barriers to Sustainable Business Model Innovation ... 8
2.5 Environmental sustainability of developed and emerging country’s multinationals ... 9
2.6 Research question and working propositions ... 11
3 Methodology ... 13 3.1 Research Design ... 14 3.2 Case Selection ... 15 3.3 Data collection ... 16 3.4 Data Analysis ... 17 4 Results ... 19 4.1 Within-case analysis ... 19 4.1.1 Mahindra Mahindra ... 19 4.1.2 Daimler ... 25
4.1.3 Tata Motors Limited ... 29
4.1.4 Volkswagen AG ... 33
4.2 Cross-case analysis ... 37
5 Discussion ... 39
5.1 Academic relevance and managerial implications ... 42
5.2 Limitations and future research ... 43
6 Conclusion ... 43
7 Appendix ... 45
Index of Tables
Table 1: Data Analysis Codes ... 18
Table 2a: Quotes Mahindra Mahindra ... 23
Table 2b: Quotes Daimler ... 28
Table 2c: Quotes Tata Motors ... 32
Table 2d: Quotes Volkswagen ... 36
Table 3: Proposition and results ... 39
Table 4: Mahindra Mahindra Ltd ... 45
Table 5: Daimler ... 50
Table 6: Tata Motors ... 57
Abbreviations
SBM Sustainable Business Model
SBMI Sustainable Business Model Innovation
CBM Circular Business Model
CE Circular Economy
MNE Multinational Enterprise
EM MNE Emerging Market Multinational Enterprise
1 Introduction
Awareness of environmental issues, such as climate change, waste disposal, and resource depletion is gaining momentum on a governmental as well as on the social level. In particular, companies with significant dependencies on raw materials, which consider operating in a polluting industry sector, must rethink their business operations dramatically. An emerging trend among companies of different areas is to innovate their business model into a
sustainable one. According to Osterwalder and Pigneur (2010, p.14), "a business model describes the rationale of how an organization creates, delivers and captures value."
Companies with a sustainable business model (SBM) pursue their economic and competitive goals while being environmental and socially sustainable (Bocken et al. 2014; Lüdeke-Freund 2009). The existing literature on SBM revealed insights into this concept (Jones & Levy 2007; Schaltegger et al. 2012), explored the transformation of business models towards sustainability (Benn et al. 2006; Roome & Louche 2016) or described archetypes of SBM (Bocken et al. 2014). Within the literature on SBM, a new research stream, signaled by the California Management Review’s recent call for papers, is the study of circular business models (CBM). Those CBM are based on the concept of Circular Economy (CE), i.e. “an industrial system that is restorative or regenerative by intention and design” (Antikainen & Valkokari 2016, p.6). In other words, the objective of the CE is to keep materials, products, and energy as long as possible in a production process to extend the useful life of products. Hence, waste disposal and resource use are minimized, as products are recycled,
remanufactured, refurbished, reconditioned or reused. Furthermore, the use of renewable sources is supported to decrease harmful greenhouse gas emissions and other negative impacts on the environment (Ellen MacArthur Foundation 2013; European Commission 2015). Consequently, the adoption of a CBM entails operating in a closed-loop system to keep products and materials at their highest value through recovery operations. An instrument that aids companies to successfully adapt the CE in their SBM is the concept of "waste hierarchy" (European Commisssion 2008; Gharfalkar et al. 2015; Barrett & Lawlor 1997). The hierarchy ranks waste management activities in accordance with to their environmental acceptability. The least desirable option is disposal, followed by recovery, recycle, reuse, and finally, by the most favorable option, prevention (Barrett & Lawlor 1997).
Recently, several actors have identified the potential of the CE. Especially the industry economy paid special attention to the emerging concept (The Ellen MacArthur Foundation
2012). However, very less work has been done in the international business context. Simultaneously to the growing globalization of the world’s economy, concerns about
environmental impacts of this trend are rising. Many developing countries lack environmental regulations and expertise, which negatively affect the environmental standards of local
companies (Christmann & Taylor 2001). Those companies are less induced to increase their environmental management capacities or technological know-how compared to companies operating in high-regulation countries. In a global economy, however, multinational enterprises (MNEs), that operate internationally, have to deal with different levels of environmental regulation. As Rugman and Verbeke (1998) states, regardless of the MNEs home country’s standards, MNEs have to align their environmental protection norms to the country with the most stringent regulations, in order to succeed. As discussed earlier, the adoption of a SBM that is based on the concept of CE is a way to increase a business’s environmental capabilities. But the adoption of SBM in the international business context is still not sufficiently addressed in the literature. Therefore, this research’s investigates if the origin of the MNE’s influences the adoption of a SBM. In order to analyze the divergences and similarities of emerging market MNE’s (EM MNEs) and developed market MNE’s (DC MNEs) approach during the adoption of CBM, this work aims to answer the following research question:
How do EM MNEs and DC MNEs transform their business model towards a circular one?
The research question will be investigated through a multiple case study research design focusing on the automotive sector. The automotive industry, which is characterized as a resource-intensive industry, are increasingly affected by the scarcity of raw materials and the associated price increases. Therefore, these manufacturers are immensely motivated to improve their energy and resource efficiency through CE activities (The Ellen MacArthur Foundation 2012). The chosen cases are comprised of two EM MNEs, Tata Motors and Mahindra Mahindra Ltd, and two DC MNEs, Daimler and Volkswagen. Those cases are selected to increase literal as well as theoretical replication logic (Yin 2009). To analyze the changes of MNE's CE activities over time, a longitudinal study approach was conducted. This method enables to map and categorize the actions of MNEs related to innovating the BM towards a circular one. The data collection for this paper consists of secondary data from corporate documents, annual and sustainability reports, newspaper articles and press releases. To identify relevant text passages or quotes in the data gathered, a thematic coding was executed.
The contribution to literature through this research is made in different ways. Firstly, it provides new insights into the SBM literature, as it addresses the previously neglected international business perspective, by comparing CE activities of EM MNEs and DC MNEs. Secondly, as the extent of academic work in the field of CBM is limited due to its recent emergence, the research enhances the understanding of CBM. Lastly, the research enriches the literature on sustainability by explaining sustainable behaviors in emerging markets. The remaining parts of the paper are organized as follows. The thesis starts with the review of literature on sustainable business models, followed by sustainable business model innovation (SBMI). In combination with the description of CBM, the concept CE is introduced. Next, different insights on sustainability in emerging and developed markets are presented, which leads to the formulation of the research question and working propositions. The methodology section describes the multiple case study design of the thesis, the cases chosen, the data collection and the analysis method. Afterward, the result section presents the collected data of the cases through both a within and cross-case analysis. The discussion of the results follows, as well as the demonstration of limitations of the research and directions for future research. The thesis ends with a brief conclusion.
