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Abstract

Despite the importance of business models for enabling a circular economy at a systems level, little is known about how value chain actors assess the circular business models that they are co-creating and how this assessment shapes their behaviour. Framing circular business models as a subject of legitimacy, this study explores how value chain actors respond when the value proposition of a circular business model seems proper, but the value creation and capture are debated. Based on interviews and workshops with 16 U.K. plastics sector organizations, this study shows how value chain actors respond to this hybrid legitimacy judgement by assuming a position of dynamic vigilance. This position affects the advising, contributing, lobbying, and trialling work that actors do to shape emerging circular economy institutions. We argue that the actors’ dynamic vigilance and advocacy work might be impeding a circular economy and corresponding business models.

Keywords

business models circular business models organizational legitimacy business strategy and the environment case studies qualitative methods organizational behaviour organizational behaviour and the environment environmental decision-making circular economy institutional theory

Introduction

A circular economy (CE) implies a shift from a linear take-make-bin economy to a system where materials are kept in a loop to maintain their longevity and high value and to minimize environmental pollution (Bucknall, 2020). The shift from linear to circular systems of production, consumption and disposal, can help realize the economic, social, and environmental value, the core goals of sustainable development (Schroeder et al., 2019).

Key materials such as steel, cement, aluminium, and plastics need a CE transformation to reduce emissions and waste. These materials contribute to nearly 20% of carbon emissions, and demand for them is projected to increase (Ellen MacArthur Foundation [EMF], 2021). Plastics in particular are the fastest-growing source of greenhouse gas emission globally (Hamilton et al., 2019). While plastics are praised for being low-cost and lightweight, they contribute 54% of the global mass of waste from human activities (Rodrigues et al., 2019), with up to 8 million tonnes leaking into the oceans annually (World Economic Forum et al., 2016). In the United Kingdom, less than half of plastics generated in a year are recycled (Department for Environment, Food & Rural Affairs [DEFRA], 2018b), with incineration and export to lower-income countries still the most common routes for such waste (House of Commons, 2022). The pollution has led to calls for companies involved in plastics production and use to commit to ambitious CE targets (EMF, 2021).

To realize a CE transformation, innovations in circular business models (CBMs) are required to motivate companies to adopt circular principles (Lüdeke-Freund et al., 2018). CBMs illustrate how an organization creates, captures, and delivers value through products or materials that undergo multiple use cycles (Hofmann, 2019; Lüdeke-Freund et al., 2018). Bocken and Ritala (2021) described the innovation processes to create new CBMs as following either a closed or open innovation approach. A closed innovation strategy involves organizing within the boundaries of a firm, while an open innovation strategy involves connecting with external partners, customers, or user communities in the CBM development process (Bocken and Ritala, 2021). There are also studies on CBM experimentation that follow the “lean design methodology” (Ries, 2011), describing how new CBMs emerge through a process of design thinking, for example, co-creation, interviews, iterative experimentation, and piloting within a firm (Bocken et al., 2021; Bocken & Snihur, 2020). Beyond the firm level, there is emerging interest in systems-level CBM innovation approaches involving high-level coordination among different stakeholders, such as Kanda et al.’s (2021) exploration of “circular ecosystems” and Oskam et al.’s (2021) collaborative development process for sustainable business models. Such ecosystem views argue that circular transformation cannot be achieved without the coordination of efforts among independent or loosely coupled entities driven by different principles of value generation, distribution, and acquisition (Konietzko et al., 2020; Pedersen et al., 2019).

The coordination among multiple actors is particularly important for a plastics CE (Jäger & Piscicelli, 2021). The plastics value chain is long and complex, typically including actors such as producers, brand owners, retailers, consumers, waste collectors, recycling businesses, technology providers, and industry associations, among others (Gasde et al., 2021). Accordingly, a CE for plastics, at the systems level, will require the input of multiple actors in co-creating new CBMs (Pedersen et al., 2019).

Despite the availability of tools and strategies to innovate CBMs (Konietzko et al., 2020), multi-actor collaborations for a CE face a high probability of disagreeing on how value is created and captured (Oskam et al., 2021). In particular, collaborations and business relations are challenging areas for organizations in implementing CBMs (Fischer & Pascucci, 2017). In addition, evaluating CBMs’ impact on profitability is difficult (Bocken & Ritala, 2021), thereby making organizations reluctant to implement them (Linder & Williander, 2017). Validating a CBM for companies has higher risk than validating its linear counterpart due to cost–benefit uncertainties of an inherently long-term CE vision (Linder & Williander, 2017). In short, value chain actors often doubt the legitimacy of CBMs in reaching their private economic and environmental objectives, which might pose a challenge in collaborative efforts to co-create CBMs.

To design CBMs, value chain actors have to commit resources (Antikainen & Valkokari, 2016). Such commitment requires an alignment of an initiative (such as a CE project) with relevant rules or laws, to attract resources such as capital, technology, personnel, customer goodwill, and networks (Deephouse et al., 2017; Zimmerman & Zeitz, 2002). When an initiative is perceived as legitimate, it attracts such resources and faces less external pressure (Darnall, 2006). So, legitimacy is key to CE initiatives requiring multi-actor collaborations (Bocken et al., 2022).

However, research that captures the role of legitimacy in the co-creation of CBMs is limited. While it is known that tensions arise during the design phase of CBMs (Dagilienė & Varaniūtė, 2023), especially when co-creating with multiple actors (DiVito et al., 2021; Oskam et al., 2021), there is little research on the types of legitimacy evaluations actors make that could impact the co-creation process or their subsequent behaviours in the collaboration. We aim to address this important research gap, as the ongoing CE “paralysis” (Bocken et al., 2023) warrants a need to analyse the behaviour of value chain actors that might be hindering progress.

Here, we conceptualize CBMs as the “subject of legitimacy” (Siraz et al., 2023) co-created by multiple actors. This conceptualization allows us to explore how these actors assess a subject of legitimacy for a CE when their assessment criteria are still evolving, or unstable. Organizational actors typically use specific standards, or criteria, during the legitimation process (Deephouse et al., 2017). As a CE is still an evolving concept (Chizaryfard et al., 2021; Korhonen et al., 2018), such standards are also in flux, which might make legitimacy assessments difficult and resource commitment for value creation challenging for companies.

In the United Kingdom in particular, standards for a plastics CE are changing in many parts of the supply chain, including how bins are collected, how waste is sorted, and which types of materials are selected for recycling (Burgess et al., 2021; Waste and Resources Action Programme [WRAP], 2022). Two trends add to this state of flux: first, new digital technologies offer better data standards (Luoma et al., 2022); and, second, the public demands alternatives to plastics (Kirchherr et al., 2017). Several coalitions of U.K. organizations have formed to develop a CE for plastics, with new rules, norms, and practices being debated, including WRAP and Platform for Accelerating the Circular Economy (PACE). These changing rules and norms are already impacting the U.K. plastics sector as organizations struggle to assess how value can be collaboratively created, protected, sustained, or managed in a plastics CE (Adelekan & Sharmina, 2024b).

These changes affect how actors along the U.K. plastics value chain assess CBMs and their corresponding behavioural responses (e.g., resource commitments), which this article aims to analyse. We explore the following research question: How do value chain actors assess and engage in co-creating CBMs in the U.K. plastics sector?

