Abstract
To achieve industry-wide circular economy (CE) outcomes, such as material reuse or recycling, competitors need to join forces and enter the paradoxical relationship of coopetition, whereby competitors collaborate. According to the literature, coopetition can benefit sustainability. However, little is known about coopetition for a CE and how competitors, as stakeholders, can engage in resolving collective environmental challenges. This study examines the phenomenon of coopetition for a CE through an extensive multiple-case study from various industries in Finland. The findings indicate that coopetition for a CE can be organised through four distinctive modes of circularity: agreements for industry standards, pre-competitive R&D and knowledge-sharing, platforms, and reverse logistics systems. New industry standards supporting CE are set by engaging competitors in voluntary agreements. It is important to bring stakeholders together for CE-focused pre-competitive R&D and knowledge-sharing projects and networks. In applied and commercial coopetitive arrangements, stakeholder engagement (e.g., third-party coordination) enables cross-industry collaboration for reverse logistics systems, whereas platforms are used to connect stakeholders and match their supply and demand, thus facilitating the development of CE business models. Our chapter contributes to academic and practical discussions on how coopetition for a CE can manifest and how competitors, as stakeholders, can engage in collaboration and contribute to CE goals.
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Introduction
Under increasing pressure from stakeholders to accelerate the transition to more environmentally friendly ways of doing business (Geissdoerfer et al., 2017; Martín-de Castro, 2021), companies have started shifting their focus to sustainable solutions and a circular economy (CE). To advance CE initiatives and business models, companies often join forces with diverse external stakeholders (Bocken & Ritala, 2021; Konietzko et al., 2020), including their competitors (Martín-de Castro, 2021). The systemic nature of CE transition also requires competitors to enter the paradoxical relationship of coopetition (simultaneous competition and collaboration), which can be fraught with tension if not managed properly (Fernandez et al., 2014; Tidström et al., 2018). Competitors possess similar interests and capabilities in markets and technologies (Ritala & Hurmelinna-Laukkanen, 2009). Therefore, they are particularly well-positioned to engage in initiatives that can enhance industry-level practices and standards (Mione, 2009), including those facilitating environmental sustainability (e.g., Manzhynski & Figge, 2020; Volschenk et al., 2016). Thus, coopetition initiatives are crucial for advancing a CE, as horizontal collaboration in industries enables collective action challenges to be addressed and system-level outcomes to be achieved, both of which are vital for advancing a circular transition (Bowen et al., 2018; Manzhynski & Figge, 2020; Thomas & Ritala, 2021). Extant research has indicated that coopetition may advance a variety of CE outcomes, such as industrial symbiosis, recycling, innovation and setting new industry standards (Bowen et al., 2018; Brown et al., 2019; Jacobsen, 2006; Volschenk et al., 2016). However, the phenomenon of coopetition for a CE has been neither systematically addressed nor empirically studied. This study addresses this gap by providing empirical insights from a multiple-case study of coopetition for a CE.
The increasing emphasis on coopetition for a CE can be viewed as part of a broader trend in which firms need to collaborate with various stakeholders to accelerate the transition towards a sustainable CE (Aarikka-Stenroos et al., 2021; Gonzalez-Porras et al., 2021; Kujala & Sachs, 2019; Kujala et al., 2019), a situation which highlights the need for stakeholder engagement. Stakeholder engagement refers to the practices adopted by an organisation to involve stakeholders positively in its activities (Greenwood, 2007), and the analysis of stakeholder engagement is based on the aims, activities and impacts of stakeholder relationships (Kujala et al., 2022). Stakeholder engagement is especially important for companies in terms of sustainable development initiatives, as, for instance, circular-oriented innovation requires intensive collaboration between companies (Brown et al., 2021). This chapter focuses on the special characteristics of competitors as stakeholders and analyses the stakeholder engagement activities which are especially relevant to engaging competitors to collaborate for a CE. The similarities among competitors regarding their objectives and positioning in relation to different CE challenges can even simplify the management of these collaborative activities. However, the tensions inherent in collaboration between competitors (Gnyawali & Charleton, 2018; Tidström et al., 2018) can affect stakeholder engagement activities in CE contexts.
In this chapter, coopetition is understood as the simultaneously competitive and collaborative relationship between two or more organisations within the same value-chain position, or, in other words, between horizontal actors (Ritala et al., 2014). Coopetition, in general, has been discussed in the management literature in multiple contexts, and various advantages have been demonstrated (Bouncken et al., 2015), including the sharing of risks and costs, resource efficiencies and expanding current markets and creating new ones (Ritala et al., 2014). However, much of the coopetition literature has focused on the question of how companies secure private benefits from coopetition in addition to joint benefits (e.g., Gnyawali & Charleton, 2018; Ritala & Hurmelinna-Laukkanen, 2009). When studying coopetition in terms of the grand challenges, the outcomes must be considered beyond both individual organisational benefits and the immediate benefits of a particular coopetitive relationship (Crick & Crick, 2020; Manzhynski & Figge, 2020). Recently, more research has emerged on how coopetition can advance environmental sustainability, and this research has addressed, for example, logistics, shared green reputation, recycling and procurement (Christ et al., 2017; Meehan & Bryde, 2015; Rivera et al., 2017; Volschenk et al., 2016). Only a few recent studies have linked coopetition and a CE and suggested that a CE requires coopetition (Hirvensalo et al., 2021; Narayan & Tidström, 2020). Therefore, we need a comprehensive view of coopetition for a CE, as such a view is lacking. Furthermore, empirical insights are required to understand the dynamics of horizontal collaboration—coopetition—to advance a CE.
