Journal of Cleaner Production 414 (2023) 137682

Contents lists available at ScienceDirect

Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Institutional re-configuration and value co-creation in circular product

development: A service ecosystem perspective in the textile and
apparel industry
Ann Vellesalu *, Olga Chkanikova , Daniel Hjelmgren , Nicklas Salomonson
University of Borås, Department of Business Administration and Textile Management, Allégatan 1, 503 32, Borås, Sweden

A R T I C L E I N F O A B S T R A C T

Handling Editor: Dr. Govindan Kannan Research on circular product development has gained popularity in recent years. While such approaches focus on
the product’s design phase to create environmental and economic value, they lack in understanding the co-
Keywords: created and dynamic nature of a multifaceted system of actors important for the transition to circularity. The
Resource integration purpose is to explore how multi-level institutional re-configuration patterns influence resource integration and
Circular product development
its associated value co-creation during circular product development in a service ecosystem. Responding to the
Value co-creation
need to address the applicability of Service-Dominant Logic to managerial practice, the paper relies on a single
Institutions
Service ecosystems case study of circular product development involving B2B actors in a supply chain for workwear garments in
Service-dominant logic healthcare. Data was collected using participant observation during an innovation project lasting 1,5 years. The
data, which was supplemented by semi-structured interviews and online queries, was analysed through coding,
condensation and interpretation. The findings demonstrate the importance of interdependencies between insti­
tutional re-configuration patterns and the interrelatedness of the micro, meso and macro levels in a service
ecosystem as these enable value co-creation opportunities during circular product development. For practi­
tioners, the paper provides an understanding of how to manage enablers and barriers arising during circular
product development through institutional work.

1. Introduction value creation through addressing resource use.

Product development is critical for a company’s competitiveness,
In recent years, addressing product development based on circular and therefore a relevant process that involves multiple actors in the
economy principles has become attractive to both researchers (e.g. planning, communication and problem solving phases (Brown and
Pinheiro et al., 2019; Diaz et al., 2021; Aguiar and Jugend, 2022) and Eisenhardt, 1995). To reduce early product obsolescence and to promote
policymakers (e.g. European Commission, 2019; ETC/WMGE, 2019; longer product lifespans and circulation, resource consumption can be
Swedish Government Offices, 2021). Since the principles of circular addressed in the design and use phases (Nyström et al., 2021). For
economy underpin strategies for slowing, closing and narrowing instance, the choice of materials affects production, use phases and
resource flows (Bocken et al., 2016), implementing them can be a so­ end-of-life (Hallstedt and Isaksson, 2017), and should be based on
lution for achieving sustainable systems (Geissdoerfer et al., 2017). The environmental and economic performance (Gmelin and Seuring, 2014).
goal is not only to reduce, reuse, recycle and recover resources on pro­ Moreover, numerous barriers to product longevity (e.g. low focus on
duction and consumption processes (Kirchherr et al., 2017), but also to longevity during development and lack of customers’ knowledge during
decouple the use of resources from economic growth (Lazarevic and purchasing) should be overcome (Jensen et al., 2021). Product devel­
Valve, 2017). On a product level, the development phases account for up opment therefore requires the involvement of actors that can impact
to 80% of the product’s environmental impacts and determine up to 75% product attributes related to circularity strategies (such as recycle,
of the production costs (IRP, 2018). Therefore, circular product devel­ repair and reuse) (Diaz et al., 2021). Thus, the optimisation of resources
opment has potential to contribute to both environmental and economic requires a diverse set of knowledge and skills (De Los Rios and Charnley,

* Corresponding author.
E-mail addresses: [email protected] (A. Vellesalu), [email protected] (O. Chkanikova), [email protected] (D. Hjelmgren), nicklas.salomonson@hb.
se (N. Salomonson).

https://doi.org/10.1016/j.jclepro.2023.137682
Received 31 October 2022; Received in revised form 25 May 2023; Accepted 31 May 2023
Available online 5 June 2023
0959-6526/© 2023 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