We investigate this question within the context of a new CE vision for plastics, titled “One Bin to Rule Them All.” This vision has brought together multiple organizations to develop CBMs to underpin a digitally enabled plastics collection and recycling system in the United Kingdom. We use workshops and interviews to show how actors respond when the CBMs they are co-creating, are judged as both proper and improper—a hybrid legitimacy outcome we call “inconsistent propriety.” We then describe the dynamic vigilant behaviour of value chain actors in response to their hybrid legitimacy judgements of the CBMs being co-created.

As a result, our study contributes to both the CBM literature and the organizational legitimacy literature. We expand existing knowledge about actors’ behaviour in developing CBMs, moving beyond assumptions of reluctance to characterize value chain actors’ behaviour as dynamic vigilance. We argue that while the dynamic vigilance behaviour is a response to hybrid legitimacy judgements, it is a state of constraint that delays resource commitments to new CBMs and whence the actors simultaneously advocate several (often divergent) institutional developments in the plastics sector. We contribute to calls to better understand barriers impeding transformation efforts towards a CE, by arguing that the advocacy work of value chain actors reinforces their judgements which might keep the actors anchored in established norms and procedures, thereby paralysing innovative CBMs. In doing so, our research highlights a set of interconnected mechanisms that may be contributing to the “circular paralysis” impeding organizational efforts towards strong circularity. We introduce a theoretical model of legitimacy assessment and engagement within context of institutional change and draw out the implications of our findings for research, practice, and policy.

Theoretical Framing

Circular Business Models

The central role of organizations in realizing a CE transformation (Bocken et al., 2023; Schroeder et al., 2019) has led to increasing scholarly focus on CBMs. CBMs describe how value is created, delivered, and captured through the process of slowing, narrowing, or closing material and energy resource loops to avoid waste and pollution (Averina et al., 2022; Bocken et al., 2016). Several studies have captured the innovation processes involved in creating new CBMs (Bocken & Konietzko, 2022; Bocken & Ritala, 2021; Heyes et al., 2018). Such processes might involve strategies (Bocken & Ritala, 2021), experimentation activities (Bocken et al., 2021; Hofmann & zu Knyphausen-Aufseß, 2022), or the use of tools to innovate CBMs and ecosystems (Brown et al., 2021; Konietzko et al., 2020). A CBM can be developed at the level of a firm (Fehrer & Wieland, 2021) or at a systems level involving the co-creation of value with value chain partners (Bocken et al., 2016; Schneider & Clauß, 2020). This process involves reimagining and restructuring business models to integrate CE principles (Burggräf et al., 2024). While previous studies have highlighted how actors respond to an evolving sector with innovative business models for a CE at the firm level (DiVito et al., 2022), our research focuses on exploring the dynamics of value chain actors’ evaluation and engagement at the systems level. Using a systems perspective, we frame CBMs as a collaboration of value chain actors collectively aiming to create and capture value that remains in products after their use and disposal (Blackburn et al., 2023; Linder & Williander, 2017).

While several frameworks have been proposed to facilitate the implementation of CBMs in organizations (Antikainen & Valkokari, 2016; Bocken et al., 2021; Brown et al., 2021; Mendoza et al., 2017), the business model canvas (BMC) by Osterwalder and Pigneur (2010) is a well-known tool both among business practitioners and scholars (Daou et al., 2020; Lewandowski, 2016; Lüdeke-Freund, 2010). Despite theoretical developments to ease the adoption of CBMs, their practical implementation in organizations has been slow partly due to ambiguities in the CE concept (De Angelis, 2022; Korhonen et al., 2018), such as multiple definitions (Kirchherr et al., 2017).

Certainly, in addition to conceptual clarity and theoretical developments, technological developments are needed to ease the implementation of CBMs (Centobelli et al., 2020). For example, advancements in digital technologies, such as tracer-based sorting for plastic packaging (Gasde et al., 2021), have been highlighted as enablers of new business models for a CE in plastics (Centobelli et al., 2020; Nascimento et al., 2019). We, therefore, consider these developments as part of our theoretical lens.

Further implementation challenges arise from a lack of stable CE rules, norms, and practices for establishing CBMs (Chizaryfard et al., 2021; Dagilienė & Varaniūtė, 2023; DiVito et al., 2022). As the CE concept evolves, it has influenced national policies (Sakai et al., 2011), new frameworks (Bocken et al., 2021; Potting et al., 2017; Sihvonen & Ritola, 2015), and new measurement indicators (Saidani et al., 2019) to support CE adoption by organizations. These evolving rules, norms, and practices represent an unstable institutional environment (Siraz et al., 2023) and point to a need for further research on how value chain actors evaluate CBMs in changing contexts (Linder & Williander, 2017).

Value Chain Actors’ Evaluating Circular Business Models

Emerging studies have started to explore how organizations evaluate the viability of CBMs (Averina et al., 2022; Guldmann & Huulgaard, 2020). Such evaluations by organizations can lead to contestations (De Angelis, 2022; Linder & Williander, 2017), for example when actors evaluate who would benefit or lose from new CBMs (De Angelis, 2021) or when they evaluate the short-term profitability potential of CBMs compared with their long-term value (Dagilienė & Varaniūtė, 2023).

Studies have captured evaluations of CBMs by individual organizations (Droege et al., 2021), by service-oriented technology companies (Heyes et al., 2018), and by consumers (Arias et al., 2024), with limited research on evaluations made by collaborating value chain actors. As co-creating CBMs entails iterative designing, experimentation and piloting by multiple actors (Bocken et al., 2021), value chain actors have to negotiate with each other (Barford & Ahmad, 2023; Dentoni et al., 2021). Such negotiations provide value chain actors with an opportunity to assess and determine resource commitments to CBMs.

The importance of value chain actors’ engagement and their resources for value creation is well established in CBM evaluation literature (e.g., Salvador et al., 2021). Such studies have predominantly employed quantitative methods (de Carvalho Araújo et al., 2022), impact measurement approaches (Mattos et al., 2022), or paradox theory in studying contestations arising from actors’ assessments (Dagilienė & Varaniūtė, 2023; De Angelis, 2022). Complementing this research, an institutional perspective (Blomsma & Brennan, 2017; Moreau et al., 2017) can provide valuable insights for CBM evaluation. In particular, institutional scholars have established a link between resource commitment and organizational legitimacy, highlighting how actors’ judgement determines their behavioural responses including resource allocation (Deephouse et al., 2017; Suchman, 1995).

Understanding legitimacy is crucial because it affects market access and resource commitments by actors (Deephouse et al., 2017). Tost (2011) suggested that individuals within an organization can evaluate the validity of a CBM either on their own or in collaboration with others and form a legitimacy judgement. Such legitimacy evaluations yield four basic outcomes: accepted, proper, debated, and illegitimate (Deephouse et al., 2017). “Accepted” denotes passive taken-for-grantedness, whereas “proper,” “debated,” and “illegitimate” result from active evaluations by actors (Deephouse et al., 2017). While “proper” arises from evaluations of propriety, “debated” signifies active contestations among actors (Deephouse et al., 2017). Furthermore, judgements can be either conditional or unknown due to inherent ambiguities (Siraz et al., 2023). In fact, contestations often accompany CBMs (Dagilienė & Varaniūtė, 2023; De Angelis, 2022) and hinder resource commitments. We set out to explore how legitimacy affects such resource commitments to CBMs.