To address the identified research gaps of coopetition for a CE, the first research question is as follows: How do coopetitors organise to advance a CE? This question aims to explore the various ways of organising coopetition to address collective environmental challenges and create an understanding of the various approaches to organising coopetition that suit different situations and purposes. The second research question—How can competitors be engaged as stakeholders in coopetition for a CE?—explores how to steer this paradoxical relationship with stakeholder engagement. The third research question—What are the contributions of coopetition to a CE?—improves the understanding of how coopetition can promote a CE.
This chapter contributes to the limited understanding of coopetition in CE research. We develop new knowledge through an exploratory multiple-case study of horizontal collaboration for advancing a CE. We present and analyse 12 exemplary empirical cases on coopetition for a CE from various industries, such as retail, forestry, brewery, construction and manufacturing, in Finland. These cases showcase different levels of collaboration and competition as well as various types of stakeholder engagement. The empirical insights provide a comprehensive review of organising coopetition for a CE and extensive insights into stakeholder engagement for coopetition. This extensive multiple-case study allows us to identify patterns of coopetition for a CE and gives profound insights into the collaboration dynamics among competitors contributing to a CE. This study uses the stakeholder engagement literature to broaden the understanding of coopetition relationships and thus contributes to the intersection of coopetition, stakeholder engagement and CE literature.
This chapter is structured as follows. After the introduction, we discuss the theoretical background to the study, focusing on coopetition and stakeholder engagement for a CE. We then explain the methodology of our exploratory multiple-case study, followed by the study findings. Finally, we discuss the contributions of the theory, implications for practitioners, limitations and future research, followed by a brief conclusion.
Theoretical Background
The theoretical background for the study is at the interface of coopetition and stakeholder engagement research to advance a sustainable CE. First, coopetition is discussed as a form of collaboration, after which the second section presents coopetition as a CE setting. The last section discusses engaging competitors as stakeholders.
Coopetition as a Form of Collaboration
Coopetition refers to relationships in which two or more organisations are simultaneously involved in both cooperative and competitive interactions (Bengtsson & Kock, 2000). Coopetition occurs between horizontal actors, that is, companies with the same value-chain position (Ritala et al., 2014). According to the seminal perception of coopetition, competitors create a bigger pie together (i.e., create more value), and through competition, the pie is divided (i.e., value is captured) among the actors in the coopetitive relationship (Brandenburger & Nalebuff, 1996); thus, in coopetition, companies aim for better or more encompassing outcomes together than those possible for individual companies to achieve alone (de Resende et al., 2018). The essence of coopetition is the realisation of collective goals and a joint understanding that a rising tide lifts all boats (Mathias et al., 2018).
Typical drivers for companies to enter coopetitive relationships include improving efficiency by sharing resources and knowledge (Bengtsson & Kock, 2000, 2014). Synergies achieved by coopetition catalyse various collaborations among companies (de Resende et al., 2018). Because competitors within the same industry have common challenges and similar objectives, their resources and capabilities are often relevant to each other (Gnyawali & Park, 2011), which drives the formation of coopetition relationships (Bengtsson & Raza-Ullah, 2016; Gnyawali & Park, 2011). A common vision and shared goals stemming from mutual objectives and complementary needs are necessary for coopetitive relationships to succeed (Bengtsson & Kock, 2000; Planko et al., 2019).
Coopetition relationships are most often viewed in a dyadic setting, and the literature has provided many means for managing such relationships (for a review, see Bengtsson & Raza-Ullah, 2016). However, when coopetition occurs in a network or an ecosystem or horizontally within industries, the relational dynamics change because the influence of a single company on the coopetition-partner selection is more limited than in dyadic coopetition (Choi et al., 2010; Czakon & Czernek, 2016; Hannah & Eisenhardt, 2018). Furthermore, trust-building mechanisms in coopetitive arrangements differ depending on the number of actors and their commitment to collective activities (Czakon & Czernek, 2016), and the balance between cooperation and competition can be increasingly challenging as the number of actors increases (Hannah & Eisenhardt, 2018). Collective system building also requires close cooperation between competing companies through information sharing and resource pooling, which introduces additional risks (Planko et al., 2019). However, such risks can be mitigated by various governance structures, such as using a neutral intermediating or orchestrating actor (Pinnington et al., 2021; Ritala et al., 2009).