2017), for example impact assessment, user engagement and collabo­ intangible resources that act upon tangible resources (i.e. the products),
ration (Sumter et al., 2021). to realise value co-creation opportunities (environmental and economic
Collaboration is a requirement for successful innovation, since single value) during circular product development. Since value co-creation is
actors rarely have sufficient resources to be competitive (Lusch et al., dependent on the broader context (Vargo et al., 2008), it should be
2010); in this case to develop circular products. Innovation is, conse­ analysed from a multi-level perspective (Beirão et al., 2017).
quently, a network issue as a variety of stakeholders are collaborating The remainder of this article is arranged as follows: Section 2 pre­
within a network of relationships (Mele et al., 2010). However, several sents a theoretical framework while Section 3 presents the methods used
challenges arise when addressing these issues in creating value for in­ for gathering and analysing data. Section 4 elaborates on the identified
dividual actors and larger systems through the circular economy (Mur­ institutional re-configuration patterns of circular product development,
ray et al., 2017). For instance, while a systemic and collaborative while Section 5 discusses the significance of the findings. Lastly, Section
approach is necessary (Bocken et al., 2016), influencing and receiving 6 provides conclusions and suggestions for future research.
support from all relevant actors in complex local and global systems is
problematic (Rizos et al., 2016). Additionally, the lack of capital and 2. Theoretical framework
support by the authorities, through effective legislation, act as barriers
(Rizos et al., 2016), further emphasising the role played by the wider 2.1. Value co-creation through resource integration in service ecosystems
environment, e.g. policymakers and the financial sector, in the transition
to circularity (Ghisellini et al., 2016; Korhonen et al., 2018). These In order to effectively integrate resources, the internal configuration
challenges indicate that further knowledge is needed of how to facilitate of resources, activities and processes of an actor needs to match with the
resource integration that aims to create environmental and economic external network configuration (Gummesson and Mele, 2010). While
value in a multifaceted system of actors. surrounding social, ecological and government resources may be inte­
Service-Dominant Logic (SDL) is a theoretical framework, which grated to create value (Vargo et al., 2008), actors also need to overcome
proposes that resource integration in networks contributes to individual resistance, e.g. competition (Lusch and Vargo, 2006). Thus, actors
wellbeing as a function of collective wellbeing through value co-creation should not only be able to integrate private resources (e.g. family and
(Vargo and Lusch, 2017). Here, all economic and social actors are friends) and public ones (e.g. contextual influence of government
viewed as resource integrators that with a goal to co-create value apply legislation), but also those that are market-facing (e.g. contextual in­
intangible resources (i.e. operant resources such as knowledge and fluences in an actor’s network, including competitors) (Laud et al.,
skills) on tangible resources (i.e. operant resources such as products) 2019). This view suggests that value co-creation may be possible
(Vargo and Lusch, 2004). The networks of actors form service ecosys­ without compromising competitive advantage, e.g. through joint
tems where institutions (i.e. humanly-devised rules, norms and beliefs research and development (Lusch and Vargo, 2006). Moreover, inte­
(Scott, 2001)) enable cooperative and coordinated behaviour (Vargo grating external resources enables actors to mitigate the potential
and Lusch, 2016). Since institutional arrangements (i.e. sets of in­ negative effects of opportunity and risk (Laud et al., 2019), e.g. those
stitutions) guide resource integration and drive value co-creation (Vargo arising from the transition to circularity.
and Lusch, 2016), re-configurations (i.e. maintenance, disruption and Multiple, nested levels of context form part of service ecosystems as
change of institutional arrangements) may be necessary based on what is they frame resource exchange, integration and value co-creation
perceived valuable or not (Vargo et al., 2015). Applying the lens of SDL (Chandler and Vargo, 2011). Akaka et al. (2013) distinguish between
aligns with product development efforts to realise the potential of value three levels of context framing resource exchange, integration and value
co-creation of circular economy, since it allows us to consider the in­ co-creation. The micro level (e.g. organisations) is nested within, and
dividual and system level perspectives of a service ecosystem (i.e. at thus influenced by, a broader meso context (e.g. industries), in turn
micro, meso and macro levels), as the actors on these levels collaborate nested within, and thus influenced by, a specific macro context (e.g.
to benefit from environmental and economic value co-creation oppor­ nation, culture, and global markets) (Akaka et al., 2013). Value
tunities during circular product development. co-creation elements and outcomes between these levels are interre­
Previous research on product development based on circularity has lated. For example, efficient and effective resource use in healthcare
investigated how preventive actions can be taken during a product’s improves a health organisation’s overall service quality and conse­
design phase to facilitate that product’s increased lifetime and circula­ quently affects the quality of life of the broader population (Beirão et al.,
tion (Bocken et al., 2016; Nyström et al., 2021), as well as mapped 2017).
product design and key partners (de Kwant et al., 2021). While inves­ Innovating for sustainability can lead to conflicting economic and
tigating of product development during the transition to circularity has environmental goals on the three levels (Garcia et al., 2019). It is
gained in popularity, the focus has mainly been on developing strategic therefore also important to understand whether efforts to co-create
frameworks or on measuring the outcomes of case studies (Pinheiro value (e.g. environmental) for the macro level are also facilitating the
et al., 2019). Additionally, traditional innovation approaches that focus co-creation of value (e.g. economic) for actors at other levels of the
on product development lack an understanding of the co-created, sys­ ecosystem (Beirão et al., 2017; Mustak and Plé, 2020). Thus, value
temic and dynamic nature of market innovation (Vargo et al., 2015). co-creation is central to understanding the dynamics of service ecosys­
Therefore, this paper aims to explore circular product development tems (Vargo et al., 2008), since value is co-created by multiple actors
through the lens of Service-Dominant Logic, in order to understand the through collaboration to integrate market-facing, public and private
role of institutional arrangements in resource integration during circular resources (Vargo et al., 2015). Moreover, actors engage in value
product development in a multifaceted system of actors. The following co-creation aiming to mutually benefit from the process (Vargo et al.,
research question is posed: 2008), which is driven by social rules engrained in actors’ practices, that
How do multi-level institutional re-configurations influence resource are the institutional arrangements (Vargo et al., 2015).
integration and associated value co-creation during circular product
development? 2.2. Institutional rules of resource integration
While operand resources (tangible, such as products) are passive and
become valuable when acted upon (Vargo and Lusch, 2004), operant The introduction of institutions by SDL highlights the importance of
resources (intangible, such as knowledge and skills) emphasise the these structures in enabling and constraining resource integration and
integration of knowledge and skills in order to apply operand resources value co-creation using regulative, normative and cognitive rules
in a more effective, efficient and sustainable manner (Lusch et al., 2010). (Edvardsson et al., 2014; Vargo and Lusch, 2016). Conversely, actors are
Therefore, resource integration involves accessing and integrating also capable of having more influence on their surrounding context