Methodology

Case Study

With more plastics ending up in landfills or incinerated than recycled in the U.K., Burgess et al. (2021) highlighted the complexity of the U.K. plastics collection systems and underscored the limited infrastructure that leads to the low recycling rates. To address the problem of plastics leakage and realize a CE for packaging, the U.K. government have devised new regulations such as the packaging extended producer responsibility (pEPR), plastic packaging tax, and deposit return scheme (DRS). There are also plans to improve the consistency of materials collected, ban plastics export, and tackle waste crime through mandatory digital recording of waste movements, across the United Kingdom (DEFRA, 2018a). These legislative efforts are driving technological innovations and cross-sector collaborations for a CE in the United Kingdom (WRAP, 2022).

In line with these developments, we focus on a consortium of organizations across the U.K. plastics sector collaborating on a CE research project called “One Bin to Rule Them All,” abbreviated in this study as “One Bin.” The One Bin project represents a vision for U.K. plastics recycling and explores the material, economic and social realities of collecting all plastics in a single bin and sorting them into mechanical and chemical recycling or reuse pathways using digital tagging technologies (Burgess et al., 2021). Achieving this vision requires collaboration, and for this article, we analyse the activities of a working group of value chain actors in the U.K. plastics sector (Supplemental Table S1).

Some actors in the working group had been involved in the project’s inception that led to the development of the project’s name and vision (as explained in Burgess et al., 2021). The project then progressed to the “experimentation phase” (Bocken et al., 2021), whereby participants collaborated with other value chain actors to co-create CBMs, aimed at delivering value to all involved. With the authors conducting the interviews and facilitating the workshops, the working group exemplified a “triple-helix collaboration” (Majava et al., 2013) between industry, government, and academia.

Data Collection

We collected primary data through interviews and co-design workshops. Yin (2009) highlighted the importance of interviews as they allow for the collection of historic evidence about a case, while workshops usually provide data from participants engaged in an innovation co-creation activity or in the study of a shared topic (Storvang et al., 2018). The legitimacy literature (Bitektine & Haack, 2015; Tost, 2011) also informed our decision to employ a combination of these data collection methods. We were able to explore individual assessments and behaviours within the group through interviews and workshops. To collect data using both means, we employed a multistep approach (Whalen, 2019) leading to two rounds of interviews and three workshops (Bryant & Charmaz, 2007).

Our multistep approach was guided by existing CE and business model studies. For example, Burgess et al. (2021) alerted us to the issue that value in business models for a CE can be captured unevenly, warranting us to organize the first workshop to discuss the challenge and to narrow down the focus of co-creating CBMs. We then conducted interviews to explore value chain actors’ interests in implementing a CE system for plastics. Osterwalder and Pigneur’s (2010) BMC informed, first, our interview guide using semistructured and open-ended questions, and second, the structure of the workshops to codesign new CBMs. Workshops 1 and 2, and the first round of interviews, gave participants a chance to highlight areas that they wanted to explore further in the co-creation of business models, informing the subsequent interviews and the final workshop. Supplemental Table S2 details the iterative data collection sequence, objectives, and outcomes to illustrate how each engagement with value chain actors influenced the later stages of the project. Overall, we engaged with 16 organizations during the data collection process covering both the upstream (e.g., packaging producers, product manufacturers, retailers, technology companies, and compliance agencies) and downstream (e.g., plastics recovery facilities, reprocessors, and local authorities) of the U.K. plastics value chain.

Sixteen interviews were conducted in the first round of interviews and nine in the second round with purposively selected actors within the consortium (Saunders et al., 2009). The nine participants interviewed in the second round were interviewed because of their expertise in food-grade polypropylene (the type of plastic that was the focus of CBM co-creation in our third workshop). Two of the workshops took place virtually and one in person. During the second and third workshops, data were collected through a discussion guide following the BMC (Osterwalder & Pigneur, 2010) and a whiteboard with sticky notes for design purposes.

Each interview lasted for an average of 1 hr, and the workshops took around 3 hours each. The total interview duration was around 30 hours from 25 interviews, aligning with data collection durations reported in other CBM research (e.g., Dagilienė & Varaniūtė, 2023; DiVito et al., 2022). The three workshops provided us with 12 hours of transcribed texts. In total over a 14-month period, the data collection period added up to 41 hours, which, according to Hennink et al. (2017), was enough to reach both code (“heard it all”) and meaning (“understand it all”) saturation in research.

Data Analysis

We transcribed and imported the saved whiteboard diagrams and discussions from the workshops and qualitative data from the interviews into the “Nvivo 12 Plus” software for analysis (Miles et al., 2014). The data were then thematically analysed using Gioia et al.’s (2013) framework to structure our findings into concepts, themes, and aggregate dimensions. As business models are centred on value and activities (Zott et al., 2011), we focused our analysis on the activities needed to develop a business model that delivers value to participating value chain actors. Within the activities, we paid particular attention to areas where value chain actors had drawn on the existing and emerging institutional context around plastic packaging (regulations, industry practices, consumer understandings, and rising climate change concerns) to assess the legitimacy of a One Bin vision for their organizations.

To generate the first-order codes, we inductively analysed how value chain actors evaluated the One Bin vision and its CBM proposition in the changing plastics sector. In the interviews, the data focused on views expressed by actors individually. In the workshops, we focused on both individual evaluations and the conclusions reached as a group about the CBMs being developed. The analysis generated a broad set of codes which we further consolidated into 29 first-order concepts. In line with the abductive method of analysis, we drew on existing studies on legitimacy (e.g., Deephouse et al., 2017; Suchman, 1995) and institutional work (Lawrence et al., 2009) to systematically interpret and group the first-order codes into second-order themes that captured the actions value chain actors were taking based on their evaluations of One Bin CBMs and the changing institutional context. We further explored interconnections among the nine second-order themes, which led to the abstraction of a legitimacy judgement and a response state from which value chain actors reacted to the outcomes of their legitimacy assessments. In addition, we identified an aggregate code to capture their active institutional engagements through advocacy.

As we generated the second-order and aggregate dimension codes, we alternated between theory and data, while continuously comparing our data across the interviews and workshops until we reached a point of meaning saturation (Hennink et al., 2017). The resulting data structure is presented in Figure 1.

Figure 1.

Data Structure Showing the First-Order (Evaluating Activities), Second-Order (Actioning), and Aggregate Dimension (Key Mechanisms) Codes.

Findings

This section presents our findings from exploring how value chain actors assess and co-create CBMs to develop CBMs for plastics. Our analysis focuses on two dimensions: a type of legitimacy judgement we call “inconsistent propriety” and a reaction we call “a state of dynamic vigilance.” The former (inconsistent propriety) represents the outcome of actors’ individual evaluations of CBMs, where its validity is contested amid evolving rules, norms, and practices in the plastics sector. The latter (a state of dynamic vigilance) describes a position that value chain actors assume due to their legitimacy judgement as a group. Below, we explain these dynamics, followed by an analysis of the advocacy work of value chain actors contributing to the changing institutional context. In this section, we also refer to value chain actors as “participants,” reflecting their role in this study.

Please note that we highlight certain terms throughout the “Findings” section. We later use these terms in the “Discussion” section to develop a theoretical model explaining how actors co-create CBMs. The variables of the model are indicated in bold, while feedback mechanisms between the variables are in italics.

Inconsistent Propriety

Inconsistent propriety refers to the hybrid judgement of value chain actors’ legitimacy evaluations of CBMs for plastics as both proper and improper. It represents the outcome of individually assessing the propriety of such business models at a time when the regulations, practices, and meanings around plastics are rapidly changing. We find that participants are assessing CBMs from a set of criteria informed by their existing and the changing institutional context. In their propriety assessments of the CBMs they are co-creating, participants acknowledge both how proper the CBMs’ value propositions are, and how improper the practicalities of realizing those propositions as a working group are, in the changing U.K. plastics context. Contestations among participants during the collective design of CBMs validate their individual assessments, resulting in their hybrid legitimacy judgement of the CBMs.