2 Literature Review
2.1 Sustainable Business Models
The business model concept (BM) has gained more and more attention over the last 20 years. Until now, there is no consensus on a common definition of business models (Klang et al. 2014; Zott et al. 2011)(Zott et al. 2011; Klang et al. 2014). Academic research increasingly concentrates on business models as a unit of analysis to understand “how companies do business” (Amit & Zott 2012; Beattie & Smith 2013; Magretta 2002) and how they generate profit out of this process. An often used definition of business models is provided by
Osterwalder and Pigneur (2010, p.14):
"A business model describes the rationale of how an organization creates, delivers and captures value."
This definition describes the employed activity system of a company to generate revenue streams, but the company’s social and environmental impact while creating and delivering value to customers is neglected.
Nonetheless, growing social concerns about the environment and increased demand for sustainable solutions force companies to rethink their BM and to develop a sustainable strategy (Kortmann & Piller 2016). Sustainable development means that a company is meeting “the needs of the present, without compromising the ability of future generations to meet their own needs.”(Brundtland 1987, p.41). In other words, sustainable development is the perfect mix between achieving corporate profitability while pursuing social and
environmental goals at the same time. Based on that, a company has to move beyond solely profit-oriented goals and has to simultaneously be in pursuit of economic, social and
environmental goals (Marshall et al. 2015). According to this perspective, scholars have developed a new framework within the business model phenomenon. This is referred to in the literature as sustainable business models, which is defined by Schaltegger et al. (2016) as:
“A business model for sustainability helps describing, analyzing, managing and communicating (i) a company’s sustainable value proposition to its customer and all other stakeholders, (ii) how it creates and delivers this value, (iii) and how it captures economic value while maintaining or regenerating natural, social and economic capital beyond its organizational boundaries.” (p. 5)
In other words, the sustainable model extends a firm’s economic objective with social and environmental objectives. The sustainable approach, which is deeply anchored in the
company’s vision, shapes the way a company creates, delivers and captures value through its offerings to the customers. There are four elements described by Boons and Lüdeke-Freund (2013) to analyze if a company meets the requirements for a sustainable business model.
1. The value proposition: company's offered products or services have to be economical, environmental and social valuable for customers
2. The business infrastructure: a sustainable supply chain management has to be incorporated, focus on long-term collaboration with suppliers and a responsible use of resources
3. The customer interface: responsible customer relation management
4. The financial model: costs and revenues are distributed equally among all actors of the business model
Summarized, sustainable business models develop sustainable, organizational value for a company, while creating and avoiding the destruction of social and ecological value.
As the debate about sustainability increasingly concerns companies and puts pressure on their behavior, many businesses have decided to transform their well-established business models into a sustainable one (Bocken et al. 2014; Bohnsack et al. 2014; Schaltegger et al. 2016). Building upon this trend, the next section will discuss the innovation process from BM to SBM, which is referred to in the literature as sustainable business model innovation. 2.2 Sustainable Business Model Innovation
The previous section emphasized that companies – in the era of scarce resources – are forced by regulations and public pressures to rethink their business models and adjust actions to sustainability-related requirements these days. One promising practice that has attracted scholarly attention in the last years is to innovate existing business models to make them more environmentally and socially sustainable. This phenomenon is referred to in literature as ‘sustainable business model innovation’, ‘business models for sustainable innovation’ or ‘business model innovations for sustainability’ (Bocken et al. 2014; Boons & Lüdeke-Freund 2013; Schaltegger et al. 2012) and is increasingly considered as the key to company’s success in the future (Bolton & Hannon 2016; Chesbrough 2010; Lüdeke-Freund 2009; Zott et al. 2011).
Bocken et al. (2014, p.44) have defined sustainable business model innovation (SBMI) as, “innovations that create significant positive and/or significantly reduce negative impacts on the environment and/or society, through changes in the way the organization and its value-network create, deliver value and capture value (i.e. create economic value) or change their value proposition”. Explaining that business model innovation is more about “how to do business”, rather than “what to do” (Amit & Zott 2012) and therefore, moves far beyond just changing organizational structures, products or technology. In particular, sustainable business innovation focuses on the development of new, unique concepts to create wealth for and positively interact with the market without damaging society or environment through business operations. Literature distinguishes three main groupings, in which business model innovation may occur: technological, social and organizational innovations (Bocken et al. 2014; Boons & Lüdeke-Freund 2013).
The first group deals with innovation enhancing organizational value creation. BMs belonging to this group are economically sustainable, but, at the same time change the organizational level, which benefits third parties, such as local communities or other
stakeholders. Examples in this field are social or hybrid enterprises, that engage themselves in bottom-of-the-pyramid initiatives, enable microfinance options or offer jobs to people with
disabilities (Santos et al. 2015). The second group describes social-oriented business model innovation (Boons & Lüdeke-Freund 2013), which included modifications of business model functions that especially enable the creation of social value. Examples in this field are
innovations in consumer offerings, e.g. product-as-a-service or longer-lasting products and innovations that maximize social profit, e.g. fair trade products and consumer education (Bocken et al. 2014). The last category focuses on technological innovation within the business model. Those innovations can be conducted by different approaches. The first innovation approach refers to a highly efficient use of resources. Examples are "Lean manufacturing" or "Low-carbon manufacturing" (Bocken et al. 2014). Another BM
development focusing on maximizing the value creation is the use of renewable resources, like solar or wind power instead of non-renewable sources. Therefore, usually innovative technologies have to be adopted in the business model, which in the long run decrease negative impacts on society and environment. The last innovation concept is described by Bocken as the archetype “create value from waste” (2014, p.48). Here, valuable resources are recovered at their end-of-life cycle and reused to produce new products. While
simultaneously managing a reduction in the company’s waste disposal. Examples are solutions like “Cradle-to-Cradle-systems," take-back programs or the phenomenon of the Circular Economy (Bocken et al. 2014, p.48).
In the last years, the Circular Economy has attracted increased attention within the research community of SBM. Therefore, the next chapter explains the concept in more depth and finally leads to a subcategory of SBM, the Circular Business Models.
2.3 Sustainable business model innovation towards circular business models
The term circular economy is described by The Ellen MacArthur Foundation as “an economy that is restorative and regenerative by design and aims to keep products, components, and materials at their highest utility and value at all times.”(The Ellen MacArthur Foundation 2012, p.7). Basically, this means that finite resources are returned into the production cycle to minimize resource use and waste disposal. The concept is based on the phenomenon of closed-loop material cycles, which was introduced by Stahel (1994). It describes the circular flow of resources to reuse, recover or recycle products and materials. Braungart et al. (2008) even extends this concept, as they typify the closed-loop system as a "cradle-to-cradle" flow system. Here, the whole product life-cycle is reconsidered, in order to minimize the amount of waste.