Coopetition Enabling a Sustainable CE
Although a vast majority of coopetition studies have focused on the economic profitability of the relationship, recent research has discovered that coopetition serves multiple purposes which extend far beyond purely financial measures, for example when competitors address environmental sustainability and CE challenges together. A CE—‘an industrial economy that is restorative by intention and design’ (Macarthur, 2013, p. 14)—can be seen as a systemic phenomenon which underscores the need for collaboration among multiple actors (Aarikka-Stenroos et al., 2021; Harala et al., 2023), including horizontal actors, to gain an industry-wide commitment to promote CE initiatives. A sustainable CE refers to a CE that considers simultaneously the environmental, social and economic aspects of sustainability (Velenturf & Purnell, 2021). Collaboration among competitors can deliver positive outcomes on the macro-level for society as well as on the micro-level for individual companies (Manzhynski & Figge, 2020). Thus, presumably coopetition for a CE can also deliver positive outcomes on the micro- and macro-levels which are complementary. The micro-level lens allows us to assess the business model benefits for individual companies (e.g., Bocken & Ritala, 2021), while the macro-level lens helps to explain the system-level impact of advancing a CE. Most of the literature on coopetition outcomes has focused on economic profitability on the micro-level (e.g., Bengtsson & Kock, 2000; Gnyawali & Park, 2009, 2011; Ritala, 2018; Ritala et al., 2014). However, when aiming for collective system-level outcomes in advancing sustainability and a CE through coopetition, environmental and societal issues must also be considered (Manzhynski & Figge, 2020). The viability of coopetition to advance sustainability depends on the perspectives of the stakeholders involved in it (Manzhynski & Figge, 2020), as coopetition to advance environmental sustainability does not only bring benefits but also entails risks (Planko et al., 2019). The risks of coopetitive relationships, for example, opportunistic behaviour, do not disappear even though coopetition aims to advance sustainability (Hahn & Pinkse, 2014).
To achieve the collective system-level outcomes required to advance a CE, coopetitive relationships must involve multiple companies or organisations. For example, coopetition is required to establish joint standards (de facto or de jure), frameworks and institutions at the industry level (Mione, 2009; Ritala et al., 2009). According to previous research (e.g., Czakon & Czernek, 2016; Della Corte & Aria, 2016), in network coopetition, actors seek to join a network, are invited to join a network or establish a network together (Czakon & Czernek, 2016). In collective horizontal coopetition, all or most of the major competitors in an industry collaborate, for example, to develop a new idea, technology or standard collectively, while simultaneously competing in other areas of business (Choi et al., 2010). Therefore, coopetition initiatives for a CE might include both industry-wide endeavours and more targeted coopetition projects by a limited number of industry actors. In the latter case, coopetition might be a way for an actor to (competitively) differentiate itself from the rest of the field in terms of CE contributions, while the former case might help the whole industry increase its viability and legitimacy.
The literature linking coopetition to sustainability is nascent, albeit developing; however, studies have, to date, argued that there are potential benefits in various areas, such as collective action problem-solving (Bowen et al., 2018), logistics (Christ et al., 2017; Limoubpratum et al., 2015), recycling (Volschenk et al., 2016), sustainable procurement (Meehan & Bryde, 2015) and the application of coopetition strategies to sustainability at the corporate level (Christ et al., 2017). In addition to this research discussing coopetition for sustainability, two very recent studies have suggested that coopetition plays an important role in a CE. Hirvensalo et al. (2021) showed coopetitive relationships in circular city ecosystems, whereas Narayan and Tidström (2020) studied the operationalisation and optimisation of coopetition using tokens to support CE transition. However, this initial stream of research needs a more thorough understanding of various forms of coopetition for a CE, which is contributed by this study. To provide a basis for this study, the previous studies addressing coopetition in the environmental sustainability or CE context are presented in Table 10.1. This table does not list all studies conducted on horizontal collaboration but, rather, those in which coopetition has been explicitly studied as a relationship between simultaneously competing and collaborating actors (Bengtsson & Kock, 2000).
Engaging Competitors as Stakeholders in a CE
In this study, we focus on competitors as stakeholders to be engaged through coopetition for a CE. Traditionally, competitors are regarded as unintended stakeholders, not engaged deliberately, with coercive powers enabling them to influence the focal organisation in either harmful or beneficial ways (Bacq & Aguilera, 2022). However, when employing coopetitive strategies for a CE, competitors are more likely intended stakeholders, and referring to Bacq and Aguilera’s (2022) analysis, such ‘coopetitors’ can become empowered stakeholders, sharing the same goals or mission. Thus, when analysing coopetition for a CE from a stakeholder’s perspective, competitors can be viewed as each other’s stakeholders, with joint interests and objectives, as the collaboration benefits the industry as a whole (Rivera et al., 2017). What distinguishes competitors as stakeholders from non-competitive actors is the potential that tensions between competitors will persist despite their common interests (for a discussion, see Ritala & Hurmelinna-Laukkanen, 2009; Gnyawali & Charleton, 2018). Therefore, competitors as stakeholders represent an interesting setting in which they might possess conflicting motivations and goals while sharing both an ‘intended’ and an ‘empowered’ stakeholder relationship.
Stakeholder engagement can be understood as the ‘aims, activities and impacts of stakeholder relations in a moral, strategic, and/or pragmatic manner’ (Kujala et al., 2022, p. 4). Similar categorisations of the contents of stakeholder engagement have been presented in the literature with terms such as purposes, reasons and incentives substituting aims. Stakeholder engagement activities are referred to as steps, practices, approaches, levels and methods, whereas related terms for impacts include outcomes, implications and contributions (Kujala et al., 2022; Novoa et al., 2018; Sachs & Kujala, 2021; Shackleton et al., 2019). This chapter follows the most recent way of organising stakeholder engagement contents (Kujala et al., 2022), namely into the aims, activities and impacts of stakeholder relationships.