Perceived Value Complexity Amid Emerging Plastics Regulations

Perceived value complexity arises when participants perceive a disparity between the value proposed in CBMs and how that value would be created for each of them to capture. We find that the evolving legislation around plastics in the United Kingdom reinforces participants’ perceptions of complexity when assessing the One Bin CBMs. On one hand, One Bin’s value proposition to enhance the sorting of plastics and retain their original value using new digital technologies resonates well with participants. Some participants (e.g., retailer) see it as proper in helping them to reduce costs arising from the upcoming extended producer responsibility (EPR) legislation, which aims to subject all packaging put on the market to a levy according to how recyclable it is. Participants also perceive the collection of all plastics in a single bin as aligning with the emerging consistency of collection plans by the government, aiming to unify plastics collection and recycling across the United Kingdom.

On the contrary, despite the support for these CE value propositions, participants find the practicalities of establishing such a system vague, considering emerging legislation. As the cost of legislation like EPR, plastics tax, and the DRS is still unclear, participants are unable to fully assess the feasibility of implementing the CE value propositions such as a single waste stream of multiple plastics or justify investments in digital technologies:

. . . trying as well to understand more the implications of the (government’s) waste and resources strategy. I think you know, that should definitely be a key part of the dialogue that we’re having consistently . . . (Sustainable Packaging Manager—Product Manufacturer 2)

Economic opportunities that might arise from the upcoming legislation are also uncertain, making it difficult to assess the strategic potential of the CBMs being proposed. Participants have a prevailing sense that new CE business models are on the verge of being unlocked, but the lack of detail makes it difficult to assess and compare the potential of the value that a plastics CE could create. In addition, downstream participants are unsure about investing in sorting technologies due to uncertainty about changes upstream to comply with emerging legislation. We find that participants’ perception of impracticalities, in light of the emerging legislation, was formed prior to the group meetings to codesign the CBMs, as shown in the quote below. This perception is then validated in each workshop when participants meet to codesign CBMs, further reinforcing the uncertainty:

. . . those bits of legislation are probably going to be the biggest changes that have occurred in the industry for a long time and are incredibly important to get right.. .and there’s a lot of differing views . . . around how all of that’s going to play out. . . (Chief Information Officer—Material Recovery Facility 1)

Perceived Value Complexity Amid Emerging Plastics Practices

Participants use their existing plastics practices and new technological developments in the industry as criteria for evaluating the legitimacy of the CBMs. We find that participants perceive these business models as capable of eliminating confusion around plastics’ disposal and simplifying recycling for households, thanks to a single waste stream for all plastics that is consistent with kerbside collection mechanisms and in alignment with the government’s emerging plans. However, we find that details of applying digital technology to a plastics CE are still unclear to participants, an issue that is collectively acknowledged and validated when they meet to co-create new CBMs for plastics. It is challenging for participants to assess the extent of technology integration required and the benefits or drawbacks of transitioning from their current production and sorting practices to a digitally enabled plastics CE. Some participants highlight uncertainties around retrofitting new technologies into existing plastics infrastructures, and the feasibility of such retrofitting across multiple sites. They query who should be responsible for digital technology purchase and installations, particularly within the supply chain since the benefits are likely to accrue to all.

In addition, participants are still probing the cost and governance of digitally tagging and tracing materials and emerging data sets, which some of them believe can be validated only in group discussions:

In this industry, as in every industry, margins are so fine. I honestly believe that we need to have this meeting first and then that answers so many questions that actually, tray tagging, this, this, and this . . . we can all make it work but I think we need to be at that point first . . . (Operations Director – Packaging Manufacturer)

Uncertainties abound as to how the data should be stored and who will administer it, with some participants advocating that “. . . a 3rd party should hold the data (with clear permissions settings) but should be selected for competence in analysis and business intelligence tools, as well as reporting (Workshop 1).” Local authorities in particular are uncertain about the economic benefits of changing existing collection practices for a separate plastics stream. Also, participants are finding it hard to gauge the appetite of other actors in the industry for a new digitally enabled plastics system, making it difficult to assess the competitive advantage potential of technology investments.

Perceived Value Complexity Amid Emerging Meanings of a Plastics CE

We find that another criterion for participants’ legitimacy evaluations of the CBMs includes the varying meanings of a CE for plastics. For example, participants see collecting all plastics in a single bin as proper, since it is consistent with existing methods of realizing high material sorting efficiencies. Participants agree that having a separate stream for plastics could result in less contamination and increased recyclate value. They also see improved plastics sorting and recycling as aligning them with emerging perceptions of a green company.

However, we find varying interpretations of how a plastics CE might differ from the existing mixed collection practices, with some participants seeing both systems as similar (as shown in the following quote) and others interpreting a plastics CE as a separate stream for plastics only:

. . . I think that there’s a misinterpretation there . . . the One Bin project is focused on plastics, right? . . . I think first of all you know in the UK, I think it’s already being collected as mixed recyclables . . . (Sustainable Packaging Manager—Product manufacturer 2)

Our findings show that participants across the plastics supply chain have limited knowledge of emerging technologies and their potential commercial benefits. While some participants understand the data that a digitalized CBMs could generate, others are asking questions such as “When we talk about data, what do we mean?” (Workshop 1). We also find that despite participants acknowledging that digital technologies become more ubiquitous over the years, particularly after the pandemic, there was still uncertainty on how best to engage householders in a digitally enabled CE system. Participants’ individual assessments on emerging technologies and consumer aspects in One Bin are validated in group discussions through an active debate around easing the adoption of digital plastics systems for consumers:

. . . would say kind of the ease for consumers concerning plastic recycling . . . personally, it feels like that’s the best value opportunity to choose . . . if that makes sense but other people can disagree . . . (Workshop 2)

These perceived complexities in value across regulation, practices, and meanings indicate a hybrid legitimacy outcome (proper value proposition and improper value creation) from value chain actors’ evaluations, a judgement we call “inconsistent propriety.” This outcome indicates that value chain actors’ legitimacy judgement of the propriety of CBMs falls into neither the category of being solely proper nor purely improper, but rather a hybrid of both. The inconsistent propriety judgement is reached individually and validated collectively when value chain actors come together to design new CBMs. Supplemental Table S3 provides further evidence for each aggregate dimension describing the hybrid legitimacy outcome among value chain actors. Based on this outcome, actors assume a position which we describe as a state of dynamic vigilance.

A State of Dynamic Vigilance

A state of dynamic vigilance refers to an assumed position that actors take based on evaluating the CBM as inconsistent propriety. Within the rapidly emerging institutional context around plastics (e.g., regulations, digital technologies, and consumer awareness), value chain actors assume a position of dynamic vigilance, whereby they are playing both “multiple games” to see what becomes dominant and “moderate games” to see what is the most cost-effective or least disruptive. Both types of games are necessary to maintain their existing practices while remaining at the forefront of what could potentially become a source of competitive advantage in the plastics sector.

