Implementing a Take-back Scheme in the Swedish Fashion Industry : a Dynamic Capability Perspective

Abstract: Background As of today the textile and fashion industry mainly relies on a linear production model, also referred to as the take-make-waste system. This economy depends solely on the single use of raw materials leaving space for an open-ended production and no intention of salvaging or recovering resources. Such a system cannot be supported by the environment in the future; therefore, several stakeholders are starting to embrace circular production systems and a closed-loop economy. One example of these efforts is take-back schemes (TBS) which strive to make the fashion industry more regenerative and restorative by narrowing, slowing, and closing the resource loops. Nonetheless, practitioners and academia have found adversities during the implementation stage which instead require competent knowledge, skills, and unique capabilities to achieve a successful performance. Purpose To achieve a successful implementation of a TBS, companies require unique capabilities that allow them to adapt and adopt a sustainable innovation. Therefore, this study investigates the dynamic capabilities (DCs) needed to implement a TBS in order to provide practitioners and academia with a guide that eases the application, overcomes the known adversities as well as explores the relationship between these and the relevant DCs. Methodology The research was based on a multiple case study method embracing abductive reasoning by extending the theory of DCs for circular business model implementation to TBS within the fashion industry. Semi-structured interviews were conducted with three companies applying different types of take-back schemes; the primary data was strengthened by document research and a validation round of interviews. The data was analyzed through qualitative thematic content analysis. Further, the characteristics of the study lend themselves well to be represented through a qualitative causal loop diagram appropriate for developing novel solution strategies such as the DCs. Findings The results show, through the use of two maps, that several DCs have to be developed when implementing a TBS in order to reach a substantial competitive advantage in the form of a cost leadership, differentiation or focus strategy. Further, the causal loop maps also shed light on the different relationships between DCs and how these can be exploited to overcome the difficulties or utilizing the possibilities in implementing a TBS. Practical implications and research limitations - The thesis creates new insights on TBS implementation through the use of DCs by presenting two causal loop maps. Thus, aiding practitioners and allowing them to quickly recognize their current situation against the maps as well as what changes need to be made following the suggested capabilities. The study is limited by the choice of interviewed companies, which represent only retailers with TBS in Sweden.