Product development based on circular economy principles can lead to environmental and economic benefits by addressing resource use in production–consumption systems. This inter-organisational process affects a business network's resources and can therefore entail challenges in the required collaboration and coordination. Based on the need to better understand how inter-organisational interaction enables business networks to address sustainability challenges, the aim of this paper is to investigate inter-organisational interaction in circular product development. The theoretical framework includes the Industrial Network Approach with a focus on resource interaction and adaptations. Moreover, the multi-level perspective for circular product development is explored, discerning micro, meso and macro levels applied in circular economy literature. The paper relies on a case study of circular product development with a focus on products' longevity and recyclability. Applying a multi-level framework of resource interaction highlighted adaptations in the business network and broader perspectives reflecting the systemic, complex nature of the business environment. The paper contributes to literature on industrial networks and circular economy by illustrating circular product development in business networks from a multi-level perspective. The findings demonstrate both minor and complex adaptations in the business network, and an understanding of the different roles of business and non-business actors. 

Purpose

Literature is abundant in identifying challenges related to multi-actor and cross-sector collaboration needed in circular economy transitions. This conceptual paper applies theoretical perspectives from the Industrial Marketing and Purchasing literature (IMP) to better understand these challenges and the underlying mechanisms of network change. Specifically, we examine the theoretical constructs of adaptations, interconnectedness, and embeddedness to provide insights into network change in the circular economy transition. This approach thus takes the behavioral instead of technical approach to CE.

Design/methodology/approach

The paper is a conceptual study in which existing literature on CE is enriched by employing knowledge from the literature on business relationships and industrial networks. The present study seeks to develop a model by using the IMP theories as method theories to increase understanding of CE transitions.

Findings

We develop a set of fundamental premises that reconcile the gaps in the CE literature and provide guidance for facilitating network change in CE transitions. Finally, we develop a theoretical model of network change in CE transitions, including solutions to address the identified challenges.

Originality/value

The findings of the present study offer a contribution to the existing literature on CE transition, especially the theoretical discussion related to CE challenges. The paper conceptually advances the literature on CE transition by proposing three premises depicting the network change mechanisms toward CE.

Research on circular product development has gained popularity in recent years. While such approaches focus on the product's design phase to create environmental and economic value, they lack in understanding the co-created and dynamic nature of a multifaceted system of actors important for the transition to circularity. The purpose is to explore how multi-level institutional re-configuration patterns influence resource integration and its associated value co-creation during circular product development in a service ecosystem. Responding to the need to address the applicability of Service-Dominant Logic to managerial practice, the paper relies on a single case study of circular product development involving B2B actors in a supply chain for workwear garments in healthcare. Data was collected using participant observation during an innovation project lasting 1,5 years. The data, which was supplemented by semi-structured interviews and online queries, was analysed through coding, condensation and interpretation. The findings demonstrate the importance of interdependencies between institutional re-configuration patterns and the interrelatedness of the micro, meso and macro levels in a service ecosystem as these enable value co-creation opportunities during circular product development. For practitioners, the paper provides an understanding of how to manage enablers and barriers arising during circular product development through institutional work.