An economic model of circular supply network dynamics: Toward an understanding of performance measurement in the context of multiple stakeholders

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Journal Article
Business Strategy and the Environment, 2018, 27 (5), pp. 643 - 655
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© 2018 John Wiley & Sons, Ltd and ERP Environment The circular economy (CE) is increasingly being seen as a way in which organizations and economies can become environmentally sustainable. In this context, a key challenge facing multiple-stakeholder collaborations in circular supply networks (CSNs) is the need to coordinate activities, as well as to monitor and benchmark sustainability performance. The limited formal analysis of CE production dynamics and performance indicators of activities in the CSN has contributed to these challenges. To address this we develop an economic model of material flow in a CSN that incorporates multiple stakeholder effects, and two novel performance indicators that: (i) estimate the joint effects of the speed of recycling, and the effectiveness of collection and conversion of recycled material on production; and (ii) a measure of the upper bound production possibilities for a given recyclable material cycling through a CSN. These indicators will be informative for monitoring, benchmarking and incentivizing performance across CSNs and informing public policy debates and strategies.
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