The range of CE operations includes waste management activities (recycling, reuse,
reconditioning, refurbishment), the use of renewable resources and system operations (take-back systems, product-as-a-service systems). Additionally, CE supports a sustainable product design which enables the use of fewer resources, extends the longevity of a product and allows the reintegration of materials at the end-of-lifecycle (El-Haggar 2007; Lewandowski 2016; Scott 2013). It is evident that harmful emissions and loss of resources will be reduced if today's economy would move away from the traditional "take-make-use-dispose"-approach towards the circular model. Therefore, the concept of CE provides significant benefits and potential for companies, as “the same industrial output is produced with less energy and fewer raw materials at reasonable cost while producing less pollution” (Geng & Doberstein 2008, p.235). By adapting the current business model to the concept of circular economy,
companies can react to emerging resource scarcity and expand their potential to maximize resource efficiency.
So-called circular business models are defined as “the rationale of how an organization creates, delivers and captures value with and within closed material loops” (Mentink 2014, p.24). The value proposition in CBMs is based on the offering of durable products, which can be renewable, reused or recycled at the end of its life-cycle or services, which enable product life extension through take-back system or are based on the concept of collaborative
consumption (Lewandowski 2016). Concerning resources, CBMs encourage the use of renewable sources and in general the reduction of raw materials. A sustainable supply chain management must be integrated into the business's infrastructure, e.g. through long-term collaborations with suppliers or industrial symbiosis to transform wastes into new products (Leigh & Li 2015). Furthermore, the customer interface has to establish new ways to engage customers, e.g. product-as-a-service offering. The revenue streams from CBMs are generated from offering circular services or the sale of byproducts. In summary circular business models take into account to optimize product performance along the entire life-cycle, innovate
resource efficiency, establish collaborations with diverse partners and minimize waste.
An instrument that aids companies to successfully adapt the CE in their SBM is the concept of "waste hierarchy" (European Commisssion 2008; Gharfalkar et al. 2015; Barrett & Lawlor 1997). The hierarchy ranks waste management activities according to their environmental acceptability. The most desirable option is prevention, followed downwards by reuse, recycle, recovery and finally by the least favorable option, the disposal (Barrett & Lawlor 1997).
“Prevention” describes activities that prevent waste through an “the re-use of products or the extension of the life span of products” (European Commisssion 2008, p.10). It furthermore affirms the use of harmless substances for production processes. The second step “Reuse” comprises all actions that extend the life-cycle of a product to be reused “for the same purpose”, e.g. repair, refurbishment, remanufacturing or reconditioning (European
Commisssion 2008, p.10). Consequently, the third theme "Recycle" focuses on the recovery of materials through up-, re-, and downcycling, which means that waste materials are reprocessed to be used for "the original or other purposes" (European Commisssion 2008, p.10). The second last favored option is “Recovery” as a form of recycling. Whereas recycling concentrates on raw materials, recovery primarily describes the reclamation of energy and fuels. Lastly, the least preferred solution of the waste hierarchy is categorized by the theme “disposal”, the final discharge of resources without any recovery (European
Commisssion 2008). The waste hierarchy mainly aims to prevent waste, but the minimization of emissions and the conservation of resources and energy are a positive side effect. Thus, while transforming a company's BM into a CBM, managers should rank the activities based on the waste hierarchy.
In conclusion, companies should integrate the idea of the CE in their business models, as there are significant benefits. First, the reduction and reuse of materials, as well as the decreased expenses on waste disposal, enables cost savings for the firm. Second, additional revenue streams from the sale of wastes, byproducts and reconditioned products are achieved. And third, customer relationships are strengthened through the offering of enhanced products and extra services. All these arguments show that CBMs are an attractive system to be implemented by companies. However, the transformation towards a CBM holds some
significant challenges. The next section describes several barriers that large MNEs face while reconstructing their BM.
2.4 Barriers to Sustainable Business Model Innovation
The rising awareness about climate change requires companies to develop new sustainable solutions and green technology quickly. MNEs usually have the right resources and know-how to develop new processes or techniques, but the successful introduction and
implementation of those systems might be complicated and time-consuming. MNEs, which are usually large companies, therefore, face problems of organizational inertia (Chesbrough 2010, p.361). The familiarization to new concepts or norms that would benefit the
rooted procedures or values. A second barrier identified by Chesbrough (2010, p. 358) is the cognitive barrier. It describes that managers often show path-dependent behavior patterns as they have difficulties to understand the value of new sustainable technologies or ideas which are different to existing technologies or ideas (Bohnsack et al. 2014). Some opportunities might even be overseen by managers, as established processes and technology already successfully work in the industry environment and no need for action is identified (Zott et al. 2011; Chesbrough 2010). An example is the substitution of non-renewable sources to
renewable resources in the production process. Coal, gas and oil are powerful sources but pollute the environment. Wind and solar energy comparatively are also very powerful but are protecting the environment by generating zero emissions. Another obstacle detected by literature is the business’s external business environment (Boons & Lüdeke-Freund 2013). Consumers might not want to shift to new sustainable technologies or products. The users fear uncertainty or associated switching costs. Sometimes new sustainable products are not
compatible with old ones or are not yet sufficiently reviewed or ranked by other consumers. Therefore, some buyers are unwilling to purchase the new product. Another important barrier that companies face is high costs and expenses. Most sustainable technology is very cost- and time-intensive. The reorganization of processes and technology might result in high R&D expenses and other costs (Asswad et al. 2016). Additional to that, inadequate governmental policies or absence of tax incentives to foster sustainable innovations may hinder SBMI (Foxon & Pearson 2008). As mentioned before, sustainable technology is usually associated with high costs and expenses. Therefore, most companies are dependent on financial support to develop innovative technology and processes.
The discussed barriers demonstrate that introducing sustainable innovation might be costly and risky for companies. Intra-organizational as well as external barriers have to be actively observed to innovate the BM successfully. However, what has not been stressed so far by the literature are obstacles during the innovation process, that arise from the institutional
environment company's operate in. As this study compares EM MNE's and DC MNE's change process towards a CBM, the next chapter first analyzes the meaning of sustainability in emerging and developed countries. And after that the importance of sustainability in EM MNEs and DC MNEs.
2.5 Environmental sustainability of developed and emerging country’s multinationals The need for higher environmental regulations is evident given that we nowadays suffer from natural degradation and an increased resource scarcity. This decline is largely attributed to the
growing globalization, exploding populations and an increase in consumption (Antikainen & Valkokari 2016). To counteract those issues, government, as well as companies, have to adopt environmental protection initiatives and develop sustainable practices. Although the
importance of this matter is widely acknowledged, there are major differences between the adoption and priority setting of such initiatives in emerging and developed market MNEs. MNEs are companies that operate in a global or international context. Whereas EM MNEs are based in an emerging country, and DC MNEs are based in a developed country. Two main rationales can explain the differences.
First, Husted and Sousa-Filho (2016) suggest that a country’s institutional context influences the implementation of sustainability initiatives. Institutions are defined by North (1991, p.97) as "humanly devised constraints that structure political, economic and social interactions" and consist of both informal (culture, norms, traditions) and formal (law, property rights,
constitutions) rules. Those institutions are forming the environment in which firms operate and therefore determine a company's strategy and outcome. In general, developed economies, are usually institutionally stable and have a high enforcement of laws and regulation.