When engaging competitors as stakeholders to advance a CE, stakeholder engagement should be analysed from a macro-level perspective rather than a focal organisation perspective (for stakeholder engagement levels, see, for example, Gonzalez-Porras et al., 2021). The seminal work of Freeman (1984) presents stakeholder engagement at three levels, starting from the rational stakeholder identification level, proceeding to the procedural stakeholder communication level and finally reaching the transactional stakeholder involvement or dialogue level. Stakeholder engagement comprises integrative stakeholder engagement, examining stakeholder relationships, communicating with stakeholders and learning with and from stakeholders (Freeman et al., 2017; Sachs & Kujala, 2021). These also link to the means of trust building and value creation in coopetitive relationships, which makes coopetitive relationships interesting settings for analysing stakeholder engagement. In coopetitive relationships, active learning over time by partners deepens trust and cooperation (Hannah & Eisenhardt, 2018), and competing companies have to share information and pool resources to enable collective system building in close collaboration (Planko et al., 2019). According to stakeholder engagement research, relationship development is an ongoing process that advances over time (Freeman, 1984; Greenwood, 2007), which, again, provides fruitful ground to focus on coopetition through stakeholder engagement lenses.
Stakeholder engagement has also been recognised as relevant in the context of CE and sustainability (e.g., Gonzalez-Porras et al., 2021; Hörisch et al., 2014; Kujala et al., 2019; Marjamaa et al., 2021; Salvioni & Almici, 2020). Hörisch et al. (2014) identified three challenges faced in managing stakeholder relationships in sustainability management: strengthening the particular sustainability interests of stakeholders, creating mutual sustainability interests based on stakeholders’ interests and empowering stakeholders to act as intermediaries for sustainable development. These challenges can be addressed through regulation, education and sustainability-based value creation for stakeholders (Hörisch et al., 2014). In addition to contributing to organisations’ business goals, comprehensive stakeholder engagement can support the transition to a CE and enhance economic, social and environmental sustainability through improving stakeholder relationships as well as creating timely awareness of sustainability-related issues (Salvioni & Almici, 2020). In turn, the push for a CE transition can improve stakeholder engagement because the CE can enable and boost stakeholder collaboration (Kujala et al., 2019). A recent study by Marjamaa et al. (2021), conducted in the Finnish context, indicated that stakeholders share an interest in promoting a sustainable CE while pursuing their own CE interests, which provides a strong foundation for studying stakeholders’ engagement in coopetition for a CE in Finland.
Methodology
Research Design and Case Sampling
To create the much-needed understanding of coopetition for a CE (Christ et al., 2017; Manzhynski & Figge, 2020), we conducted an exploratory and qualitative multiple-case study (Yin, 2003, 2018). A qualitative research strategy was chosen because it enables the understanding of complex real-life situations (Hirsjärvi et al., 2009). An exploratory approach was chosen due to its suitability for studying emerging topics (Corbin & Strauss, 2008) and to address the lack of understanding of coopetition for a CE (Table 10.1). Given the lack of empirical evidence on deploying coopetition strategies to promote a CE, a multiple-case study with numerous cases across multiple industries was undertaken, and the chosen design allowed us to identify patterns across coopetition cases for a CE. A multiple-case study design strengthens the generalisability of the findings and reduces unexpected vulnerabilities in the selected cases while enabling a cross-case analysis (Yin, 2003). The cases in this chapter refer to various industry-wide initiatives, networks, projects, platforms and systems. These cases were chosen through maximum variation sampling in different industries which are especially relevant for a CE, for example, retail, construction, plastic and textiles. Typical case sampling per industry was used to identify the most typical coopetitive initiatives for a CE within these industries in Finland (Patton, 1990, 2002). Selecting typical case sampling (Patton, 1990) within these relevant industries fulfilled the research objectives of describing and illustrating what is typical in coopetition for a CE.
The cases were selected through a pre-study, including extensive expert interviews and discussions, news articles and internet sources. In the initial case identification, 15 potential cases were tracked and initially analysed, of which 12 were chosen to provide variation. As understanding of coopetition for a CE in Finland is scarce in practice and in theory, industry experts were interviewed to identify what is typical regarding the coopetitive activities performed to promote a CE in various industries in Finland. The 12 cases were all selected from Finland to diminish variation in geographic context and related institutions. Conducting research in the CE context in Finland is justified, as the Finnish government aims to strengthen the country’s role as a pioneer in CE and Finland has a strategic programme to promote such an economy (Finnish Ministry of Environment, 2021). Selecting a broad set of 12 cases allowed us to compare numerous cases, detect similarities and differences in them, theorise them and thus identify generalisable patterns explaining coopetition for a CE. The cases span business and society, including the retail, construction, plastic and textile industries, as well as industrial cases. Coopetition in all of the selected cases has happened within the last five years. The selected cases also capture different levels of success: most are ongoing success cases, while in some, collaboration has ceased (see Table 10.2) because, for example, coopetitive stakeholders have not been sufficiently engaged. However, we do not want to categorise the cases as complete successes or failures, as collaboration can be seen as dynamic and a continuum rather than a category (e.g., Ingstrup et al., 2020). Thus, we believe that ceased cases are fruitful for examining what went wrong in stakeholder engagement and revealing what would have been required to foster coopetition. Four cases were chosen as primary cases as we had an opportunity to study them particularly closely through interviews, expert discussion and secondary sources. Table 10.2 presents an overview of the studied cases and their data sources across the various industries; the primary cases are marked in bold.