Playing Multiple Games

Our findings reveal the multiple games participants are playing, in the emerging institutional plastics environment, to stay alert to emergent changes, while maintaining existing practices for competitive advantage. This game is played to see which emerging technology, initiative or business model becomes dominant. One of the ways participants demonstrate the playing of multiple games is by emphasizing the need to wait to see the outcomes of emerging legislation for the industry, as it will help inform where and how to invest. This wait is important to participants as they are aware that new business models are likely to be facilitated by changing legislation for plastics:

. . . because you know, the reason why we recycle what we recycle now is because of landfill tax and the business models that are enabled to be created. You know, the next round of waste and resources strategy and the business models that will open up . . . All of that is incredibly interesting and incredibly hard to predict, as well. (Chief Information Officer—Materials Recovery Facility)

So, while participants are eyeing new potential business models that could be spurred by the new legislation, they are still keen to be involved in co-creating One Bin’s CBMs because, as discussed in the previous section, the value proposition seems proper and aligned with the legislation. To further demonstrate how they are watching developments on multiple sides, some participants express hope that One Bin’s work “would have to somehow integrate with” (Chief Information Officer—Materials Recovery Facility) the emerging legislative forms.

As participants perceive the CBMs as having the potential to create new income sources and competitive advantage, they seek to see it gain traction to be able to determine appropriately the benefits and evaluate its impact on their activities ahead of upcoming legislation. Participants keep sustained attention both on multiple plastics projects they are involved in and on the evolving institutional context for plastics. Participants emphasize their dependence on the current plastics environment, since they are yet to see any traction or any feasible demonstration on how to upscale emerging CE business models from any of the projects that they are involved in.

Playing Moderate Games

Alongside multiple games, participants are playing moderate games, to see which of the existing and upcoming digital technologies and CBMs are less disruptive to their existing arrangement. The most important aspect of that arrangement is cost. While participants are interested in One Bin’s value proposition of enhanced sorting of plastics through digital technologies, they are also seeking more cost-effective means of achieving the same outcome. Participants are willing to protect their existing arrangement by paying the plastics tax if it is cheaper than investing in a plastics CE. Within this moderate positioning, participants’ perspectives on cost and CE innovations differ. Some participants use environmental reasons to justify why other participants need to look beyond cost and adopt an innovative CE system whether it is disruptive or not. For example, product manufacturers say that retailers should be “switching now and accepting the on cost” if their “total and . . . number one goal, ignoring all other elements, is to have a more green, sustainable pack” (Group Sourcing Manager—Product Manufacturer 1). Digital technology providers highlight, during Workshop 2, the need for participants to establish a plastics CE regardless of its short-term cost.

Another aspect of participants’ arrangement where they seek less disruption, is their existing infrastructure. We find that participants prefer less radical means of achieving the same objectives as the digital technologies in One Bin, but with their existing infrastructure. For example, participants want to use current labelling at the bottom of their packaging to differentiate food from nonfood-grade packaging, instead of adopting new digital technologies. Participants are concerned about a slow speed of their machine belts to accommodate item-level tagging of products. One of the key concerns downstream is whether the current infrastructure can accommodate the new digital technologies for a CE, with some participants stating that “. . .size is an issue as the implication is more products equals more bays. Most MRFs [Material Recycling Facilities] are not built to be adapted” (Workshop 1). Such downstream participants are considering whether to update their existing infrastructure instead of installing new digital technologies across the many sites of their operations.

In addition, participants seek industry standards that would compel others in the plastics supply chain to adopt CBMs. We find that participants see the adoption of a new digital technology or business model that seems both proper and improper as a risk that could make them less competitive without accompanying industry standards:

. . . If they’re a choice, then they’re hard to make, you know . . . to support those investment decisions. Because if I do and my competitor doesn’t, then they’ve automatically got a competitive advantage on me. Whereas if it is a universal standard across the country . . . then everyone’s in the same boat (Managing Director—Packaging manufacturer)

In summary, participants are responding to a CBM perceived as both proper and improper through dynamic vigilance. The uncertainty associated with their inconsistent-propriety judgement of CBMs constrains actors in this dynamic vigilance position. From here, they monitor emerging legislation while looking out for plastics CE innovations that can become dominant and that are less disruptive to their existing cost, investment, and infrastructure arrangements. Supplemental Table S4 provides more empirical data for each aggregate dimension describing the dynamic vigilance state of value chain actors. We find that participants are not only seeking competitive advantage from their dynamic vigilance state, but are also simultaneously shaping the legislation, practices, and meanings related to plastics recycling, through advocacy work.

Advocacy Work

In our analysis, advocacy work refers to the actions that value chain actors are undertaking while in a state of dynamic vigilance to influence the changing institutional context. The dynamic vigilance of value chain actors’ grounds their advocacy work as they are able to use their expertise and awareness of developments within the plastics sector to drive their advocacy efforts in shaping those changes. We present four advocacy strategies through which value chain actors are enabling emerging rules, practices, and meanings in the U.K. plastics sector: advising, contributing, lobbying, and trialling.

Advising

Advising refers to individual expertise-sharing by value chain actors to shape the plastics regulatory, normative, and pragmatic institutional environment as it emerges. We find that some participants advise the government through contributions to consultations on emerging legislation. As the government is seeking input from the plastics industry regarding how the rules should function, it is an opportunity for participants to draw upon their organizational experiences in shaping the trajectory of legislation for the sector:

. . . we’re obviously heavily involved in consultations for the deposit return scheme, we’re highly in support of it. And ultimately, if that reduces littering, it ends up increasing the amount of feedstock that we get in our fleets. (Chief Information Officer—Materials Recovery Facility)

Aside from advising the government, participants are also engaged in advising other organizations in the plastics supply chain about their choice of plastic materials, to shape evolving norms and practices. We find that this advisory work mainly occurs upstream where participants with influence in the supply chain, for example, retailers are advising product manufacturers to reconsider certain materials that might affect their relationship, especially if such decisions are not in line with the retailer’s packaging sustainability targets.

Contributing

Contributing involves attempts to shape government policies and industry practices through working groups. For example, we find that participants join working groups set up by the government to shape upcoming plastics rules. Participants also join in industry working groups, for example, those set up by private nonprofit organizations, as a way of contributing to the discussions on plastics in the U.K. Such nongovernmental organization-led working groups consist of member organizations from across the plastics sector and wield considerable influence on industry norms and practices including plastics standardization and packaging labelling, as well as policy development for the sector:

. . . So, the plastics xxx (group) have set a target of 30% average recycled content in plastics and as an example of how xxx (NGO) influence government policy, that’s the target threshold that’s been set in the UK plastics tax. So that came from xxx (NGO) (Packaging Manager—Retailer).