Emerging markets, in contrast generally are characterized by weak institutional setting, limited protection of property rights, corruption and an unstable political and financial framework (Luo 2001; Sheth 2011). Those characteristics naturally influence the
enforcements of environmental laws and regularities of a country and the companies, which operate in it. Thus, the strong institutional setting of developed countries has enabled to regulate company's environmental performance regarding waste, water and air pollution and protection of natural resources by laws. However, in emerging economies, the attempt to adopt environmental laws and initiatives was less successful, as the government lacks legally binding enforcement authorities and proceedings to ensure the compliance of companies (Christmann & Taylor 2001). Thus, EM MNEs are less pressured by the
government to operate and produce in an environmentally friendly manner compared to DC MNEs, which face a multitude of environmental laws and regulations. Additionally, in developed countries, government for many years uses economic incentives and other
strategies to promote environmental protection activities in companies. Those incentives are seen as the "key to more effective environmental protection" (BELL & RUSSELL 2002, p.63), as they support companies to develop new technologies and to make necessary
investments. Emerging market government mostly lack of the resources and knowledge (Hitt et al. 2000) to give financial and technical aid to companies. As the development of
environmental techniques often is related to high monetary and knowledge investment, EM MNEs might be disadvantaged compared to DC MNEs, as the local government offers them less support.
Second, most high-end technology and innovation is generated in developed countries (Ali, Mura Ullah, San Khan 2009). EM MNEs, compared to DC MNEs, are mostly late movers concerning innovation, have a lack of intangible assets, such as technological and managerial know-how and business experience (Ali, Mura Ullah, San Khan 2009; Ramamurti 2012; Child & Tsai 2005). The latter influences the development of new innovative environmentally friendly technology and processes. The lack of intangible assets might negatively affect a company's ability to develop and exploit innovative, environmentally friendly technologies and operations. Due to limited knowledge about advanced technology and unavailability of technological infrastructure, most emerging market companies fail to develop new technology or processes, that would enhance a company's environmental performance. In order to catch up with their developed rivals, EM MNEs often have to mimic DC MNE's technology or create collaborations (Lynch & Jin 2016).
2.6 Research question and working propositions
The literature review has illustrated that environmental protection and the conservation of materials and resources are important issues nowadays. Companies need to develop new ways to align its business activities to environmental standards and norms. One often discussed strategy for businesses is to implement corporate social responsibility (CSR) activities, but researchers state that those activities have to be aligned with the overall strategy and vision of the company in order to be entirely successful and useful (Banerjee 2008; Porter & Kramer 2006; Aguinis & Glavas 2012). If, however, the CSR activities are disparate and
uncoordinated, the positive impact on social and environmental systems in which companies operate is not guaranteed (Rangan et al. 2015). As a result, an emerging research stream has emphasized the implementation of SBM. By adopting a SBM companies go far beyond CSR initiatives, as the whole activity process how to create, deliver and capture value is organized in a sustainable way (Schaltegger et al. 2016). Literature in this field has primarily focused on the description of SBM components or the formulation of SBM archetypes (Bocken et al. 2014; Bolton & Hannon 2016; Bohnsack et al. 2014). Further investigations have stressed BMI by concentrating on the reconfiguration process of existing business models through different management approaches, describing particular forms of sustainable innovation or SBMI (Schaltegger et al. 2016; Sosna et al. 2010; Bocken et al. 2014; Bohnsack et al. 2014).
One sub-category of SBMI is Circular Business Models, which evolve from the phenomenon of the Circular Economy (Bocken et al. 2014; Antikainen & Valkokari 2016). Circular Economy is a system that focuses on the longevity of products and materials through a regenerative design. The objective is to minimize waste, increase product and source efficiency and to reuse materials at the end-of-life-cycle to create further value (European Commission 2015; Ellen MacArthur Foundation 2013). Therefore a CBM is a BM, which generates sustainable value by using as much as renewable sources as possible and returning utilized resources into the production cycle to minimize resource use and waste disposal. Although the concept of CE has been widely discussed in the literature, the phenomenon of CBM has rather been unexplored in general. Emerging research streams are describing frameworks of CBM, provide strategy recommendations for companies to develop a circular business model or examine the circularity of product designs (Bocken et al. 2016; Mentink 2014; Antikainen & Valkokari 2016). However - to the knowledge of the author – no research has been done on CBM in the international business context. As a country’s institutional environment has influences on company’s environmental priority setting, this thesis aims to analyze how EM MNEs and DC MNEs are aligning their BM with the idea of the CE. Therefore, the research question is structured as the following:
“How do EM MNEs and DC MNEs innovate their business model towards a circular one?”
To answer the research question, two working propositions have been developed. The propositions draw upon the literature of SBM, which is applied to the institutional setting of developed and emerging countries.
The literature review explained that EM MNEs are based in a country, which is characterized by weak institutions, corruption and poor access to technology and (Luo 2001; Sheth 2011; Ramamurti 2012). Those characteristics have an impact on MNEs, as lower political pressures and financial support lead to a lower adoption and priority setting of environmental initiatives in companies (Christmann & Taylor 2001). Although some EM MNEs are motivated to voluntary adopted some practices to protect nature and environment, they might lack behind the practices of DC MNEs as they have less intangible assets, such as technological and managerial knowledge (Ali, Mura Ullah, San Khan 2009; Child & Tsai 2005; Christmann & Taylor 2001). DC MNEs, however, face fewer difficulties to get access to technology and mostly have the appropriate skills and experience to generate eco-friendly technology and innovations. Accordingly, this paper hypothesizes that DC MNEs are early adopter of CE activities, whereas EM MNEs are late movers regarding the implementation of CE activities.
Due to the longitudinal framework of this thesis, the integration of CE actions of EM MNEs and DC MNEs can be tracked and analyzed. Therefore the first proposition suggests:
Proposition 1: MNEs of developed countries are more likely implement CE activities earlier
compared to MNEs of developing countries.
As stated in the literature review, companies are aided by the “waste hierarchy” to successful adopt CE activities in their BM (European Commisssion 2008; Gharfalkar et al. 2015; Barrett & Lawlor 1997). The hierarchy ranks waste management activities according to their
environmental acceptability (Gharfalkar et al. 2015; Loiseau et al. 2016; Price & Joseph 2000). The most desirable option is prevention, followed downwards by reuse, recycle, recovery and finally ends with the least favorable option, the disposal (Barrett & Lawlor 1997). Especially the higher ranked "Prevention" and "Reuse" categories describe activities that force companies to change established processes and technologies. Therefore
"Prevention" and "Reuse" activities are mostly harder to develop and implement as innovative ideas and technologies drive them. As mentioned previous, most high-end technology and innovation is generated in developed countries (Ali, Mura Ullah, San Khan 2009).