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A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

through institutional work as they engage with the maintenance, rules of resource integration on the multiple levels of a service
disruption and change of institutions (Lawrence and Suddaby, 2006). ecosystem.
Therefore, the actors and institutions guiding resource integration on
the three levels of context can lead to both the stability of and changes to 3. Methods
the system (Chandler and Vargo, 2011; Akaka et al., 2013). That is, since
actors and their interactions are influenced by institutions and vice versa 3.1. Research design
(Koskela-Huotari et al., 2020), understanding how actor- and
institution-driven mechanisms lead to stability and change can enable This paper is based on a single case study, in order to investigate
an understanding of the enablers of circular product development. resource integration and associated value co-creation during circular
Such institutional work is a central construct when it comes to un­ product development in a service ecosystem. The case method was
derstanding innovation as a collaborative process, involving the found appropriate for investigating this complex phenomenon, which
participation of all economic and social actors to co-create value by takes place under rare circumstances (Eisenhardt and Graebner, 2007),
addressing tensions that are “foundational to all institutional arrange­ and cannot be understood in isolation from its context (Yin, 2014)
ments” (Vargo et al., 2015). On the one hand, the actors that are Moreover, this approach was chosen since it benefits from multiple
stakeholders in the value co-creation (Vargo and Lusch, 2008) need to sources of data (Yin, 2014), and allows for the investigation of context
break and make institutional rules of resource integration in order to and theory simultaneously (Ketokivi and Choi, 2014). This enabled us to
adapt in the direction of their preferred configurations. On the other better understand the multiple levels of institutional context in circular
hand, maintaining existing rules is important for a sense of familiarity, product development, and to address the lack of the managerial appli­
security and trust, which demonstrates a need for a balance between cability of the SDL (Vargo and Lusch, 2017; Bocconcelli et al., 2020).
these forms of institutional work (break, make and maintain) is required The research design is presented on Fig. 1 below, and further described
(Koskela-Huotari et al., 2016). The institutional arrangements thus form in the following sections.
patterns of behaviour (actions) of actors to integrate knowledge and
skills (operant resources) that enable value co-creation opportunities 3.2. Case and research context description
during circular product development.
Koskela-Huotari et al. (2016) argue that making, breaking and The case in this study is circular product development, which takes
maintaining resource integration rules results in three changes to the place in the frames of an innovation project where B2B actors collabo­
service ecosystem. Firstly, new actors joining forces with existing ones rate to increase product circularity by applying the principles of
allows the creation of new resource constellations. Secondly, redefining designing for longevity and designing for recyclability. The aim of
the roles of different actors can, for example, involve customers in applying the principles was to explore different value co-creation op­
product development, thus making them take a more active role in value portunities when it comes to both environmental and economic values.
co-creation. Thirdly, alternative frames of sense-making enable the Two garments were chosen as a basis for circular product development
emergence of new instances of “resourceness”, thus allowing actors to due to the high quantities produced and used: the blouse and trousers
benefit from partially-conflicting institutional arrangements (Koskela-­ worn by healthcare professionals. From a circularity perspective, this
Huotari et al., 2016). However, while the conflicting institutional ar­ means (1) increasing the garments’ lifetime, (2) using materials with a
rangements are seen as a source of value co-creation, such discrepancies lower environmental impact (e.g. recycled (2a), monomaterials (2b),
may also lead to diminished individual or collective wellbeing (Mustak etc.), (3) recycling the garments at end-of-life, and (4) addressing the
and Plé, 2020). laundry process standards.
Since institutional arrangements exist on multiple interrelated levels The study focuses specifically on four B2B actors along the supply
of context, a particular institutional arrangement on one level can only chain of workwear garments used by healthcare professionals. These
be understood by also considering the other levels of context (Neghina actors do not engage in such close collaboration on a daily basis, and
et al., 2015; Vargo and Lusch, 2016). That is, particular micro level therefore the sample was found suitable as the resource integration
institutional arrangements of an organisation (e.g. company culture) during circular product development presents a unique case, which is
reflect a particular meso level institutional context of an industry (e.g. found beneficial for case studies (Flyvbjerg, 2006). Additionally, simi­
industry norms), as well as a particular macro level institutional context larly to Mele et al. (2010), the focus is on actors closely linked to the
of a country or larger geographical area (e.g. legislation, economy) circular product development of the innovation project, since their
(Akaka et al., 2013). For example, digital innovation of healthcare distinct perspectives allow an in-depth understanding of the phenome­
practices at the meso level enables healthcare organisations at micro non (Yin, 2014).
level to communicate with patients via digital channels, which also re­ The focal actors were; a fabric producer (A), a garment producer (B),
quires that data protection legislation at the macro level is followed (Pop a rental and laundry service provider (C), and a local municipality as a
et al., 2018). However, as dealing with complexity may require novel potential B2B customer (D). Each actor was represented by 1–3 man­
ideas (Koskela-Huotari et al., 2016), this interrelatedness may also agers based on the organisation’s role in the supply chain and available
become an important source of changing existing rules of resource expertise for developing the products. These included a business
integration on different levels to enable value co-creation for both in­ developer (A), a managing director, sustainability manager and product
dividuals and the service ecosystem. manager (B), a product manager and commercial director (C), and an
The development of the institutional perspective on resource inte­ environmental strategist (D). Sustainability issues are addressed by
gration in the SDL has mainly been theoretically driven and includes few every organisation in their publicly shared strategies in relation to their
empirical examples. Further empirical explorations are required to gain position in the supply chain. Actors (A-C) are analysed on the micro level
a better understanding of the systemic and processual nature of value co- (Fig. 2) as they are of key importance to the delivering the products and
creation (Vargo and Lusch, 2017), in turn allowing the issue of limited related services (i.e. production and the rental and industrial laundry
applicability of the SDL to managerial practice to be addressed (Vargo service) to B2B customers. The micro level actors are embedded within
and Lusch, 2017; Bocconcelli et al., 2020). Additionally, as the role of both the industry (meso level) and the geographical area (macro level),
institutional theory has become more evident in service research, more similarly to Pop et al. (2018).
rigour and long-term data collection is needed (Koskela-Huotari et al., The meso level involved actor (D) plus three additional actors in a
2020). The rest of this paper thus explores resource integration during supportive role (an innovation hub Science Park, a university, and a
circular product development as the process of value co-creation, circular change agency responsible for circular product and system
influenced by the making, breaking and maintaining of institutional innovation in fashion and textiles). Lastly, the macro level included

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Fig. 1. Research design.