Lobbying

Lobbying is an avenue through which value chain actors try to influence powerful actors or groups for regulatory change or to shape evolving industry practices. Our analysis shows that participants such as local authorities are working to influence the U.K. government on the standardization of plastics to improve recyclability, material value, and income generation for their councils. We also find that local authorities try to influence industry associations in the plastics sector around the same material standardization issue. Other participants contribute to research groups for plastics set up by universities, to generate outputs that can be used in lobbying:

. . . I think we can see the longer—term piece of work in both the period of the actual research and then also these are big changes, aren’t they? So, the kind of formulate a view and lobby around that . . . (Chief Information Officer—Materials Recovery Facility)

Trialling

From our analysis, we find that trialling involves private sector-led experiments to test and demonstrate technical feasibility, economic viability, or public acceptance of an initiative for the plastics sector. One type of trials includes new recycling technologies for plastics. Such trials, designed in partnership with the government and other organizations across the plastics supply chain, aim to test how well a recycling technology can identify and sort plastics. An essential part of the trials involves mimicking infrastructure at the production and sorting ends of the supply chain, to simulate a live operational environment. Another type of trials focuses on understanding households’ plastics practices and educating them on plastics recycling. By sharing outputs from the trials, participants shape evolving plastics meanings through their work with households, just as they shape evolving industry practices through their engagement with brands:

. . . So, we’ve got some very interesting open days happening. . .with about 20 brand owners, and we are going to hopefully onboard two or three of them to say, right, okay, yep, we’ll start printing some of those codes . . . (Founder—Technology company 3)

Outputs from the trials also inform plastics legislation enabling its evolution. Some participants fund in-house demos to prove the feasibility of plastics collection and traceability and to demonstrate to the local authorities or government that it is possible to collect and recycle all types of plastics sustainably:

. . . we’ve always come back to them (local authorities) and said, well, . . . what the pilot was doing this is to prove that it’s possible for you to do it . . . (Packaging Manager—Retailer)

Supplemental Table S5 provides further evidence for each aggregate dimension describing the advocacy work of value chain actors to shape evolving regulations, practices, and meanings a plastics CE in the United Kingdom.

Discussion

A Model of Legitimacy Assessment and Engagement in an Evolving Institutional Context

In this section, we develop a theoretical model explaining how multiple value chain actors with resources assess and engage in co-creating CBMs in the U.K. (Figure 2). The model is structured following the organizational legitimacy processes of perception, judgement, and behavioural response (Bitektine, 2011; p. 159; Deephouse et al., 2017). We start our discussion by explaining how value chain actors engage in co-creating CBMs, and then, how they assess CBMs in the evolving plastics CE context. We visualize our model in Figure 2, drawn from the perspective of an evaluator, that is, an individual value chain actor. We further discuss our model below, with variables of the model in bold and feedback mechanisms in italics.

Figure 2.

A Theoretical Model of Legitimacy Assessment and Engagement in Co-creating Circular Business Models in an Evolving Institutional Context.

Engaging in Co-creating CBMs in an Evolving Institutional Context

When value chain actors engage in co-creating CBMs for piloting (Bocken et al., 2021) in a rapidly evolving institutional context such as a plastics CE, they are also assessing the legitimacy of the intended CBMs to be developed simultaneously in their engagement—a process that shapes their behaviour during the process (Deephouse & Suchman, 2008; Suchman, 1995). In our study, we call the outcome of value chain actors’ evaluations of the CBM’s inconsistent propriety. Extending Deephouse et al.’s (2017) description of the outcome of legitimacy evaluations, inconsistent propriety describes individual value chain actor’s judgement of CBMs’ components as both proper (value proposition) and improper (value creation and capture) amid an evolving plastics CE environment. We find that these inconsistent propriety judgements are brought into group-level discussions to seek clarity, thereby informing the contestations and evaluations made as a group. In turn, the ensuing disagreements serve to validate these inconsistent propriety judgements. This process demonstrates the effect of group-level validity on individual-level propriety judgements (Bitektine & Haack, 2015).

Based on the value complexities actors perceive, actors assume a position we call a state of dynamic vigilance as a response to the constraining effect of changing institutional criteria. Consistent with seeing actors’ social position as a mediator in their relations with their embedded environment (Battilana et al., 2009), a state of dynamic vigilance describes the position the value chain actors assume, and act from, when the CBM they are engaging in is judged as an inconsistent propriety.

In this dynamic position, actors are watchful of emerging institutions while embarking on playing multiple and moderate games in search for dominance and cost-effectiveness among their existing arrangements and new business models. Value chain actors play both games simultaneously to see which options can deliver favourable outcomes for their individual organizations. In addition, our study shows that rather than merely watching how institutions in the plastics sector evolve, the multiple and moderate games are also how value chain actors influence plastics CE institutions through advocacy work (Lawrence & Suddaby, 2006). Participants participate in trials, working groups, consultations, and lobbying to shape how policy, industry practices, and consumer behaviours evolve. By enabling the evolution of rules, practices, and meanings through advocacy, they are also contributing to the changing legitimacy criteria that inform how they individually assess CBMs, therefore indirectly reinforcing their constrained dynamic vigilance position. This position provides the grounding for value chain actors’ advocacy that enables the evolution of institutions. We capture this dynamic reinforcement of value chain actors’ vigilance as the anchoring effect of evolving institutions on their position.

Assessing CBMs in an Evolving Institutional Context

When value chain actors with resources assess CBMs in an evolving institutional context such as a plastics CE, our findings show that they use assessment criteria from both established and emerging rules, norms, and beliefs, to individually assess each component of the business model, that is, the proposed value which they assess cognitively (Pinkse et al., 2023) and how the value would be created and captured which is based on material assessments. We find that participants assess the following elements within each collaborative business model component: consistency and alignment for value proposition, and integration and strategic potential for value creation and capture.

When value chain actors evaluate the value proposition in CBMs, they look for its consistency with established rules, not only within the local context but also across regions and in other sectors or countries where they do business. Value chain actors also cognitively assess the value proposition’s consistency with established methods and knowledge, such as how the CBMs for plastics can leverage existing practices of kerbside collection for collecting all plastics. However, when it comes to emerging rules, practices, and beliefs, value chain actors assess the alignment of CBMs with such institutional changes. For example, in our study, participants are questioning how the plastics CE value proposition aligns with emerging legislation such as the EPR and DRS. In addition, participants assess alignment with emerging technology innovations shaping plastics practices and emerging sustainability concepts (e.g., “CE”), especially when the evaluating organization has committed to sustainability targets.

For the value creation and capture, value chain actors materially assess the integrative nature of the new business models with their existing infrastructure, processes, cost, and revenue. Actors compare the technical and commercial feasibility of such business models to their existing arrangements. For example, even when a new technology brings minimal disruption, participants still consider fitting it with their existing systems rather than bearing the risk of installing new technologies wholesale. However, when emerging rules, practices, and beliefs are used as criteria for assessing value creation and capture, value chain actors consider the strategic potential of installing new technologies, adopting a new practice, or integrating their existing systems with upcoming legislation. The goal of such assessment is the competitive advantage that could come from adopting the new CBMs. Value chain actors consider how integrative the new business models are with upcoming legislation; whether the benefits of adoption are going to exceed the costs; and whether it would be an industry-wide standard that everyone must comply with, to protect their investments as early adopters and position them for competitive advantage. In addition, as perceptions of what it means to be green emerge, actors assess how participating in the new CBMs would strategically enhance their image as a green company.

In summary, by analysing how value chain actors engage in co-creating CBMs, our theoretical model captures how value chain actors assess CBMs in an evolving institutional context and how value chain actors respond when a CBM is judged as inconsistent propriety due to evolving institutional criteria.

Research Implications

We set out to explore the following research question: How do value chain actors assess and engage in co-creating CBMs in the U.K. plastics sector? Our analysis sheds light on what actors assess in CBMs, the hybrid type of judgement they form, and how they respond to such a hybrid legitimacy outcome. Our findings have implications for studies on organizational legitimacy and CBMs, and for the practices of establishing collaborative initiatives to attract resources. We discuss our findings by highlighting, first, our original contributions to the organizational legitimacy and CBM studies, and, second, the areas where our study confirms already existing findings in that literature. As original contributions, we highlight a unique form of hybrid legitimacy judgement we call “inconsistent propriety,” dynamic vigilance as a behavioural response to hybrid legitimacy judgements, and the anchoring effect produced by hybrid legitimacy evaluations. In addition, we confirm existing studies by emphasizing the alignment with system-level perspectives in CBM studies and addressing the contested validity of co-creating CBMs with multiple actors.