Additionally, DC MNEs, in general, have better access to financial assets and technological know-how, compared to EM MNEs (Ali, Mura Ullah, San Khan 2009; Ramamurti 2012; Child & Tsai 2005). Based on that knowledge, the second proposition is formulated as follows:
Proposition 2: MNEs of developed countries are more likely to integrate CE activities that are
more preferable relating to the waste hierarchy compared to MNEs of developing countries.
3 Methodology
The method section aims to describe the rationale for the application of a specific research design, which helps to answer the research question. This process enables to evaluate the paper's validity and credibility. Thus, the section starts with the description and justification of the research procedure, which in this case is adopted through a multi-case study approach. It continues with the case selection, to provide information about the selected cases. The case selection is followed by the description of the data collection method and ends with the data analysis.
3.1 Research Design
Generally, as the contributions to CBM literature are very limited and rather less attention has been paid to the SBM literature in the international context, this paper follows an exploratory reasoning to provide new insights and a better understanding of the phenomenon (Saunders et al. 2009). The aim of this study is to analyze how EM MNEs and DC MNEs transform their business model towards a circular one over time. In particular, this thesis investigates the different components of EM MNE's and DC MNE's business models and analyzes processes and activities that lead to the development of a CBM. The importance lies in both, the time period at which MNEs are adopting CE activities and the quality of the CE activities.
Moreover, this paper analyzed if and how EM MNE's and DC MNE's behavior differ during the CBM implementation process. According to Yin (1994), the best approach answering "how" and "why" questions is the qualitative research design. It is a proper method to explore the complexity inherent in a phenomenon and explain the conditions of a phenomenon within a particular contextual setting (Yin 2009). As this research examines how different MNEs are changing their BM towards a circular one and compares this process in terms of differences and similarities due to the MNEs institutional setting, this approach is extremely suitable. A commonly used design in the qualitative research design is the case study. This strategy is also used in this paper due to several reasons. First, it helps the explore the research question as it collects detailed real-life information about a particular phenomenon (Robson 2002). Moreover, it provides a clear understanding of processes and context due to the use of multiple sources of evidence (Robson 2002). Although the case study's main critique is, that the collected data can not be statistically generalized, it is considered as a proper method to give an in-depth insight of a matter, even if the boundaries of phenomenon and context are blurred (Yin 2009). Consequently, this paper uses a multi-case study approach, as the
evidence of differences and similarities between the cases is increased and findings are more valuable and reliable compared to single-case study’s findings (Yin 2009). As every case is chosen according to the same rationale, the literal and theoretical replication logic is justified (Yin 2009). This strengthens the research’s external validity.
To address the research question, which focuses on the transformation process of MNE’s business model towards a circular one, the cases need to be analyzed over a wider time horizon (Pettigrew 1997; Saunders et al. 2009). Saunders (2009) argue that longitudinal studies will be a valuable tool to study change and development of organizations.
3.2 Case Selection
For this paper, four automobile companies were selected as cases: Volkswagen AG, Daimler AG, Tata Motors and Mahindra Mahindra Limited. Those identified businesses were chosen due to several reasons. First, as this thesis wants to investigate similarities or differences between EM MNEs and DC MNEs, due to a distinct institutional setting, companies with different origins are selected. On the one hand, Daimler as well as Volkswagen, are based in Germany and therefore represent the companies from developed countries. On the other hand, Tata Motors and Mahindra Mahindra Ltd. are based in India, an emerging country. Second, all of these companies are considered as MNEs, as their business operations are
internationally oriented. Third, the companies were selected based on the number of produced cars in 2015 in their home country. Thus, the largest enterprises of the German market are Volkswagen with 10,2 Mio and Daimler with 2,92 Mio produced cars (Statista 2015). For the Indian market, the best-producing companies are Tata Motor with 0,9 Mio and Mahindra Mahindra Limited with 0,4 Mio produced cars (Tata 2016; Mahindra & Mahindra 2016). And finally, the automotive industry is highly dependent on raw materials (The Ellen MacArthur Foundation, 2012). Due to raw material scarcity and pressures of price shocks, this sector has a high intrinsic motive to improve its energy and resource efficiency through the circular economy approach.
The next section will give a brief overview of the cases, as the background information of all four companies is presented. The focus lies on where the companies are located, what product portfolio they offer and the number of employees.
Volkswagen is the leading automobile producer in Europe and considered as second biggest in the world (Statista 2016). The corporation, with headquarter in Wolfsburg, Germany, is concentrating its business activities on the production of small to luxury cars and the provision of financial services. Twelve brands from seven European countries are counted among the Volkswagen group: Volkswagen, Audi, Bentley, Bugatti, Ducati, Lamborghini, Scania, SEAT, Skoda, Porsche, MAN and Volkswagen commercial vehicles. In 2015 the company had a workforce of more than 600,000 in total, as it operates in 20 European countries and 11 countries in America, Asia, and Africa.
Daimler, the second organization, is one of the biggest automotive manufacturer worldwide and among Germany's best high-selling companies. The traditional car maker is based in Stuttgart and achieved its international reputation through the production of premium
its business portfolio into five fields: Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Bus, and Daimler Financial Service. Moreover, the company is employing over 280.000 business workers and has a global presence, as they set up production facilities, marketing organizations and R&D centers in Europe, North and South America, Africa and Asia.
The third case to be analyzed is Tata Motors Ltd, the largest Indian automobile company with its headquarter in Mumbai, India. The enterprise's portfolio covers all types of passenger cars, utility and defense vehicles (Tata Motor webpage). Their main operations take place in 20 Asian countries, with its biggest market being in India and South Korea. However, they are also exporting their products to South Africa, South America, and the UK, as they acquired Jaguar Land Rover in March 2008 (Motors 2008). Tata Motor’s goal is to enlarge their global operating presence by a step-by-step expanding approach into new relevant markets in Europe and America.
The last elected company is Mahindra Mahindra Ltd, an Indian MNE that mainly concentrates on two divisions: the automotive and farm sector. Its product portfolio includes two-wheelers, passenger cars, commercial vehicles, and tractors. The automobile manufacturer is based in Mumbai, India and has established R&D centers in North America, Italy, India, South Korea and Japan. With its 200,000 employees, the company has high ambitions to expand its global networks and enter new markets to distribute their products worldwide.
In conclusion, all of the four companies portrayed above, meet the required characteristics for the in-depth analysis of this thesis. In order to clearly distinguish the chosen enterprises, Table 2 will provide background information and key numbers of all cases.
