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From Linear to Circular Economy: a Transaction Cost Approach to the Ecological Transformation of the Firm

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  • Arne Nygaard

    (Kristiania University College
    The Arctic University of Norway, Faculty of Humanities, Social Sciences and Education)

Abstract

Ownership and control have been the strategic focus of organizational analyses to achieve performance. The emergence of sustainable strategies has, however, confronted conventional organizational theory because performance has become a complex concept containing both social elements and environmental dimensions together with conventional economic aspects. Increased climate change, temperature risk, and environmental hazards, as well as intertwined social consequences, create a need for new theoretical insights to understand the emerging circular organization of product lifecycle networks. The ongoing climate crisis calls for new institutional approach that challenges future organizational structures. We present a framework for integrating low-carbon ecological transformation from linear to sustainable circular inter-organizational networks. The global and circular economy increases performance ambiguity, the uncertainty of eco-opportunism, information asymmetry, and transaction costs. Consequently, sustainability makes it necessary to integrate and control organizations throughout the supply chain to avoid eco-opportunism and to economize transaction costs.

Suggested Citation

  • Arne Nygaard, 2022. "From Linear to Circular Economy: a Transaction Cost Approach to the Ecological Transformation of the Firm," Circular Economy and Sustainability, Springer, vol. 2(3), pages 1127-1142, September.
  • Handle: RePEc:spr:circec:v:2:y:2022:i:3:d:10.1007_s43615-022-00158-w
    DOI: 10.1007/s43615-022-00158-w
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    References listed on IDEAS

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    Cited by:

    1. Nizar Abdelkafi & Jinou Xu & Margherita Pero & Federica Ciccullo & Antonio Masi, 2023. "Does the combination of sustainable business model patterns lead to truly sustainable business models? Critical analysis of existing frameworks and extensions," Journal of Business Economics, Springer, vol. 93(4), pages 597-634, May.
    2. Agafonow, Alejandro & Perez, Marybel, 2024. "Overhauling multinationals for the Anthropocene: How a rogue subsidiary offers a blueprint for sustainable development," Ecological Economics, Elsevier, vol. 222(C).

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