We contribute to studies on organizational legitimacy (Deephouse et al., 2017; Deephouse & Suchman, 2008; Suchman, 1995) by providing empirical evidence of the legitimacy dynamics of a CBM comprised of value chain actors with resources. Most applications of legitimacy in CBM studies are as a resource that can be exploited or built to facilitate market access for a product or service (Press et al., 2020; Valor et al., 2022; Zheng et al., 2023). Our work stands out as it adopts a legitimacy-as-judgement perspective to examine CBMs, thus providing a different angle compared with studies focusing on tensions within CBMs or on actors’ behaviour towards CBM establishment. Traditionally, organizational legitimacy was viewed as either legitimate or illegitimate (Deephouse & Suchman, 2008), but it has evolved to include accepted, proper, debated, and illegitimate outcomes (Deephouse et al., 2017). Our research presents a scenario where the judgement is hybrid, with CBMs being collectively judged as having a proper value proposition but an improper value creation aspect.

Our study shows that improper judgement does not imply outright illegitimacy but rather represents the inability of value chain actors to decide on the legitimacy of the CBMs’ component involving collective design with other actors. This finding is symbolized by actors’ continuous engagement in workshops, seeking information from other actors to validate their individual assumptions, reinforcing their uncertainty (see Supplemental Table S2). As a result, our study presents a novel form of hybrid judgement where a CBM is seen as appropriate yet impractical, contributing to studies that explore the grey areas between legitimacy and illegitimacy judgements (Siraz et al., 2023) and challenge dichotomous views of legitimacy (Deephouse et al., 2017; Deephouse & Suchman, 2008). This contribution opens avenues for future studies to explore additional hybrid legitimacy scenarios and the behaviours of actors involved in them.

In addition, our findings on hybrid legitimacy judgements add to multilevel legitimacy approaches during times of institutional change (Bitektine & Haack, 2015; Tost, 2011). We observed that through group-level engagement, actors validate their hybrid legitimacy judgements that in turn shape the validity of CBMs as contested at the group level. Hence, our study extends studies on judgement formation (Tost, 2011) by providing empirical evidence of how active individual-level legitimacy judgements are formed through engagement at the group level.

Following active evaluations of the regulatory, moral, and cognitive appropriateness of a CBM in the absence of institutional stability, our findings show how actors, instead of only triggering re-evaluation (Tost, 2011), demonstrate dynamic vigilance, actively shaping institutional developments to maintain legitimacy amid rapid institutional changes. We observe that dynamic vigilance is a response to inconsistent propriety judgements of CBMs and a state of constraint as actors monitor emerging institutions such as upcoming legislation and await further details before deciding the extent of their commitments to the CBM. While previous research has explored how actors cope with inconsistent criteria through decoupling or hybridization (Battilana et al., 2017; Boxenbaum & Jonsson, 2017), our study demonstrates a dynamic vigilance response that shapes the legitimacy criteria underlying these inconsistencies.

Based on actors’ vigilant behaviour, we demonstrate the diversity in how they react to their evolving institutional environment through the diversity in their multiple and moderate behaviours (Supplemental Table S6). Furthermore, we propose that the variability we observed in their behaviours is shaped by actors’ individual interests, as they pursue cost-effective strategies and strive to achieve a competitive edge in the evolving plastics industry. Our finding, therefore, provides empirical evidence to Bitektine and Haack’s (2015) perspective that changing institutional contexts offer actors multiple competing criteria, allowing them to strategically promote norms that align with their interests and goals.

In addition, our study elucidates the dynamics of actor evaluation and behaviour under conditions of institutional change (Bitektine & Haack, 2015; Wooten & Hoffman, 2016) by showing how actors’ judgements are reinforced by the evolving legitimacy criteria they help shape, a process we call the “anchoring effect.” From our findings, we argue that this effect might be responsible for value chain actors getting stuck at the CBM design phase, rather than moving towards piloting. As institutions evolve, changing legitimacy criteria complicate value chain actors’ assessments of CBMs, making them dynamically vigilant. This heightened vigilance can hinder their ability to adapt to new practices and potentially reinforce their tendency to stick to familiar methods. Consequently, the cautious and vigilant approach we observed among value chain actors in the evolving plastics institutional context may help explain the “paralysis” in adopting circular practices at scale (Bocken et al., 2023), due to difficulties to break free from entrenched linear economy models.

Our findings on the “anchoring effect” have significant implications for understanding organizational transformation towards a CE and for open innovation in co-creating new CBMs (Bocken, 2024; Bocken et al., 2023). This effect suggests that individual companies require group-level validation of CBMs, which determines how they assess and engage with co-creative innovation processes. Our study shows that this group-level validation is complicated by an uncertain institutional environment, particularly emerging policies, which creates challenges in aligning and perceiving the strategic potential of new CBMs. This uncertainty in the legislative landscape contributes to “circular paralysis” for organizations transitioning to a CE. The uncertainty may also hinder the development of novel CE ecosystems by increasing investment risks and potentially stifling innovation. For organizations to successfully adopt and validate new CBMs, legislative stability is crucial. Such stability would provide clear legitimacy criteria enabling actors to assess CBMs’ strategic potential and to collaborate with other ecosystem participants for a successful CE transformation.

In addition, our study contributes to the literature on CBMs (Linder & Williander, 2017; Pedersen et al., 2019) by drawing on the legitimacy lens to explain the co-creation of CBMs in an evolving institutional context. Employing this lens reveals that CBMs are not solely contested but also proper, and organizations are not merely hesitant to invest. The organizational legitimacy lens enables the expansion of our understanding beyond assumptions of reluctance and characterizes this behaviour as dynamic vigilance.

We also contribute to the system-level perspectives of CBMs (Abdelkafi & Täuscher, 2016; Kanda et al., 2021) by exploring a multi-actor effort to develop CBMs for a plastics CE. In line with Korhonen et al.’s (2018) view that a CE has become an “essentially contested concept” in its emergent state, we draw on our findings to confirm the contested validity of CBMs. As a result, CBMs are perceived as having inconsistent propriety (i.e., both proper and improper) at the individual level due to varying perception of their value complexities among value chain actors, particularly in light of changing institutions. We add that the outcome of value chain actors’ assessments of the consistency, alignment, integration, and strategic potential (Figure 2) of a CBM might help explain the contestations that usually arise during collaborative value creation (e.g., Oskam et al., 2021) due to misalignment of value judgements that influence behaviours. We capture our contributions to knowledge and our suggestions for future research in Supplemental Table S7 and present the various legitimation processes in Supplemental Table S8.

Conclusions

A circular economy transformation requires collaborative development of new CBMs among value chain actors (Bocken et al., 2023; Pedersen et al., 2019). This study sheds light on how value chain actors evaluate and respond to collaborative initiatives essential for driving the transformation. By illuminating their assessment and engagement in co-creating CBMs, we provide insights for designing collaborative sustainability initiatives that can meet diverse expectations. Our study brings together literature on CE, organizational legitimacy, and CBMs to unpack how value chain actors’ assessment of a CBM in a rapidly evolving institutional context shapes their judgement and corresponding behavioural responses. We show how value chain actors respond when a CBM is judged as both proper and improper. Such judgement, we argue, shapes actors’ behaviour during co-creating CBMs: they assume a dynamic vigilance position whereby they dip into many similar initiatives in search for competitive advantage while causing least disruptions to their existing arrangements. We draw out the elements that value chain actors assess in the value proposition, creation, and capture of CBMs and explore how their assessments, influenced by a changing institutional environment, impact organizational transformation towards “strong circularity” (Bocken et al., 2023), as a contribution to knowledge and to inform practice.