Fig. 2. Resource integration on multiple levels in an institutional context.

legislation (Swedish and European), as well as the Swedish Institute for The context is specific to the textiles and apparel (T/A) industry in
Standards (SIS), which provides guidelines for the production and Sweden, since the textile products are a key product category addressed
handling (e.g. laundry) of workwear. The inclusion of diverse actors in in both Swedish and European Union (EU) policy goals for circular
the analysis is relevant for investigating co-creation opportunities in the economy (European Commission, 2019; Swedish Government Offices,
textile and apparel industry (Oliveira Duarte et al., 2022). The actors on 2021). The industry relies on complex linear supply chains that
the micro and meso levels integrate their resources to create environ­ contribute to high environmental impacts, for example, due to signifi­
mental value for the macro level (Garcia et al., 2019). As the micro level cant water and land use, high toxicity of chemicals, and the decrease in
is embedded in the meso and macro levels (Akaka et al., 2013), micro biodiversity (ETC/WMGE, 2019). Further negative global impacts
level resource integration both affects and is affected by resource inte­ arising from societal issues (e.g. poor working conditions and widening
gration on the meso and macro levels. Thus, zooming in and out allowed inequality), as well as economic issues (e.g. resource price volatility and
us to account for the heterogeneity and complexity of the exchange ownership structures) (Geissdoerfer et al., 2017) are also apparent in the
phenomenon (Leroy et al., 2013), i.e. how institutional re-configuration T/A industry (Ellen MacArthur Foundation (EMF), 2017). Besides
patterns influence resource integration during circular product demonstrating the relevance of the industry for this study, the
development. geographical context also determines the level of analysis at B2B due to

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EU policies placing responsibility on producers for the transition to to gain the trust of the participants so that they were comfortable about
circular economy (Ghisellini et al., 2016). disclosing information (Saunders et al., 2009).

