Customer value in the circularity transition: scarcity of understanding 20

As shown in chapter 2, customer value has attracted prominent academic attention al-ready for decades. It has been studied from multiple perspectives and while the concept has evolved, it has also become more multifaceted and complex (Zeithaml 2020). The temporal development of customer value publications is presented in Figure 5 on the left.

Circular economy literature, on the other hand, has developed more recently. However, the expansion of research on the topic has been exponential. The surge in publications shows well in Figure 4 on the right. According to Scopus, in business and management sciences alone the first 10 months of 2021 have seen about 600 new publications.

Figure 5 Search results on "customer value" in Scopus (October 2021)

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Figure 4 Search results on "circular economy in Scopus (October 2021)

With such great amounts of CE-related literature being published at the moment, it can get challenging to identify the exact focus areas of the current research. However, in the context of this study, a very important and rather surprising research gap stands out.

There is still very little research conducted in the interface of these two hot themes of customer value and circular economy. Figure 6 below illustrates this scarcity, with only a handful of search results coming up by combining the earlier search terms.

Table 3 lists the few extant studies that consider customer perspective in the context of CE or environmentally sustainable business, dividing them by their focus on B2B or B2C environments. The body of research is very narrow and methodologically limited, as sur-veys have been used clearly more than focused qualitative techniques. Of special inter-est is that this research is almost non-existent on the B2B-environment. Only a few stud-ies can be found using the major search engines (refer to Table 8 for used literature review methodology), and focused case studies on the customer-perceived value are missing almost completely. Aarikka-Stenroos et al. (2021) have conducted the only iden-tified CE study that considers dimensions of value from customer perspective, however missing a strict B2B focus and without investigating the need for renewed classifications of customer value for the CE. Van Boerdonk et al. (2021) also utilize value dimensions to some extent in their study of circular touch points in the healthcare industry. All in all, this study fills an important gap by tackling B2B customer value in circular business mod-els in a holistic manner, yet taking an in-depth perspective through focused case studies.

In the B2C environment there is a little bit more research from customer perspective available. The biggest focus seems to lie on customer acceptance. Nevertheless, re-search that aims to identify and differentiate between the components of customer-per-ceived value is very scarce also in circular B2C settings, tackled perhaps most notably by Antikainen et al. (2018) and Aarikka-Stenroos et al. (2021). The listing of B2C studies addressing customer perspective of circular economy in Table 3 is non-exhaustive and could be supplemented for example with studies by Wang & Hazen (2016), Abuabara et

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-> 2014 2015 2016 2017 2018 2019 2020 2021*

Figure 6 Search results on "customer value" AND "circular economy" in Scopus (October 2021)

al. (2019), and Julião et al. (2020), which however have rather restricted contextual fo-cuses as well.

Table 3 Extant studies from customer perspective in the context of circular economy

Customers are, quite naturally, being considered in different ways in various main streams of CE literature. Viewpoints and degree of customer embeddedness vary among these streams and individual studies, but direct integration of customers’ perceptions on value is difficult to find, as shown by the limited size of Table 3.

Rapidly growing circular supply chain literature can be taken as an example of this phe-nomenon. Many recent studies in this field have put attention onto how customer rela-tionships need to become closer (De Angelis et al. 2018; González-Sanchez et al. 2020)

when implementing circularity, and how customer collaboration and partnerships should increase and value co-creation opportunities built (Hazen et al. 2020; Aloini et al. 2020).

Interestingly, most of the studies refer similarly to the development of the focal firm’s business relationships towards both its customers and suppliers, latter of which sets the studied firm into customer’s role. Nevertheless, these studies do not go as far as to em-pirically examine the perceived value of such changes in the firms in question. Closest touchpoint to customer-perceived value in the circular supply chain literature stream is Bressanelli’s et al. (2019) study which includes consideration of ownership’s meaning to customers’ value perceptions and of price as a barrier to accept circular offering.

3.2 Missing perspectives on circular customer value

The presented literature review shows that the literature addressing customer-perceived value in the age of CE, its different forms, and its ultimate components in everyday busi-ness is extremely scarce. The topic is mostly being discussed as a side note in some studies on circular business models, value proposition strategies, and supply chains. In the consumer business side, some studies exist on consumer acceptance, but all in all the focus has been in very specific cases and CBM types (Camacho-Otero et al. 2018).

In addition to building a classification to describe the customer-perceived value of the CE, this study strives to build a first understanding of two subordinate research dilemmas with high practical importance (RQ2 and RQ3). Firstly, it sheds light on the key differ-ences of value perceptions on recycle- and reuse-based CBMs, both of which have their typical characteristics. As the CE is a roof concept for such a big variety of business models, it would be risky not to look into how value perceptions differ according to the CBM category. Secondly, dyadic data is used to investigate circular providers’ ability to interpret customer value perceptions and search for common misunderstandings. This can help companies to critically examine their value propositions and thus accelerate the CE transition. The theoretical relevance and existing knowledge gaps of these two topics in the CE context are briefly addressed in the following.

3.2.1 Comparison of recycle- and reuse-based CBMs

Because recycle-based CBMs aim to close material flows whereas reuse-based CBMs aim to slow the material flows down (Lüdeke-Freund et al. 2018), each one requires its own kind of adaptation from the business partners regarding for example logistics, com-munication, and new partnerships. Value creation (Ranta et al. 2018) and various other concepts in CE have been studied earlier basing on the division between recycling and reusing CBMs (and sometimes also reducing, which however has been left out of the

scope of this study). By exploring customer-perceived value specifically for each of these CBM categories, this study provides a logical next step to deepen the theoretical and practical knowledge on these two distinct forms of implementing the CE.

As outlined in the introduction, the study takes things one step further by considering a particularly relevant and distinctive subcategory of reuse-based CBMs, namely those in which the ownership of the product is retained by the provider. This characteristic has diverse implications for logistics, product lifecycle control, and distribution of risk, among other things. As mentioned earlier, this subcategory of CBMs has been targeted and highlighted by research broadly in recent years (such as Bocken et al. 2016; Haber &

Fargnoli 2019; Kim & Hong 2019; da Costa Fernandez et al. 2020). Therefore, it is a fascinating addition to the scope of this study to conduct a first investigation on what possible changes to value perceptions does this more and more common ownership retention model bring.

3.2.2 Comparison of customer and provider perceptions

As reviewed in the introduction, the extant CE research is heavily centered on studying the perspective of the provider or supplier. When it comes to value creation in the cus-tomer interface, this trend has created a biased body of research that addresses firms’

value propositions well but does little to explore the reception of those propositions by the customers. Good examples of studies on CE value propositions include Lieder et al.

(2018), Kristensen & Remmen (2019), da Costa Fernandes et al. (2020) & Ranta et al.

(2020). However, as providers and customers tend to perceive value differently as em-pirically proved by Aarikka-Stenroos & Jaakkola (2012), research from the customer per-spective has the potential to increase understanding of both value propositions and the perceived, realized customer value.

This study not only addresses the research gap by focusing on customer-perceived value with customer-bound data but does it while retaining the provider perspective on the side.

Asking similar questions about the customer-value formation to the providers as to their customers enables an analysis of the transparency of the different components of the customer-perceived value towards the providers as well as the creation of practical im-plications with high relevance. It can also support more profound investigations of circular value co-creation processes and activities, as both the perspectives of the provider and customer need to be understood to accurately depict the creation of value-in-use (Aarikka-Stenroos & Jaakkola 2012; Grönroos & Voima 2013).