Data Collection and Analysis
In the pre-study, primary data, such as expert interviews and discussions, enabled the identification of the most relevant and typical cases of coopetition for a CE from various industries in Finland. Most cases included one or two main expert interviews or discussions, which were then complemented with secondary data or supplementary interviews. Interviews were conducted during 2019 and 2020. Secondary data included presentations, a lecture, internet sources, news articles, information booklets, brochures, theses and a report, which were used to triangulate the primary data from interviews. Some of the cases were sourced closely, including more interviews and secondary data, while others were regarded as more complementary and sourced mostly through secondary data sources. Four cases were sourced particularly closely, as they were regarded as primary cases in terms of presenting various industries and different types of coopetition settings. These cases are marked in bold in Table 10.2. Data analysis was initiated by inductively identifying patterns from the data with data-driven coding and sorting the data into tables (Gibbs, 2018). First, within each case, the collaborating horizontal actors, coopetition settings, rationale for coopetition and contribution to a CE were identified, analysed and sorted into tables. Following this, the cross-case analysis identified similarities as well as differences across the cases, which enabled us to identify more theorised patterns and categorise the cases. The initial inductive data analysis was followed by multiple deductive analysis rounds on the basis of the stakeholder literature regarding, for example, the aims, activities and impacts of stakeholder relationships in coopetition initiatives for a CE. To ensure the research quality, data triangulation was performed using different data sources, and the collected data were handled carefully, which included recording and transcribing the interviews.
Findings
Our cross-case analysis revealed four categories of coopetition for a CE: agreements for industry standards, pre-competitive R&D and knowledge sharing, platforms and reverse logistics systems. These categories, their coopetition characteristics, the collaborating stakeholders within cases, stakeholder engagement for coopetition and contribution to a CE are further explained in Table 10.3 and the following sections.
Agreements for Industry Standards Supporting a CE
Having competitors involved in industry-standard settings refers to building the groundwork for a more competitive environment for industry; that is, when the entire industry develops, the horizontal industry actors benefit from the improved competitive environment as well. When competitors collaborate on technical or other industry standards, they set up the rules, norms and practices in their shared environment and therefore make it clear how and under what conditions firms are allowed to compete. In the CE context, this is particularly important work, as it creates equal operating conditions for the entire industry, which allows companies to compete and differentiate among themselves while improving particular CE goals and the sustainable development of a particular industry more widely.
The cases categorised as agreements to set new industry standards, in which the actors in certain industries have committed to joint goals, are the material-efficiency commitment, the energy-efficiency agreement and an initiative by retailers to not hand out free plastic bags to consumers. These cases illustrate how horizontal actors from various industries enter coopetitive relationships through agreements and commitments to set new industry standards. The motivation for companies to join these agreements and commitments stems from building positive sustainability brands and improving profitability. Companies from specific industries join to match their competitors; thus, companies can set new standards for the industry as a whole. For example, the initiative to reduce plastic bag usage by not giving out free plastic bags spread quickly among retailers before legislative constraints, because it would have been negative for a company’s sustainability image to be the only retail store still following this practice. In addition, the first movers initiating these changes in their industries might gain significant sustainability brand benefits among consumers.
Regarding stakeholder engagement in coopetition, all three of the cases in question were initially based on voluntary agreements. Today, an EU directive guides retailers’ plastic bag decisions. However, the material-efficiency commitment and energy-efficiency agreement facilitated by Motiva, a state-owned Finnish sustainable development company, are still voluntary for companies. Motiva motivates companies to join the energy-efficiency agreement on its webpage by stating, ‘Join an agreement and increase the efficiency of your energy use—you will improve profitability, demonstrate your own responsibility and build a positive public image’. According to the senior experts interviewed at Motiva, when energy-efficiency agreements reach sufficient coverage in an industry on a voluntary basis, no legislative constraints are required. The companies that have signed up to these agreements participate in co-development and share best practices to improve energy efficiency. Regarding the coopetitive aspects of the agreement, a senior expert explained that even though energy efficiency is a significant competitive factor due to cost reductions, the companies do not see it as an area in which they could not collaborate with their competitors.
Agreements for industry standards can significantly contribute to a CE. Retailers not giving out plastic bags for free has recently had a great impact in decreasing the use of plastic bags. The material-efficiency commitment aims to reduce companies’ environmental impacts; for example, the food retail sector aims to reduce food waste and increase recycling rates during the commitment period. The objective is to expand the material-efficiency commitments coordinated by Motiva into other industrial sectors. Energy-efficiency agreements enhance the efficient use of energy and thus combat climate change.
Pre-Competitive R&D and Knowledge-Sharing for a CE
Pre-competitive R&D and knowledge sharing allow competitors to increase their future value creation and capture potential by developing new industry-relevant knowledge, innovation and insights by collaborating in clusters, networks or projects with the aim of jointly addressing common CE challenges. The competitive pressures in such projects are deemed generally low, given that commercial use cases are still far away and the knowledge being developed is potentially useful for and applicable to all actors’ CE objectives.
Case examples of such a collaboration include the knowledge network New Plastics Center (NPC) in Lahti, the co-innovation project PLASTin and the collaboration network Telaketju. These cases engage various actors to contribute jointly to a CE. NPC and PLASTin address the challenges of plastics together with plastic industry actors and research organisations, whereas Telaketju advances the CE of textiles in a collaboration network comprising textile companies, recycling and waste operators, municipalities, charity organisations and research organisations.
