Investigating drivers of circular supply chain with product-service system in automotive firms of an emerging economy

Abstract

In the rise of global emphasis on circular economy, the automotive firms in an emerging economy such as India in this context are bracing themselves for circular supply chain to recover the expended resources after formalization of End-of-life vehicle (ELV) norms, but these firms lack the knowledge about how to transform from Product-Service System (PSS) business model to circular business model. The extant literature doesn't mention clearly as to what drivers and sub-drivers are needed for adoption of circular principles in PSS business model. This paper aims to propose a multi-theoretical framework (the resource-based view, resource-dependence theory, and stakeholder theory) and identifies and evaluates drivers and sub-drivers. The paper adopts Grey-Decision-Making Trial and Evaluation Laboratory multi-criteria decision-making method to evaluate the inter-relationship between the sub-drivers. A structural model has been developed based on the outcome of the empirical analysis. The study recommends that firm should focus on the important drivers (sub-drivers) – Circular Value Marketing (Recovery/Recycling information on a Product), Circular Services (Supplier adaptability for closed resource loop), Circular Product Design (Design of Sustainability Capability), and Reverse Flow Drivers (Incentives in Secondary Market for Recoverable Products). The implications are related to design, sourcing, and marketing functions and suggest the adoption of the influencing drivers and sub-drivers to create circular value. This study contributes to the literature of the circular supply chain by discriminating the causal relationships between factors that would help managers to develop product service systems strategy(s) to create circular value in the supply chain.