3.3 Data collection
The data for this paper consists of secondary data which will be gathered from a variety of sources. Aside from media sources, such as international and national newspaper articles, corporate documentations, annual and sustainability reports and press releases are
investigated. These archival data sources were chosen as they are pertinent to longitudinal, international and comparative studies, as the data is widely available and ready to be used for analysis (Van der Velde et al. 2004; Welch 2000). All four companies are publishing annual and sustainability reports, which might portray the sustainable initiatives in a much more positive light as they are in reality. Therefore, the gathered data from the newspaper will provide an outside or more accurate view on the circular activities of the firms and help to
examine the cases critically. To be accurate and consistent across cases, two international newspapers and one newspaper published in the MNE's home country – one German and one Indian newspaper – were selected. The first source, The Financial Times, "is one of the world's leading news organizations" and internationally known for its accuracy and
professionalism (Financial Times n.d.). In 2011 the Global Capital Markets Survey (GCMS) had ranked 'The Financial Times' as the most important business read (Financial Times 2009). Due to the importance and internationality of the newspaper, The Financial Times is an important provider of information. The second source, the Guardian was chosen, as it is easily accessible via LexisNexis and provides a high number of hits relating to the topic of this thesis. Additionally, the newspaper has a high circulation in the UK and was honored with several awards (International Federation of Audit Bureaux of Circulations 2013), which ensures it's quality. As this thesis compares MNEs from different geographical origin, local newspapers were chosen. For the companies Volkswagen and Daimler the German "Die Welt" was selected to gather information. The newspaper is reliable, as it was accessible through LexisNexis. For the Indian MNEs, Tata Motors and Mahindra Mahindra Ltd., The Telegraph India was chosen, as it is an English daily and has one of the highest circulation in the India (Telegraph India n.d.). The selected newspaper are covering the data relating to the case for the entire period to be analyzed. As this thesis pursues a longitudinal approach, a specific timeframe was set: January 2011 – December 2015. During this period, sustainability reports are available for all four companies. In order to be consistent throughout the cases, the start of the analysis is January 2011, the year in which the Volkswagen Group published its first sustainability report. Unlike the investigation of a short time period event, a five-year timeframe is appropriate to capture the development of circular activities within a particular company. Besides to the media sources of international and local newspaper information, corporate documentations are studied to gain relevant and sufficient data on the processes of the change and evolution of the individual MNEs.
3.4 Data Analysis
The process of evaluating the data used for the cases underwent a two-step reasoning. First, to prevent the use of irrelevant information, a thematic coding was utilized to classify relevant data and answer the research question. Ryan and Bernard (2003) state, that thematic coding is a method to interpret collected information by identifying themes or patterns within its data and therefore help to answer the research question. Themes are described as “the fundamental concepts we are trying to describe” (Ryan & Bernard 2003, p.87), which help analysts to define and interpret real concepts of a phenomenon (Strauss & Corbin 1990). For this thesis,
themes derive from the existing literature, as a priori approach (Ryan & Bernard 2003) was adopted. The data was scanned and put into clusters with Nvivo, a computer-assisted tool. To get a more detailed view on the derived main themes, the latter were break down into sub-themes. Those sub-themes are referred to “explanatory concepts”(Strauss & Corbin 1990, p.14), to attribute the main themes with more accurate information. The themes are presented in table 1.
Table 1: Data Analysis Codes
The themes describe the different components of the waste hierarchy outlined in the article (4) of the WFD2008 (European Commisssion 2008). With respect to the research question and the propositions, the hierarchy has been chosen as it categorizes the degree of sustainability of MNE's activities. The first theme "Prevention", the most preferred option, describes activities that minimize waste through the reduction of waste through a more valuable resource use or the replacement of non-renewable resources through renewable ones. CE activities relating to prevention encompass the use of renewable sources, the redesign of products and the
development of green technologies such as electric and hybrid vehicles. "Reuse" comprises all actions that extend the life-cycle of a product; therefore CE activities cover take-back systems offered by the manufacturer, car-sharing options, repairing, remanufacturing, refurbishment and reusing. The third theme "Recycle" focuses on the recovery of materials through up-, re-, and downcycling, which is followed by the theme of "Recovery" as a form of recycling. Whereas recycling activities concentrate on raw materials, "Recovery" actions primarily describe the reclamation of energy and fuels. Thus especially activities that enable the conservation of energy are listed as CE activities. The least preferred solution of the waste hierarchy is categorized by the theme "Disposal", the final discharge of resources without any recovery. The sub-themes were found by highlighting the relevant text phrases or keywords of
Parent Themes Sub Themes Associated keywords
Prevention
Waste minimization, reducing waste, replacement non-renewable resources
Rethink, redesign, reinvent, renewable ressources, maintenance,
Reuse Remanufacturing, extension of useful life
Checking, cleaning, repairing, remanufacturing, recondition, refurbishment, redistribution, Recycle Materials recovery Upcycling, recycling, downcycling Recovery Energy reclamation Recovery of energy/fuels, backfilling
operations
Disposal Final discharge Landfill and incineration without recovery
all cases while reading through the collected data. The quotes and expressions were highlighted due to their relevance to answer the research question and the propositions. The second step realized was the creation of a case study database to summarize the quotes and expressions of all cases. The information was put in chronological order to elucidate the changes of all MNEs over time. In chapter four the developed tables are displayed to support findings and enhance the reliability of the results (Yin 2009). The four cases are investigated by a within-case and cross-case analysis based on the method of Eisenhardt (1989) to examine information and to find patterns across cases. Thus, a comparison and generalization of the findings is enabled, which leads to a higher validity and accuracy of the findings as evidence from multiple sources are aggregated (Yin 2009).
4 Results
This section examines the outcome of the multi-case study. The aim is to find patterns within the individual cases and then compare the findings across cases to find similarities and divergences. The first step, therefore, is to identify MNE's CE activities and to record the point of time, that MNEs are performing those. The second phase is realized through the cross-case analysis, where conclusions are drawn from the comparison of patterns and time across cases. This entails that the stated propositions are either supported or rejected and finally leads to the answer of the research question.
4.1 Within-case analysis
This section investigates the four MNEs individually by analyzing the cases through the themes to portray the CE actions of the companies over the years. The activities are supported by quotes in the table 2a, 2b, 2c, 2d.
4.1.1 Mahindra Mahindra
As seen in Table 4a, Mahindra Mahindra Ltd. was committed implementing CE activities throughout the whole range of the waste hierarchy. In 2011 Mahindra Mahindra Ltd. focused its "Prevention" activities on "energy and resource conservation" (Mahindra & Mahindra 2011a, p.4), to counteract negative environmental influences and tackle waste problems. Although, their current business model was far from the ideal circular business model the company was starting to implement different activities to ensure circular activities in its business operations. Examples are the development of green and innovative technologies to
reduce the company’s environmental footprint and waste, the acquisition of the Reva Electric Car Company in May 2010 to enter the market of hybrid and electric vehicles and the
commitments to reduce energy and resource consumption by 5% until 2013 as the oil prices are steadily rising (Chauhan 2011; Mahindra & Mahindra 2011a, pp.12, 37). Nevertheless, media, as well as company's reports, stated that Mahindra's prevention activities very nascent, which led to the assumption that those actions in 2011 are still in the beginning phase and need be improved over time. The second theme "Reuse" and the associated activities
performed by Mahindra are primarily focusing on the reuse of water and construction waste and the resale of refurbished cars. While the company in 2011 only reused water from “engine after tests” (Mahindra & Mahindra 2011a, p.90), already "75% of construction waste was reused" to minimize the demand on natural resources (Mahindra & Mahindra 2011a, p.119). Additionally, by offering customers the option to buy “quality pre-owned and refurbished cars” (Mahindra & Mahindra 2011a, p.64) the Indian company created opportunities that are favorable for customers and environment. Those restored cars have been tested during a special check process to ensure business requirements and standards and were, therefore, comparable to new vehicles. Value creation through "Recycling" activities in 2011 was limited to some smaller movements in the management of water, waste and paper recycling. However, "at Mahindra, we pay keen attention to material consumption, employ "Alternative Thinking" to seed innovation and harvest conservation through recycled content, recyclability and the potential for reuse." (Mahindra & Mahindra 2011a, p.109). Regarding "Recovery" neither media nor company's statements or reports revealed any groundbreaking activities until 2011. The only initiative implemented by the automotive company is the installation of oven heat recovery engines that generate hot water (Mahindra & Mahindra 2011) for further operations. While the circular economy strives to eliminate waste and prefers the efficient resource use through recirculation, the Mahindra group was far from acting in a circular way. Therefore, referring to “Disposal”, the company’s goal was to keep waste of manufactured products at it smallest and to start collaborations with third parties to treat and storage hazardous waste in a responsible manner (Mahindra & Mahindra 2011a).