The stakeholder engagement enabling collaboration among competitors in these pre-competitive R&D and knowledge-sharing cases is based on bringing various stakeholders together to advance a shared goal. In addition, conducting research enables and advances collaboration within these networks or projects, and research organisations play an essential role in these cases. A third-party coordinator may ease collaboration between competitors. A project coordinator describes their role as ‘to be a sort of orchestrator because we feel that we are an objective actor’. NPC was established in collaboration with two plastic industry associations, Muoviteollisuus ry and Muovipoli Oy, which advanced the collaboration between the companies in the network by facilitating joint projects, gathering information on biomaterials and promoting networking.
The CE contributions of NPC, PLASTin and Telaketju concern advancing the CE of plastics and textiles. NPC solves plastic-related challenges through new innovations, developing new materials and products and promoting networking in the plastic industry. The PLASTin project aims to improve the recycling rate of plastics and create new business opportunities from the current plastic challenges in Finland. Telaketju promotes the sustainable production, usage and circulation of textiles.
Platforms Enabling CE Business Models
Digital platform-based business models in the CE context can effectively match the supply and demand among companies that can both sell and buy excess materials and resources. Competitors typically acquire and use similar resources; therefore, CE platforms are often set up in horizontal industry settings where those selling and buying are often (but not exclusively) current or potential competitors. At best, platform models can become good businesses on their own and, at the same time, improve CE outcomes in the entire industry.
Coopetition to contribute to a CE can occur through different, mostly digital, platforms, which enable industry-wide collaboration to promote, for example, material circulation and industrial symbiosis. Some platforms are run by a particular for-profit organisation with a platform-based business model, while others are based on a broader collective effort. Materiaalitori, Maapörssi and Loop Rocks in the construction industry and CEP in the forestry industry represent industry-wide platforms in which one organisation provides the platform and the entire industry can use it. Materiaalitori and Maapörssi are up and running, whereas Loop Rocks and CEP have stopped operation.
The challenge to engaging competitors to use these platforms is fostering trust in the platform. If a particular firm provides a platform or actively participates in platform development, the competitors of the platform owner might be sceptical about using the platform or entering information into it. Companies do not want to share data regarding their proprietary business or, for example, production volumes or side-stream volumes, which might be necessary information for the efficient use of platforms facilitating industrial symbiosis. A senior expert described the challenge of information-sharing between competitors thus: ‘For example, exact waste amounts can reveal too much for competitors. Companies may want to keep the information related to core business to themselves. That is maybe where the limit is’. Trade secrets must be handled carefully on platforms which engage horizontal actors. Platforms can operate in different ways and yet facilitate successful horizontal collaboration, advancing CE outcomes. The Materiaalitori platform, provided by the Ministry of Environment and administrated by a trustworthy third party, Motiva, is free of charge and open to all industry actors. In contrast, Maapörssi is a private company providing a platform which requires registration, and registering a profile on the platform incurs a cost. Maapörssi’s operation mode can promote trust in the platform because it corresponds to conventional market logic.
Platforms developed to promote a CE contribute to the CE when they achieve extensive coverage and usage in the industry. These platforms enable the circulation and reuse of materials and may thus promote resource efficiency and enable industrial symbiosis. However, the platforms themselves do not create value chains, which was regarded as a challenge for CEP in aiming for new business creation. Value chains have to exist, and a platform is a good tool to easily match the supply and demand of materials and services.
Reverse Logistics Systems for Circular Operations
Reverse logistics systems often require horizontal collaboration to enable efficient operations and substantial contributions to a CE. The motivation for competing firms to engage with such initiatives lies in their ‘positive-sum’ nature. Competing firms can improve their own material efficiency and, at the same time, improve their CE goals and CE outcomes by enabling circular value chains for the overall industry.
Our case examples of reverse logistics systems include the beverage package recycling system and Kinkkutemppu, which engage competitors to collaborate in recycle and reuse operations. Beverage package recycling in Finland dates back to the 1950s and has developed into a well-functioning and efficient recycling system, resulting in high return rates. Kinkkutemppu, a recently launched initiative, enables cooperation to ensure excess cooking fat can be reused and R&D can be undertaken into fat reuse.
Both cases engage consumers to participate in enhancing a CE by returning their beverage packages and excess cooking fat. For companies participating in these recycling systems, collaboration benefits their sustainability image and marketing. The beverage package recycling system is guided by regulations exempting beverage producers from packaging tax when they join a recycling system and obliging retailers to accept returns if they sell beverages. There is no regulatory guidance for collaborators in Kinkkutemppu. The operations of these recycling systems engage the entire supply chain. Therefore, the value chains comprise of different actors from various industries; thus, horizontal collaboration occurs simultaneously in different industries. Stakeholder engagement activities in the Finnish beverage package recycling system include a central actor administrating and coordinating collaboration within a recycling system in which the consideration of trade secrets and regulations eases the collaboration between competitors. This third-party coordinator, Palpa, reduces the tension between competitors and maintains a balance between the interests of different actors within the system. A manager from the brewery industry described Palpa’s role in the recycling system as ‘mostly to operate from the recycling system’s perspective and maintain the balance in a way that the system isn’t based on the will of breweries or on the will of retail companies; instead, Palpa ensures that the system is as efficient as possible and consumer-friendly and that the return rates are high’.
These reverse logistics systems demonstrate significant CE contributions at the national level in Finland. In particular, the Finnish beverage package recycling system, with a return rate of over 90%, is among the most efficient beverage package recycling systems globally, enabling the recycling of plastic bottles, aluminium cans and glass bottles. During the Christmas season in 2020, Kinkkutemppu was able to collect 55 tonnes of cooking fat for use in renewable fuel production.
