A transformative journey from linear to circular business models of a First-tier Supplier in the marine leisure industry. A Volvo Penta case

Abstract: More and more companies are adopting Circular Business Models (CBMs), which can serve to foster a sustainable transition towards a Circular Economy (CE). Nonetheless, much of the CBMs adoption-related research in academia has a focus on end-user facing companies, which have direct access to final end-users, to whom they sell a complete product. However, a significant role in such settings is played by upstream suppliers who often manufacture key components for the final product without having direct access to end-users. Therefore, after understanding the current attributes of a traditional business model and supply/value chain for a First-tier Supplier (FTS), this research aims to explore which CE strategies and CBMs are most likely to be adopted by an FTS. Additionally, because of the nature of the business set-up, FTS rely on value chain partners: therefore, the research aims at understanding the role that collaboration with the surrounding network of stakeholders plays in the implementation of CBMs. For this purpose, the research gathers insights from a single case study with Volvo Penta (VP), a Swedish-based FTS in the marine leisure industry, which manufactures diesel engines, sold in a linear manner through dealers and boat constructors. For data collection, a review of company documents, 17 interviews with the company’s employees, 2 interviews with external business consultants and researchers as well as one onsite visit at one of the company’s operational plants in Sweden have been conducted. Key results show that FTS should focus on i) design stage; ii) leveraging on existing strategies, exploiting and expanding developed infrastructures and expertise; iii) establishing a closer relationship with the immediate steps of both the upstream and downstream supply and value chain. Further investigation needs to i) conduct research on other case studies within the same or different industries to understand the generalizability of current findings; ii) consider the role played by internal organizational structures and dynamics in the transition of an FTS from Linear Business Models (LBMs) to CBMs iii) explore how an FTS could be supported in this transition, through the lenses of change management literature.