In 2012, Mahindra Mahindra Ltd. made significant progress in terms of "Prevention". Through the launch of the new electric Sun2Car vehicle, which directly can be charged by solar panels and the new micro-hybrid two-wheeler Duro DZ, the company's product range now incorporated sustainable mobility options (Mahindra & Mahindra 2012). “Reuse” options were improved through processes that make it possible to reuse or resize cotton and other components of end-of-life cycle products for creating new products. Moreover, in the
category of "Recycle" Mahindra Mahindra Ltd. revealed some impressive steps in 2012. Especially the improvement in the company's water management through the initiative "H2Finity" has to be acknowledged. As India is a country, which faces a severe scarcity of water, the automobile manufacturer dedicated itself to target water insecurity problems with specific initiatives and programs. The "H2Finitiy" program focused on the reduction of water consumption through innovative recycling processes and the reuse of wastewater. Actions included the monitoring of water use, a reduction plan in water consumption and strategies to conserve water. Those strategies mainly focused on roof- and rainwater harvesting and the introduction of a closed loop water circulation system. Their “goal was to be water neutral at all our facilities” (Mahindra & Mahindra 2012, p.60). Another breakthrough was the
“Reduce-Reuse-Recycle” initiative realized by Mahindra's paint shop. Goals were the reduction, reuse and recycle of “every single natural resource that entered and left the paint shop” (Ltd. Mahindra & Mahindra 2012, p.111). Moreover, Mahindra aimed to expand this campaign to other divisions and materials “like plastic, e-waste and tin” (Ltd. Mahindra & Mahindra 2012, p.105). There were no changes found referring to the theme “Recovery”, however, "Disposal" activities were reduced through the zero discharge of waste water (Ltd. Mahindra & Mahindra 2012).
The year of 2013 was a changing year at Mahindra. The activities of previous years “targeted greenhouse gas reduction and basic eco-efficiencies in operation”, as Chairman & Managing Director Anand Mahindra declared. The company’s focus in 2013 lied on how to establish a regenerative business model, that creates sustainable financial returns. As a result, the company's aim was to continue and improve its clean and green business operations through an efficient water management, the development of new technologies to maximize resource use and the compliance of different sustainability standards. In terms of "Prevention" the company made two impressive achievements. First, the launch of Mahindra e2o, a battery operated electric vehicle is expanding the company's sustainable mobility portfolio (Ltd. Mahindra & Mahindra 2013a). Secondly, the firm introduced the “Rise Prize”, a program to encourage individuals to share potential solutions for future mobility or renewable energy (Mahindra & Mahindra 2014a, p.1). By building upon the power of the crowd, Mahindra intended to prevent the inefficient use of resources and materials to minimize the landfill further. Another significant action referring to the "Reuse" theme that was launched in the economic year of 2013 is the establishment of "systems to take back end-of-life vehicles" (Mahindra & Mahindra 2014a, p.64) for passenger cars and light commercial vehicles. Those systems facilitated the reuse of components or complete cars, which result in the extension of
product life cycle periods. Mahindra's "Recycling" objective this year was to restrict the amount of waste from end of life vehicles through a redesign for better recycling. The company announced that the produce vehicles are recyclable to 75% by that time and "the remaining 25%, which mostly comprises of plastic, glass, rubber, foam and contaminants is considered either unsuitable or uneconomic for recycling" (Mahindra & Mahindra 2014a, p.64). However, no changes in the company’s activities were found regarding "Recovery" and "Disposal".
In 2014, the company introduced additional technology for its electrical vehicles, like the revolutionary Quick2Charging Station to boost the "Goodbye fuel, hello electric" program to encourage the use of fuel saving mobility options. Moreover, Mahindra was collaborating with the Government of India to push R&D for electric and hybrid vehicles under the National Electric Mobility Mission Plan. The initiative’s goal was to promote electric and hybrid vehicles in India by issuing governmental supply and demand sided incentives to local automotive industries and improve the charging infrastructure of the country (Ltd. Mahindra & Mahindra 2012, p.8). Furthermore, the company was also able to document a breakthrough in the energy “Recovery” category. Mahindra Mahindra Ltd. built up a biogas plant to utilize waste for the production of energy (Mahindra & Mahindra 2014a, p.94). In the year of 2014, no changes have been recorded in terms of “Reuse”, “Recycling” and “Disposal”.
In December 2015, the Paris Agreement on Climate Change was held to set up goals to limit global warming (United Nations 2015). Participating countries – including India – are forced to adopt strategies to reduce climate change through the lowering of carbon emissions. Mahindra replied to the enforcement by primarily restructuring its "Prevention" strategy. The Indian MNE set up additional solar panels, extended the biogas plant and obtained more energy from wind and thermal sources. This approach was entitled throughout the company as the movement from "conservation of resources" towards a "rejuvenation of resources"
(Mahindra & Mahindra 2015, p.94) and was appreciated by Indians Ministry of Non-conventional and Renewable Energy with the “third prize in the category of TOP 3
institutions for R&D in renewable energy” (Mahindra & Mahindra 2016, p.14). Moreover, the company was able to launch the E-Maxximo vehicle, which was developed “as part of the Indian Government’s Electric Mobility Mission Plan”(Mahindra & Mahindra 2015, p.4). This battery powered van was specially constructed to reduce emissions in the public
transportation sector. By advertising the product to local authorities in different cities, the Government estimated to have a good chance to contribute to a cleaner future. Besides, the
company first time explicitly mentioned the importance of value creation for their
stakeholders through circular economy activities in their reports (Mahindra & Mahindra 2015, p.118). They aimed for a zero waste management through a revolutionary resource efficiency. Waste will be eliminated by rethinking and improving the whole lifecycle of a product and the greening of the entire supply chain. Thus, another goal referring to "Reuse" was to reach environmental targets through future collaborations and industrial symbiosis with third parties. By sharing or exchanging resources and waste, the ecological footprint will be minimized, and environmental innovations will be boosted. In the field of "Recycling” explicit features were the recycling of paint sludge by “using dryer to make powder” and the improvement of the Recycle-Recover-Reuse program (Mahindra & Mahindra 2015, p.120). Nonetheless, no developments have been reported in terms of “Recovery” or “Disposal” activities.
