Objective of the study

This study aims to contribute to the rapidly growing field of academic Circular Economy literature by targeting the research gap between Circular Economy business and finance.

As said, the relationship between finance and Circular Economy has been frequently mentioned as a barrier in transitioning to and maintaining circular business models and principles and creating CE innovations (Fischer and Pascucci 2017; Ormazabal et al.

2018; Rizos et al. 2016), but the details and factors resulting in this have not been re-searched systematically in detail. Therefore, the first point of view to the two-fold objective of this study is to identify what factors about finance drive and/or inhibit transitioning to and operating by CE principles and how.

In addition to providing solutions to CE companies, this study aims to shorten the gap between investors, other financiers and CE as an investment. Despite that financial in-dustry is nowadays pursuing sustainable values to an increasing extent (Global Sustainable Investment Alliance 2018; Knoepfel 2004; WWF 2018) and that the connec-tion between sustainability and finance has been studied (Carolina Rezende de Carvalho

Ferreira et al. 2016; Friede et al. 2015), there is significantly little academic research done on what opportunities would CE offer to the financial industry from the viewpoints of both business and sustainability objectives. A great amount of studies has been done researching the performance of sustainable investing (Friede et al. 2015; Viviers and Eccles 2012) and effects of corporate social responsibility on company performance (Brammer and Millington 2008; McWilliams and Siegel 2000), but as far as I am aware of, there are no academic studies done on if and how sustainable investors and other financiers could benefit from CE. Therefore, the second point of view to the objective of this study is to review what factors of CE business and CE companies drive and/or inhibit their attractiveness as an investment or a debtor and how.

Concluding these two point of views, the objective of this study is to identify what financial factors drive and/or inhibit transitioning to and operating by CE princi-ples and how, and what characteristics of CE business and CE companies drive and/or inhibit their attractiveness as an investment or a debtor and how. To ad-dress the first point of view of the objective of this research, or in other words, to identify what factors about finance affect transitioning to and operating by CE principles are, the following research question is asked:

RQ1: What financial factors affect transitioning to and operating by CE princi-ples?

To clarify further and deepen the understanding about the mechanisms behind the iden-tified factors, the following research question is asked:

RQ2: How do the identified factors drive and inhibit transitioning to and oper-ating by CE principles?

To address the second point of view of the objective of this research, or in other words, to identify what factors about CE business and CE companies affect their attractiveness as an investment and/or a debtor, the following research question is asked:

RQ3: What factors related to specifically CE business and CE companies affect their attractiveness as an investment and/or a debtor?

To clarify further and deepen the understanding about the mechanisms behind the iden-tified factors, the following research question is asked:

RQ4: How do the identified factors drive and inhibit CE companies’ attractive-ness as an investment and/or debtor?

To conclude, with these 4 research questions, which can be grouped as 2 groups of 2 questions related to the same issues, the main thematical area of the study of financing

CE is reviewed from 2 sides of a coin. The first side is how finance and funding affect CE companies and CE as a paradigm, or in other words, the CE practitioner perspective.

The second side is how CE is regarded in the eyes of the financiers, or in other words, the financier perspective.

Towards answering these 4 research questions an explorative and qualitative study with an abductive approach to theory is conducted, utilizing thematic analysis and systematic combining in the analysis phase. As the study’s purpose is to address a thematical area with little previous academical attention focused on it, the explorative aim of the study is justified, since exploratory research is an effective means to ask open questions about the subject and clarify the understanding of a subject which has not been researched to a great extent before (Saunders et al. 2016). Similarly, because there does not exist any previously developed theoretical frameworks of the thematical area on hand, a qualita-tive study was seen as more suitable for finding a larger scale of factors affecting financ-ing CE and therefore for answerfinanc-ing the research questions askfinanc-ing “what” and “how”.

To increase the understanding of the underlying research questions as much as possi-ble, the method called systematic combining is utilized in the analysis phase. The method introduced by Dubois & Gadde (2002, 2014) allows the researcher to go back and forth from result data to theory, gather new data during the analysis process and increase one’s understanding from both theory and the insights discovered in the data throughout the analysis process. The iterative and revisitative nature of the method makes it more fruitful in mapping undiscovered thematical areas than a standard linear research pro-cess. As the factors to be mapped are fundamentally descriptions summarizing the di-verse sets of insights regarding the underlying issues, thematical analysis is chosen as a method of analysis since it is a method capable of producing a thematic description of a diverse data set (Saunders et al. 2016).

As the aim of the study is explorative and as the purpose of it is to gather the most relevant knowledge available of the thematical area, there is no strict scope and/or limi-tations assigned to it beforehand of the data gathering and data analysis. The principle in the data gathering is that the data is taken into account if it is considered to contain insights relevant from the point of view of the research questions. Instead of having a pre-described scope and limitations, the data-driven scope and limitations applicable for the findings are recognized during the data analysis and are discussed better in detail in Chapter 6.4: Quality and limitations of the study.