3.3. Data collection 3.4. Data analysis

The case study approach allows multiple data collection techniques, The observations, along with interviews and other supplementary
which are often complementary and lead to varied data relevant to data, were analysed through the subsequent steps of coding, condensa­
understanding the phenomenon within its real-world context (Yin, tion and interpretation (Brinkmann and Kvale, 2015), as presented on
2014). The data used in this study was collected both in-person and via Fig. 1 above. The initial, exploratory data was analysed by sorting
online meeting platforms (due to COVID-19 restrictions) over the course relevant extracts into first-order codes and temporary categories (e.g.
of the innovation project, from April 2020 to December 2021. As pre­ operant and operand resources, institutions, levels of the service
sented in Fig. 1 in section 3.1, data collection started with an online ecosystem, etc.). After additional data collection through interviews,
questionnaire, to understand the initial motivation and expectations of focused observation and online queries, the codes and categories were
the participants, as well as the resources, activities and actors required compressed and linked to the framework of the three patterns of
for the development. The questionnaire (Appendix – Table A) was resource integration, as well as the level of institutional context that
shared with project participants in the beginning stages of the project. these take place in. Lastly, the final step of interpretation, comparing the
Out of 9 responses collected between May and June 2020, a total of 5 collected data, allowed us to identify the underlying interrelations be­
were analysed as they represented the actors investigated in this study (i. tween the micro, meso and macro levels. The primary researcher was
e. the project included other actors that are not focused on workwear). involved in all three steps, while the second author contributed to
Initial data collection, involving the questionnaire and observations, condensation of the data, along with interpretation and validation of the
was exploratory in nature to allow for familiarity with the topic and results by all authors.
context (Blumer, 1969; cf. Elman et al., 2020). Using multiple data sources in data collection and analysis allowed
Participant observation was the main data collection method, as it to add richness and breadth to the study (Denzin and Lincoln, 2003),
allowed us to gain an in-depth understanding of the observed context while researcher triangulation during data analysis brought increased
(Grove and Fisk, 1992; Yin, 2014), which is beneficial for exploring the validity to the results by means of agreement being reached on the
underlying institutional arrangements (Koskela-Huotari et al., 2020). findings of each step (Creswell and Miller, 2000). Theoretically
The aim of the observations was to investigate how resource integration grounding the case in SDL’s framework of institutional rules of resource
enables value co-creation during circular product development on integration allows for analytical generalisability (Yin, 2014) of resource
multiple levels. The primary researcher participated in the innovation integration during circular product development to different contexts.
project in a supportive role to assess the environmental and economic Lastly, in order to achieve case reliability, the aim was to minimise er­
impact of the value co-creation opportunities. The participants were rors and biases. Therefore, the collected data and analysis procedures
made aware of the research purpose (Grove and Fisk, 1992), and were continuously documented throughout the duration of the project
therefore the observations, since discussions also involved confidential (Yin, 2014).
information. The collected data consists of fieldnotes from 27 meetings
and 2 workshops held between the actors. While the meetings were not 4. Findings
recorded for confidentiality reasons, the fieldnotes were revised and an
outline of the key points was written ensure accuracy (Grove and Fisk, This section presents our analysis of circular product development in
1992). Initial, exploratory observations led to the development of a a service ecosystem influenced by multi-level institutional rules
semi-structured interview guide. regarding resource integration.
Three semi-structured interviews with representatives of actors
central to the supply chain of the products (A – business developer, B – 4.1. Multi-level institutional re-configurations
managing director, D – environmental strategist) were carried out by the
primary researcher in April 2021. The interviews lasted between 30 and As previously argued, institutional arrangements enable and
60 min and were recorded after receiving the oral consent of the in­ constrain value co-creation practices by guiding service exchange and
terviewees. The aim of the interviews was to complement the data resource integration (Koskela-Huotari et al., 2016). In the case of cir­
collected during the exploratory observations in order to better under­ cular product development, certain patterns of making, breaking and
stand resource integration between the focal actors as they were maintaining the institutional rules (i.e. institutional re-configurations)
exploring the value co-creation opportunities, as well as with those on of resource integration can be distinguished at the micro, meso and
the meso and macro levels in- and outside of the project frames. The macro levels (see Fig. 2 for actors’ belonging to each level). That is, the
semi-structured approach allowed openness when sequencing and institutional arrangements form patterns of behaviour (i.e. actions) of
forming the questions (Brinkmann and Kvale, 2018), in order to adapt to actors to engage in resource integration to enable value co-creation
the different perspectives. An interview guide (Appendix – Table B) was opportunities during circular product development. Moreover, in­
shared with the respondents prior to the interview, to provide them with terdependencies between such institutional re-configuration patterns
information regarding the type of questions and terminology used. become evident, as do interrelations between the three levels of the
Data collected from the interviews enabled to validate and elaborate service ecosystem. These findings, which are summarised in Fig. 3, are
field notes collected during the exploratory phase, as well as structure elaborated upon in the remainder of this section.
later observations for a more focused approach. This led to more
detailed understanding of the resource integration and underlying 4.1.1. Micro level institutional patterns of resource integration
institutional re-configuration necessary to implement the value co- The micro level involves the fabric producer (A), garment producer
creation opportunities. Further data was collected from company web­ (B), and the rental and laundry service provider (C). Making institutional
sites, public policies, as well as material certifications and product practices of inter-organisational collaboration throughout the supply chain
standards. Triangulation of data sources and collection methods allow to (1.1) (i.e. actors A, B and C all collaborating) becomes crucial. As part of
cross-check the data and improve quality of the findings (Lincoln and establishing collaborative practices to pursue jointly-agreed opportu­
Guba, 1985), while also enabling greater credibility (Grove and Fisk, nities, e.g. using recycled and recyclable materials, the need to make the
1992). The primary researcher’s high level of immersion in the project practice of sharing technical product knowledge between fabric and garment
and repeated observations over a lengthy period allowed the researcher producers (1.1a) was highlighted. Furthermore, the fabric producer takes a

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Fig. 3. Institutional re-configuration patterns for enabling value co-creation during circular product development.

lead role in driving the collaboration (1.1b), instead of the garment pro­ constrain the opportunity to further decrease the environmental impact
ducer, who traditionally drives product development. This is due to of the garments by adapting the laundry processes and increasing their
development being oriented towards the use of recycled and recyclable lifetimes (e.g. by lowering water temperatures). In addition, proactive
materials, which requires critical technical knowledge of materials and engagement in the development of standards allows a highlighting of the
the recycling process. Additionally, the rental and laundry service provider need for knowledge support and competency development by SIS (on
becomes more active during circular product development (1.1c) since the macro level), that can be viewed as insufficient when it comes to
knowledge of laundry processes is vital when it comes understanding pursuing circular product development by the collaborating actors on
how the use of alternative (e.g. recycled) materials might affect changes the micro level.
at the laundry, and thus the level of compliance with industry standards. The making of inter-organisational collaboration also led to previous
A new practice of research project involvement (1.2) was made, as it is practices becoming de-institutionalised, or broken. In particular, this
beneficial when it comes to facilitating the above-mentioned collabo­ refers to breaking unilateral leadership practice during product development
rative practices between supply and demand actors along the supply (1.4), whereby Actor (B) usually lead in product development. However,
chain, but also when it comes to fostering new connections with actors as the focus of development was on materials, Actor (A) took the lead in
on the meso level (e.g. B2B customer, and research and education or­ this process due to its competence in textile materials and recycling:
ganisations). These connections allow access to relevant knowledge and “The arrangement is that pretty much that everything goes through me, which
expertise that is not available internally, e.g. ideating circular product is not the best thing sometimes. But I do feel that this is the way we need to
development opportunities and evaluating the economic feasibility and handle it for the time being”. Furthermore, the practice of insufficient
environmental impacts of these opportunities. As emphasised by Actor involvement of the rental and laundry service provider during product
(A), these connections successfully facilitate initial developments, which development (1.5) was broken. This is due to Actor (C)’s resources, e.g.
can later enable progress in its day-to-day activities by understanding knowledge of laundry process requirements, being relevant to circular
the perspectives of the different actors: “… the sooner we have something product development as these are affected by, or affect, value co-
that works, the sooner I think we’ll start making real progress. It’s just that creation opportunities.
then you have something real in action … and you can learn from having so Institutional rules of resource integration that need maintaining on
many perspectives.” the micro level include core competencies of the involved organisations
As Actors (A) and (C) are participants in SIS working groups, the (1.6), aligning circular product development with current standards and
making of proactive engagement in standards development (1.3) was dis­ regulations (1.7), and participating in SIS standards working groups (1.8).
cussed by the micro level actors. This includes influencing the standard The latter practice enables organisations to keep updated as regards
requirements for the materials, production processes and performance knowledge/competency development of materials, processes and final
characteristics of the garments, and thus it does not constrain the garment requirements. Moreover, the practice paves the way for op­
implementation of value co-creation opportunities during circular portunities to make the previously described institutional practice of
product development. For instance, current laundry process standards proactive engagement with standards development (1.3) in order to