Coopetition for a CE: Synthesis
Coopetition for a CE can take various forms, which have different requirements for stakeholder engagement and make different contributions to a CE. The cases were divided into four categories, demonstrating the various coopetitive activities engaging competitors to advance a CE together. Figure 10.1 provides a visual synthesis of the coopetition categories we found among our cases, which we briefly elaborate on in this section.
Our findings portray coopetition initiatives both in foundational areas (industry standards and pre-competitive R&D) and at the more applied and commercial end (reverse logistics systems and platforms). The triangular shape in the picture depicts how the groundwork for joint CE-related industry principles helps organisations to engage in joint research and, later, joint business models. Such initiatives, however, do not occur linearly; more likely, there is activity going on in all ‘layers’ of the industrial and economic system. In all layers, the coopetition for a CE involves many types of stakeholder engagement, which we briefly discuss below.
Agreements for industry standards supporting CE and resource-efficient operation modes can rapidly shift the practices and processes in an industry in a more sustainable direction when all industry actors are involved through peer pressure or, later, by legislative measures. We found evidence of agreements and commitments that enable the setting of new industry standards and may lead to co-development and the sharing of best practices to advance a CE. The agreements for industry standards are typically voluntary initiatives which companies join to match their competitors and build positive sustainability brands. However, the peer pressure from competitors to join sustainability-related agreements and commitments boosts companies’ engagement in collaboration.
Pre-competitive R&D and knowledge sharing for CE networks and projects to increase resource circularity bring different stakeholders together with the aim, for example, of addressing plastic-related challenges, improving the recycling rate of plastics and promoting the CE of textiles. We found that conducting research and creating new understandings are important when engaging competitors to collaborate to address shared challenges. Platforms enabling circular and resource-efficient business models promote the circulation of materials and components and thus facilitate resource efficiency. The platforms enable the connecting of stakeholders and matching their supply and demand, thus potentially enabling industrial symbiosis. We found evidence that platforms can operate in various ways to achieve sufficient coverage in the industry. However, building trust in the platform is required to ensure sufficient coverage and usage to contribute to a CE.
The studied reverse logistics systems between competitors can make linear value chains more circular by enabling, for example, closed loops, which enable more circular operations in value chains, such as recycling beverage packages and reusing cooking fat. In particular, the Finnish beverage package recycling system significantly contributes to the CE, with over 90% return rates of plastic bottles, glass bottles and aluminium cans. Third-party coordination or facilitation of collaboration is important for major national and cross-industry systems, such as beverage package recycling systems. A third-party coordinator can facilitate the consideration of trade secrets and competition regulations, which is important when competitors collaborate regarding, for example, data inputs to platforms or production volume estimation in the beverage package recycling system. Third-party coordination can reduce tensions between competitors, which enables smoother collaboration. In the beverage package recycling system, this was addressed by, for example, maintaining the balance between the interests of different actors, focusing on operations and considering trade secrets in the operations of the recycling system.
All four types of coopetition for a CE seem to benefit from third-party facilitation. Our cases indicate that such third-party facilitation between competitors should understand different institutional logics (see, for example, Ingstrup et al., 2020) and thus take into consideration the competitors’ different interests and perspectives in order to engage competitors and enable feasible collaboration. Previous research has identified that implementing a sustainable CE requires coordination or intermediaries, such as academic or third-party organisations, government bodies or industry champions (see also Pinnington et al., 2021; Velenturf & Purnell, 2021). Third-party facilitation played an important role in engaging stakeholders in collaboration, particularly in the beverage package recycling system, Materiaalitori, Maapörssi, material-efficiency commitment and energy-efficiency agreement in which a third-party organisation coordinated the collaboration between competitors. For example, in the beverage package recycling system, a non-profit company, Palpa, was founded to enable efficient collaboration between competitors in the brewery industry, whereas a state-owned company, Motiva, facilitates and administrates the horizontal collaboration in the material-efficiency commitment, energy-efficiency agreement and Materiaalitori. Some form of third-party coordination, such as legislative steering or academic organisations leading research projects, was identified in all cases except CEP and Loop Rocks. In the latter two platforms, one of the competing companies was in charge of the technological solutions or administration of the platform, and thus third-party coordination was not realised, which might be one reason that these platforms did not succeed in sufficiently engaging stakeholders in reaching their objectives.
Discussion
Theoretical Contributions
This exploratory multiple-case study analysed coopetition for a CE and identified four main categories for organising coopetition. The key findings add value to the stakeholder engagement, coopetition and sustainable CE literature by bridging coopetition and stakeholder engagement research and providing important insights to understand stakeholder engagement and coopetition in the context of a CE (Christ et al., 2017; Johanna Kujala et al., 2019; Manzhynski & Figge, 2020).
For the stakeholder engagement literature, the findings create an understanding of the characteristics of competitors as stakeholders and the stakeholder engagement activities relevant especially for coopetition (Bacq & Aguilera, 2022) and contribute to the understanding of stakeholder engagement by analysing the aims, activities and impacts of stakeholder relationships for coopetition (Kujala et al., 2022; Sachs & Kujala, 2021). We address the need for more stakeholder engagement research with a more extensive level of analysis (network level and relationship-based), unlike the current research, which focuses on the focal firm (Sachs & Kujala, 2021). Our study also addresses the research gap in the in-depth understanding of stakeholder engagement in different contexts (Kujala et al., 2022) by providing insights from coopetition and CE contexts. The study contributes to the CE literature by identifying how coopetition can contribute to a CE as it is often necessary to enable systemic changes in the latter (Geissdoerfer et al., 2017).
