Challenges and organizational capabilities to implement circularity in the automotive industry. A multiple case study

Abstract: The market for electric vehicles has been growing rapidly in recent years. As a result, the largest share of emissions along the life cycle of vehicles will no longer come from the combustion of waste gases but from manufacturing materials. To cope with this change, implementing the operational principles of circular economy within the business model is an effective solution for vehicle manufacturers. The study therefore aims to identify the challenges that companies in the automotive industry are facing for the circular transition and the organizational capabilities to be used to overcome them. To achieve the purpose of the research, a multiple case study was used: the sample consists of three automotive companies based in Sweden, whose representatives were interviewed through semi-structured interviews. Using thematic analysis, challenges for the circular transition were identified and grouped into two categories: business related and cultural related challenges. In addition, organizational capabilities that companies need to use to cope with the transition were identified. These were categorized into 8 categories: ways to ensure employees’ commitment to circularity, management skills, green culture creation, management and people practices for circularity, product development and production processes, best practices to create circular products, relationship with suppliers, relationship with other external stakeholders. Thus, the contribution of the study is to provide a systematic categorization to the challenges and organizational capabilities for implementing circularity in the automotive industry. In addition, it enables industry players to identify and develop the capabilities needed to gain a competitive advantage in a circular business model.