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A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

influence and align standards with both circularity principles and the insufficient involvement of B2B customers and end-users (2.4) was
identified opportunities of value co-creation. That allows the mitigation acknowledged as beneficial to establishing recycling infrastructure (2.2) as
of the standards constraining the implementation of value co-creation it permits the communication of standardised procedures for sorting
opportunities, as was evident in the omitted opportunity to implement garments in order to enable high-quality feedstock for recycling.
changes during the laundry process. Moreover, this practice also enables products to be kept in use for longer
periods.
4.1.2. Meso level institutional patterns of resource integration Actors both on the meso and micro levels viewed the institutional
The meso level includes the B2B customer (D), the university and practice of maintaining competitiveness among collaborating companies on
science park, and the circular change agency. On the meso level, the the industry level (2.7) as a vital pre-requisite for joining inter-organisa­
making of collaboration with research- and education-focused actors (2.1) tional collaboration (1.1) that is facilitated via research project involvement
facilitated resource integration with additional actors. It was high­ (1.2). For instance, while evaluating the economic impact of using new
lighted by Actor (D) that integrating resources with the university and types of materials, some information was not shared, either during the
the science park enabled access to competencies that are not available course of the project or when making the final project report. According
internally: “… of course, it has been very good support … using this Higg to the involved actors, while collaboration is required in order to suc­
part … but I guess the things we wouldn’t have been able to do ourselves are cessfully implement circular product improvements within the industry,
the things that it [Science Park] has done in terms of designing and producing it should not be carried out for the sake of the competitiveness of each
these new circular products.” Moreover, the role of these two additional company involved.
actors was emphasised by Actor (A) thus: “… that’s why I’m thinking
about education to some extent, where I think it [the university] plays a part 4.1.3. Macro level institutional patterns of resource integration
… trying to teach those kinds of things, those kinds of ideas, because they’re a The macro level includes Swedish and European Union legislation, as
big part of it.” well as the Swedish Institute for Standards (SIS). Integrating financial
Related to the broader meso level, the making of the new institutional resources from the macro level, by making the institutional practice of
practice of proactive involvement in establishing infrastructure for recycling the public funding of research projects (3.1) from Swedish and
(2.2) would facilitate the development of the market for recycled ma­ EUgovernment/non-government agencies, enables circular product
terials to be available in the required volumes and at competitive prices, development. In particular, project funding facilitates the practice of
in order for circular product improvements based on the use of recycled research project involvement (1.2) on the micro level in order to introduce
materials to be feasible for large-scale implementation. However, the new actors and develop the necessary competencies. As stated by Actor
development of recycling infrastructure requires industry-level collab­ (A), participating in projects facilitates keeping up to date with the
oration that can be supported via the practice of inter-organisational relevant knowledge and implementing circularity principles during
collaboration (1.1), initiated on the micro level. As regards establishing operational practice: “We participate in a lot of different projects …
this recycling infrastructure, the potentially new role of Actor (C) was research projects … that’s one way we keep ourselves updated in certain areas
mentioned, e.g. collecting and directing used garments to recycling due … We’ve taken a huge step forward …”.
to its ownership of these products. As supported by all the actors in the case study, breaking the prevailing
The value co-creation practices on the micro level, by means of inter- socio-economic paradigm of the linear economy (3.2), i.e. the prevailing
organisational collaboration (1.1), also facilitate the making of the new macro-institutional norm that governs inter-organisational exchanges
practice of customers’ and end-users’ involvement during circular product within the industry, will introduce changes of paramount importance
development (2.3) on the meso level, with the aim of better coordinating into the supply chain and the market structures motivating and enabling
knowledge exchange between the actors on both the supply and demand circular product development on the micro level. Although attributed to
sides of the product supply chain. This allows better alignment of both macro level changes, this institutional re-configuration of the paradigm
sides’ internal needs and expectations in relation to value co-creation shift from a linear to a circular economy approach requires the com­
opportunities. Moreover, making the two institutional practices on the bined efforts of various actors on different institutional levels. Actor (A)
meso level (2.1, 2.3) also leads to breaking other institutional practices views this transition as necessary when it comes to co-creating value for
on the same level. These practices prevent the pursuit of value co- the whole workwear supply chain, and society: “Just trying to find the best
creation opportunities, e.g. the use of alternative fibres and re-use in way forward for us, and in this case, it’s the whole value chain … because the
alternative settings (other than healthcare), relating mainly to cus­ way I try to see this is what’s best for society.”
tomers and end-users. The macro level institutional practices needing to be maintained
Breaking the institutional practice of insufficient customer and end-user include industry standards development (3.3) and regulatory frameworks
involvement during circular product development (2.4) enables the (3.4). Maintaining the industry standards (3.3) developed by the SIS
breaking of the two other institutions on the meso level (2.5, 2.6), which brings some flexibility to choosing suitable materials (e.g. recycled fi­
are preventing value co-creation by redefining the role of B2B customers bres and other alternatives that reduce the environmental impact).
and end-users. According to Actors (A) and (D), involving B2B customers However, standards can place limitations on circular product improve­
in product development can help break customer resistance to accepting ment in terms of, for example, hampering new material design solutions
the product design changes (2.5) associated with using materials that have that allow post end-of-life reuse or recycling. As mentioned previously in
a lower environmental impact (e.g. recycled). In particular, this be­ the analysis of institutional re-configurations on the micro level, busi­
comes possible by means of developing customer knowledge of the ness actors can proactively engage with standards development (1.3) to
environmental benefits in order to justify increased product prices overcome such conflicting situations and enable value co-creation dur­
during inter-organisational collaboration that is further enabled by ing circular product development.
breaking siloed leadership during product development (1.4). Policymakers on the regional, national and international levels
The B2B customer also gains insights from end-users in terms of their should also maintain the practice of supporting the transition of both
experience of garments, as well as opportunities to break their resistance industry and society to circularity by establishing informed regulatory
to accepting fully synthetic fibres (2.6). The prevailing industry norm of frameworks (3.4). For example, the Sustainable Product Initiative, as a
using blend materials results in a greater environmental impact than part of the EU Action Plan for the Circular Economy, aims to ensure that
when using monomaterials. Overcoming end-user resistance using sustainable products become the norm in the EU. Additionally, the EU
knowledge provision of the environmental and recycling benefits of such Chemicals Strategy aims to increase the production and use of secondary
changes would create the economic motivation for supply actors to use raw materials (i.e. through recycling), which will facilitate the adoption
such materials in these types of garments. Overall, breaking the of recycled materials on a larger scale while lowering the associated