For the coopetition literature, this study contributes to the very limited understanding of coopetition for a CE (Hirvensalo et al., 2021; Narayan & Tidström, 2020; Volschenk et al., 2016), which lacks empirical insights. The conventional coopetition literature has identified that collaboration between competitors typically occurs in activities far away from the customer, such as R&D (Bengtsson & Kock, 2000), whereas more recent research has demonstrated that collaborative activities occur close to the customer, such as marketing and sales (Flanagan et al., 2018). This study provides empirical insights which showcase collaborative activities occurring both far away from (e.g., R&D and knowledge sharing in networks and research projects) and near (e.g., recycling beverage packages and gathering consumer cooking fat) the customer.
The findings of this study also improve the understanding of the third-party coordination and facilitation of coopetition and demonstrate the importance of a third-party coordinator or facilitator of collaboration, which has been previously identified (Kestemont & Chalant, 2013; Planko et al., 2019; Ritala et al., 2009). The benefits of such a neutral ‘orchestrator’ (Pinnington et al., 2021) can be viewed as a means to resolve the tension-laden nature of the competitors as stakeholders relationship. As our results demonstrate, such orchestration occurs through various projects, systems and collectives and, more formally, through digital platform models. In these cases, it is important to understand how legitimacy is developed in both roles, the orchestrator and the participants (Thomas & Ritala, 2021), and, more broadly, how such collective action can contribute to a CE.
Practical Implications
Practitioners will benefit from the insights discussed in this chapter, as the findings provide valuable understanding of organising coopetition for a CE. For companies, the study demonstrates different ways in which a CE can be promoted through collaboration with competitors. The findings help companies understand what kind of coopetition is feasible for various CE objectives. Non-profit organisations or industry associations aiming to organise horizontal collaboration within industries are offered important insights on how to engage competitors to collaborate for a CE and how this has been achieved previously. The categorisation and analysis of the cases provide an outlook on what type of coopetition has contributed to a CE previously and the key points for stakeholder engagement for each coopetition arrangement. Third-party facilitation or coordination of collaboration is important in all types of projects and schemes, but the right governance model will vary across cases; for some projects, a digital platform solution might help to scale up the CE impact, while for others, the project might focus on looser elaboration and development of industry norms and practices. In addition, the consideration of trade secrets and regulations, reducing tension between competitors, peer pressure to commit to initiatives and trust building for platform users seem to be necessary to engage competitors in collaboration to advance a CE.
Limitations and Future Research
Our study has limitations that represent pathways on how to further advance understanding of the vital role of collaboration and coopetition for a CE. We sampled cases from multiple industries in Finland, and we assume that findings are generalisable to many industrial and geographical contexts. However, as all cases are from similar institutional contexts, the findings may have been affected by certain cultural and geographical characteristics. Therefore, coopetition for a CE should also be studied in different institutional contexts. The cases in this chapter analyse collaboration between competing companies. However, insights from other competing organisations, such as NGOs, universities or public actors, collaborating to advance a CE can provide interesting results and improve the understanding of multi-actor collaboration for a CE. The importance of trust in coopetition became evident in this study, and thus further research on trust building in stakeholder relationships entailing competition could provide interesting future research avenues and important contributions to the stakeholder engagement literature.
Conclusion
This chapter examines how coopetitors organise to advance a CE, how to engage competitors as stakeholders and the contributions of coopetition to a CE. For this purpose, we conducted a multiple-case study of coopetitive initiatives for a CE in Finland. Building on a very limited previous understanding of coopetition for a CE, we identified four main patterns across 12 cases which were categorised into agreements for industry standards, pre-competitive R&D and knowledge sharing, platforms and reverse logistics systems. Adding to the understanding of stakeholder engagement for coopetition, we identified the aims, activities and impacts of stakeholder relationships within the coopetitive initiatives. Coopetition can contribute to a CE in foundational areas when competitors are engaged to set new industry standards that support the CE through voluntary agreements and commitments as well as through pre-competitive R&D and knowledge-sharing projects and networks promoting collaboration for a CE by bringing different stakeholders together. Coopetition can also advance a CE through more applied and commercial approaches, as stakeholder engagement enables cross-industry collaboration within reverse logistics systems and platforms to connect stakeholders and match their supply and demand, facilitating the development of CE business models. Coordination that acknowledges different, even conflicting, stances, by, for example, making available third-party organisations, government bodies or academic organisations, benefits coopetition for a CE in all categories. Finally, with sufficient stakeholder engagement, including coordination of collaboration, coopetition can contribute significantly to a CE through agreements for industry standards, pre-competitive R&D and knowledge sharing, platforms, and reverse logistics systems.
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The data generation and writing of this chapter were supported by the Strategic Research Council at the Academy of Finland under the project titled ‘Circular Economy Catalysts: From Innovation to Business Ecosystems (CICAT2025)’ (grant numbers 320194 and 346626).
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Harala, L., Aarikka-Stenroos, L., Ritala, P. (2023). Coopetition for a Circular Economy: Horizontal Initiatives in Resolving Collective Environmental Challenges. In: Kujala, J., Heikkinen, A., Blomberg, A. (eds) Stakeholder Engagement in a Sustainable Circular Economy . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-31937-2_10
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