In conclusion, from the beginning of the analysis, Mahindra Mahindra Ltd. incorporated different CE activities along the waste hierarchy. The company consistently evolved and adopted strategies to a more efficient use of resources and positive waste management but the importance of zero waste management was firstly acknowledged in 2015. Furthermore, the collaboration with the government was a smart step made by the company. The initiative entailed a win-win situation for both parties, as the monetary support by the Government of India boosts Mahindra's R&D, and technical innovation and the country possesses a reduction of carbon emission and an improvement of infrastructural conditions. Mahindra Mahindra Ltd’s “Reuse” operations especially consisted of the reuse of water, due to India’s scarce water resources. As the MNE mainly operated in India, one of their core activities was to conserve as much water as possible through a proper water management. Additional to the water management, the company established an appropriate tack-back system for end-of-lifecycle vehicles. This was an important move towards the circular economy. Nevertheless, the company was very limited in “Reuse” activities. “Recycling” had already been adopted in 2011. The program “Recycle-Recover-Reuse” was the most outstanding feature. Moreover, the construction of a biogas plant helped the company to “Recovery” energy, which can be reused in the production process. Referring to “Disposal” the company was working together with third parties to guarantee safe landfill operations of hazardous waste.
Date CE Activity Quote
Dec 11 Prevention "Mahindra Reva is a pioneer of EV (electric vehicle) technologies and one of the first companies to introduce electric vehicles worldwide" (Mahindra
& Mahindra 2011a, p.12)
Dec 11 Reuse
"First Choice is India's No. 1 multi-brand pre-owned car company that offers a wide range of certified refurbished cars which have undergone a rigorous 118 point checks." (Mahindra & Mahindra 2011a, p.73)
Dec 11 Recycle "We work to manage and reduce waste at all possible levels through systematic processes of reusing and recycling." (Mahindra & Mahindra 2011a, p.111)
Dec 12 Disposal "We maintain zero discharge of waste water pollutants." (Ltd. Mahindra & Mahindra 2012, p.101)
March
13 Prevention
"We have therefore instituted the Rise Prize with a pursue of over USD 1 million to encourage breakthrough and affordable innovation. Individuals discovering potential solutions for the future of mobility and distributed renewable energy will have the opportunity to be mentored by the world's foremost experts in the field." (Ltd Mahindra & Mahindra 2013, p.1)
Dec 13 Recycle
"It is estimated that some 75% of a vehicle (mainly metallic content) is currently recycled. The remaining 25%, which mostly comprises of plastic, glass, rubber, foam and contaminants is generally considered either
unsuitable or uneconomic for recycling." (Ltd Mahindra & Mahindra 2013, p.64)
Dec 13 Reuse
"[The RRR Directive] includes the following propositions: […] Producer to be responsible for establishing collection systems to take back end-of-life vehicles, and the arrangements for meeting re-use, recycling and recovery targets.” (Ltd Mahindra & Mahindra 2013, p.64)
Dec 13 Prevention
"The launch of the battery operated electric vehicle, the Mahindra e2o, in march 2013 was an important milestone in the direction of sustainable mobility. […] The company continues its efforts to develop the Electric Vehicle (EV) market and upgrade EV technology capabilities." (Ltd. Mahindra & Mahindra 2013b, p.44)
Dec 14 Recovery "Setting up a biogas plant to covert food waste and other waste into energy." (Mahindra & Mahindra 2014b, p.24)
Jan 15 Prevention
"The Indian vehicle maker and industrial conglomerate, will triple its investments in in solar energy this year and seek US or other foreign partners to boost its defense manufacturing business, according to its chairman Anand Mahindra" (Mallet 2015)
Dec 15 Reuse "Reducing industrial water consumption is a means of addressing the global water crisis. We recycle and reuse water for various purposes." (Mahindra & Mahindra 2015, p.194)
Dec 15 Recycle "European exports: In line with the EC directive on Recycle, Recovery & Reuse (RRR)." (Mahindra & Mahindra 2015, p.80)
4.1.2 Daimler
As seen in Table 2b Daimler was committed implementing CE activities. Especially the themes of "Prevention", "Reuse" and "Recycle" have been recurrently found during the data analysis. As the company already launched its first electric vehicles in 2010, the "Prevention" activities in the year 2011 focused on electric mobility. While the carmaker saw the vast possibilities for the electric vehicles market, they also acknowledged that "an extensive network of filling and charging stations" (Daimler AG 2012, p.65) was necessary to promote the use of the e-cars throughout the mass. Therefore, the carmaker was working together with “German Transport Ministry” to create a charging-favorable infrastructure in Germany (Daimler 2012a). Another important project within the “Prevention” theme was the
development and optimization of hybrid engines, a motor that encompasses of a combustion engine and electric motor. This hybrid engine reduces the fuel consumption of vehicles and lowers the emission of CO2. In 2011, the most outstanding performance in the theme “Reuse” was Daimler's car-sharing program car2go. The company was offering vehicles to its
customers in large cities (Daimler 2012a, p.84). This product-as-a-service tool enhanced the reuse of cars, which are otherwise would have been kept unused. Additionally to car-sharing, Daimler provided a “Europe-wide take-back network for end-of-life vehicles” (Daimler 2012a, p.71). Returned cars will be checked if they contain any components that can be reused, remanufactured or refurbished. When it comes to “Recycling” the company had a clear guiding principle: “We believe that prevention and recycling are preferable to disposal” (Daimler 2012a, p.82). The company trusted in the potential of closed loop systems to
decrease environmental impacts through manufacturing in the long run. Concerning
"Disposal", Daimler was able to certify a "zero waste to landfill" facility in Canada in the year 2011. This plant is capable of reusing or recycling their total materials and waste.
Daimler’s “Prevention” focus in 2012 lied on the expansion of renewable source use. In “spring 2012, Daimler purchased a powerful wind energy facility near Germany’s A9
highway to coincide with the market launch of the new smart fortwo electric drive” (Daimler 2013, p.11). By generating energy from wind turbines, the total fleet of electrically powered smart vehicles in Germany can be charged with 100% renewable electricity. The company also launched a new "luxury plug-in hybrid model" (Foy, Henry; Bryant 2013) to diversify its vehicle portfolio in the sustainable mobility sector. Under the theme “Reuse” the carmaker had started various projects to create a circular system. Those projects included activities of remanufacturing, repairing and reconditioning of old vehicle components. Furthermore, the development of innovative technologies to remanufacture high-voltage battery components