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A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

costs. Lastly, EU plans for Digital Product Passports are aimed at recycling).
providing relevant information about a product to all the actors along Similarly, a balance between making, breaking and maintaining
that product’s value chain in order to boost circular economy, even needs to be accomplished within the meso level. For instance, collabo­
though this will lead to increased costs during the development and rating with customers on the meso level enables access to users’
implementation phases. knowledge (e.g. product requirements) (Sumter et al., 2021), as well as
to address lack of customers’ knowledge (Jensen et al., 2021). The
5. Discussion involvement of new actors therefore allows to address customer and
end-user resistance to enable product longevity. On the other hand,
The purpose of this paper was to contribute an understanding of how involving non-B2B actors (research organisations in particular) in
multi-level institutional re-configuration patterns influence circular innovation projects allows better coordination between supply and de­
product development and its associated value co-creation. Based on an mand by facilitating pre-competitive collaboration, while simulta­
exploratory case study, the paper makes two contributions, which are neously maintaining core competencies as the source of competitive
both supported by empirical evidence. Firstly, it confirms previous advantage. Moreover, in this case it enabled the companies access to
research (Koskela-Huotari et al., 2016) by identifying interdependencies operant resources related to assessing environmental and economic
between the re-configuration patterns of making, breaking and main­ performance of different solutions, which should form the basis for
taining institutional rules of resource integration. Moreover, the paper product development (Gmelin and Seuring, 2014). This kind of balance
also acknowledges the importance of this perspective when it comes to between the institutional re-configuration patterns on the meso level
understanding the co-created, systemic and dynamic nature of innova­ allows to involve actors that can impact product attributes related to
tion in service ecosystems (Vargo et al., 2015), which has been under­ circularity strategies (Diaz et al., 2021), while enabling to overcome the
emphasised in the existing literature on circular product development main challenge facing the circular economy, which is related to influ­
(Pinheiro et al., 2019). In particular, the case study analysis showcases encing and receiving support from a variety of actors (Rizos et al., 2016;
how to navigate between stability and change, within the multifaceted Korhonen et al., 2018). Furthermore, institutional interdependencies are
system of actors, by considering the interdependencies between insti­ also evident on the macro level, where breaking the prevailing
tutional re-configuration patterns in order to enable value co-creation socio-economic paradigm of the linear economy requires policymakers
during circular product development. and standards developers to support circular product development (e.g.
Secondly, the paper adds to previous research on institutional re- through publicly funding research projects).
configuration (Koskela-Huotari et al., 2016; Pop et al., 2018) by iden­
tifying the interrelations of the institutional rules of resource integration 5.2. Interrelatedness between different levels of institutional context
between different levels of context. Although this interrelatedness has
been mentioned in the previous literature (Chandler and Vargo, 2011; Taking an ecosystem perspective, in which resource integration is
Akaka et al., 2013; Pop et al., 2018), the novelty of this research lies in coordinated by institutional arrangements (Neghina et al., 2015; Vargo
revealing the interrelatedness between all three re-configuration pat­ and Lusch, 2016), appears to provide a better understanding of how
terns and the three levels of context. Moreover, the paper also reveals institutional arrangements influence the broad variety of actors and
the presence and relevance of interrelatedness in enabling value their value co-creation, not only within the different levels of context
co-creation, while also indicating the ability to avoid having any po­ (Koskela-Huotari et al., 2016), but also between, to enable circular
tential negative effects on the wellbeing of the actors and the broader innovation in the service ecosystem. In particular, our paper provides
ecosystem (i.e. value co-destruction, cf. Laud et al., 2019). The following detailed insights from circular product development by explaining how
discussion focuses on presenting these two contributions in more detail the institutional rules of resource integration between the different
by elaborating on how the identified interdependencies and in­ levels are closely connected and have an impact on one another when
terrelations enable the pursuit of value co-creation opportunities during influencing the actors’ ideation of value co-creation opportunities.
circular product development. For instance, the maintaining and making of macro level practices of
public research funding and industry standards development (in
5.1. Interdependencies between institutional re-configuration patterns collaboration with B2B actors) enable both the industry (meso level) and
individual companies (micro level) to pursue value co-creation oppor­
As demonstrated in Section 4 and Fig. 3 (via the arrows), the inte­ tunities jointly by means of involvement in research projects. This
grating of resources during circular product development is associated involvement can be viewed as a vital institutional practice that posi­
with interdependencies between the re-configuration patterns of tively influences resource integration for circular innovation. As
breaking, making and maintaining the institutional rules of resource demonstrated in our analysis (Fig. 3), it facilitates institutional re-
integration. The results confirm previous findings by Koskela-Huotari configurations on both the micro and meso levels. In particular, these
et al. (2016) whereby such interdependencies were identified within re-configurations include inter-organisational collaboration, as well as
different levels of the institutional context. For instance, on the micro customer and end-user involvement, in turn associated with breaking
level, a requirement for developing circular products was maintaining multiple institutional practices on both the micro and meso levels.
core competencies and aligning the pursued value co-creation oppor­ Moreover, this kind of interrelatedness enables value co-creation and
tunities with current standards and regulations. While maintaining the indicates the avoidance of potential negative effects if discrepancies
institutional rules provides a sense of familiarity (Koskela-Huotari et al., emerge in terms of conflicting goals and required institutional re-
2016), it also supports the making and breaking of the institutional rules configurations between actors.
that enable circular innovation. As evident from the explored case, the Specifically, research project involvement leads to new actor con­
making of institutional rules on the micro level, e.g. engaging in figurations and thus to resource integration in the form of capital and
inter-organisational collaboration is important for design in a circular knowledge support from the meso and macro levels, which is often
economy (Sumter et al., 2021) since it requires a diverse set of knowl­ missing and acts as a barrier to the transition to circularity (Rizos et al.,
edge and skills (De Los Rios and Charnley, 2017). However, as the 2016). Moreover, it also leads to a redefining of the actors’ roles and to
collaboration lead to a focus on choice of materials, which impacts the emergence of alternative frames of sense-making whereby institu­
production, use phases and end-of-life (Hallstedt and Isaksson, 2017), it tional tensions are dealt with, e.g. the needs of the supply and demand
also requires the breaking of institutional rules by changing the roles of side actors are agreed upon and aligned with the pursuit of environ­
the actors (e.g. the fabric producer taking a leading role over the mental and economic objectives. In this regard, this paper contributes to
garment producer due to being competent in textile materials and the discussion on the importance of blurring the organisational