Implications for Practitioners

Our findings can have useful applications for practitioners since we explore how actors assess and respond when co-creating CBMs. Our analysis of what value chain actors with resources assess in a CBM can be useful when designing and executing collaborative initiatives that require actors’ resource commitments (Mallon, 2017). Organizations face barriers in implementing CBMs not only because of ambiguities in what a “CE” means in practice, but also because of a rapidly changing policy environment which makes it hard to predict returns on investments. Therefore, organizations developing new CBMs with partners along their value chain need to develop collaborative value propositions aligned with upcoming policies. Such value propositions can help to garner the interest of collaborating firms as they are more likely to make a quick cognitive assessment of a sustainability initiative in line with relevant rules, norms, practices to decide whether and how to engage.

We also show that actors are able to use their dynamic vigilant state as grounds for advocacy in shaping emerging rules, practices, and meanings. This proactive advocacy work is essential for staying relevant and competitive, especially in environments marked by institutional flux. We highlight four types of advocacy work that actors in a dynamic vigilant state do to shape the very institutions that they are monitoring: advising, contributing, lobbying, and trialling. Organizations seeking to advance the principles of CE might benefit from adopting the full range of advocacy work.

In addition, as the value co-creation process in CBMs is inherently fraught with tensions (De Angelis, 2022), our research underscores two criteria that are always questioned and might result in a firm’s reluctance to commit resources if there is lack of clarity: the degree of integration of CBMs with a firm’s existing systems and the potential for the proposed CBMs to confer competitive advantages. Practitioners seeking to co-create value with other firms and other relevant actors, for example, government, can draw on this insight to ensure buy-in.

Implications for Policymakers

Our work might be useful to policymakers looking to secure critical stakeholder support for policy schemes around a plastics CE. Existing research highlights how new laws are affecting both the plastics industry as a whole and specific business model of organizations (Adelekan & Sharmina, 2024b). Our research shows that organizations within the plastics value chain are striving to safeguard their current business models while remaining vigilant about the uncertain developments in the plastics policy landscape. Given that emerging policies influences organizations’ willingness to embrace CBMs, our findings suggest a way for policymakers to gauge the interests of various actors in the value chain and craft policy tools to encourage their participation.

For example, as integration is one of the criteria with which organizations in the plastics sector assess CBMs, policymakers need to be clear on how the emerging technologies proposed in upcoming CE policies will be integrated into the U.K. current recycling infrastructure. Such clarity is crucial because it can help the organizations that have structured their business models around current infrastructure and, therefore, view technological advancement as a disruption. Likewise, our study indicates that plastics companies are keen on the strategic potential of emerging innovative and collaborative activities. Policymakers can support such efforts through standardization, for example, standardizing plastic materials and emerging technologies associated with them. Such standardization would help organizations in the value chain to direct their resources accordingly, stimulating investments to advance the government’s CE objectives.

Most importantly, policies must actively support organizational transformation towards a CE. Previous research has highlighted that a lack of policy clarity regarding the interconnected elements of technology, investments, and business models can hinder CE transition plans (Adelekan & Sharmina, 2024a). Establishing and maintaining a stable policy framework in the plastics sector—one that is comprehensive, accessible, and offers clear guidance—can empower companies to invest in and adopt CE principles. It would also provide companies with a consistent set of assessment criteria, enabling them to renegotiate boundaries and foster collaborations with other actors, ultimately driving the development of innovative CBMs and ecosystems towards “strong circularity” (Bocken, 2024; Bocken et al., 2023).

Limitations and Future Research

Our study is not exempt from limitations. First, we collected our data through a consortium of organizations from the U.K. plastics sector. While our sample size is comprehensive with purposefully selected actors representing both upstream and downstream the plastics value chain, we acknowledge that our sample and views might not be representative of all stakeholders in the sector. Also, as our study focuses on a single sector, our findings might be specific to the structure and dynamics of the plastics sector. We acknowledge that there are limitations in generalizing our findings to other sectors going through similar rapid changes.

There are areas for further research emerging from our study. While we captured inconsistent judgements that might hinder the co-created CBMs from progressing towards experimentation, further research can uncover other barriers to CBM design, experimenting, and piloting (Bocken et al., 2021), and how to navigate them. In relation to hybrid legitimacy judgements of CBMs, compelling research questions include: How do actors, for example policy-makers, navigate situations where something is considered proper by one group but illegitimate by another, or where certain practices have recently shifted into illegitimacy?

While we explored how value chain actors perceive technological changes in the plastics industry, we did not unpack how advances in digital technologies in the sector are being used to influence legitimacy, as seen in, for example, Castello et al. (2016). Thus, there is an opportunity to further explore technology trials to understand and influence the value chain actors’ behaviour in the plastics sector, drawing on legitimacy theory as lens. While we documented the diversity in actors’ behavioural response to their changing institutional landscape, there is an opportunity to further explore heterogeneity in legitimacy judgements and responses such as differences among value chain actors of different sizes or collaborating actors across diverse geographical contexts in dynamic institutional environments. Such research could inform dynamic judgement formation over time and across space. We also acknowledge that our study focused solely on legitimacy dynamics and not issues of power and urgency explored in literature on stakeholder collaborations and salience (e.g., Mitchell et al., 1997; Surucu-Balci & Tuna, 2022). Therefore, the influence of power dynamics on actors’ assessments when co-creating the CBMs presents an avenue for future research.

Supplemental Material

sj-docx-1-oae-10.1177_10860266241300455 – Supplemental material for Co-creating or Confounding? Hybrid Legitimacy Evaluation of Circular Business Models in the U.K. Plastics Sector

Supplemental material, sj-docx-1-oae-10.1177_10860266241300455 for Co-creating or Confounding? Hybrid Legitimacy Evaluation of Circular Business Models in the U.K. Plastics Sector by Adeyemi Adelekan and Maria Sharmina in Organization & Environment

Footnotes

The authors are grateful to Mike Shaver,Siobhan Kilbride,Kris Kortsen,Helen Holmes,and Torik Holmes for their support and input throughout the project. The authors would also like to thank the companies and organizations involved in the ‘One Bin to Rule Them All’ consortium.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research,authorship,and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research,authorship,and/or publication of this article: This article is one of the outputs of the research project One Bin to Rule Them All,a collaborative venture funded by the UKRI Natural Environment Research Council (NERC) as part of the Smart Sustainable Plastic Packaging (SSPP) programme (grant no. NE/V01045X/1).

Supplemental Material

Supplemental material for this article is available online.

ORCID iD

Maria Sharmina

Author Biographies

Adeyemi Adelekan is a postdoctoral research associate at the University of Manchester. His research focuses on the intersection of organizational strategy and sustainability transformation,with a particular emphasis on circular business models for plastics and circular economy strategies within social enterprises. His work leverages management and organizational theories to explore innovative approaches to sustainability. Maria Sharmina is professor in energy and sustainability in the School of Engineering at the University of Manchester. Her research on low carbon energy and circular economy involves interdisciplinary approaches to complex policy problems,and aims to provide a conduit between academics and policymakers.

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