8
A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

boundaries for innovation with other B2B actors Mele et al. (2010) by involvement on the micro level, which allows a direct influence on
means of additionally acknowledging the vital importance of resource institutional arrangements on the meso level (e.g. through partnering
integration with non-B2B actors, e.g. universities and science parks, to with new non-B2B actors in order to access necessary resources). This
enable resource integration across multiple levels of the ecosystem. relates to the second key institutional arrangement, the involvement of
As evident in this paper and previous research (Koskela-Huotari customers/end-users, which allows the industry to address customer and
et al., 2016), some patterns of institutional re-configuration may act as user resistance to economic and environmental value co-creation op­
barriers to value co-creation. For instance, maintaining current industry portunities. Thirdly, the proactive involvement of B2B actors in stan­
product and laundry standards can constrain the pursuit of some of the dards development allows the aligning of the standards requirements
value co-creation opportunities occurring in the explored case, and thus with the industry’s ideation of value co-creation opportunities, i.e. op­
lead to potentially negative effects on individual (economic) and col­ portunities for circular product development. However, the institutional
lective (environmental) wellbeing. Breaking this institutional arrange­ work done on the micro and meso levels is dependent on the main­
ment can decrease resource consumption in production and taining of informed regulatory frameworks, which is the fourth key
consumption processes (Kirchherr et al., 2017), such as using dyeing and institutional arrangement, as these provide the industry with a sense of
laundry processes that use less water at lower temperatures, and stability during the transition to circularity.
therefore less energy. To overcome this barrier, actors on the micro level Further, our study has some limitations that can be addressed in
can proactively engage in standards development on the basis of their future research. Due to the specific nature of the products featured in the
current participation in standards working groups. case study (i.e. the blouse and trousers worn by healthcare professionals,
Moreover, to enable environmental value co-creation on the macro and these products following strict requirements and material specifi­
level, the proactive involvement of micro and meso level actors in cations), future research should include diverse product categories from
establishing recycling infrastructures allows the lowering of material other industries and contexts to test the generalisability of the results.
costs with fewer environmental impacts. Lowering of costs is important Moreover, since the study is geographically bound due to the prioriti­
not only because it is the main focus of managers during product sation of textile products for circular economy in Sweden and EU,
development (Gmelin and Seuring, 2014), but also as successful product similar studies should be carried out in other contexts in which industry
development is critical for a company’s competitiveness (Brown and and policy focus on circular product development takes a different
Eisenhardt, 1995). This kind of integration of contextual resources (Laud approach.
et al., 2019) through institutional work thus enables the actors to While broader perspectives have been explored, the data collected in
simultaneously maximise value for both the individual actors and the this study mainly focuses on the micro level of the service ecosystem.
surrounding service ecosystem, the importance of which has been Thus, future studies should also include the distinct perspectives of the
highlighted in previous research (Beirão et al., 2017; Mustak and Plé, actors on the meso and macro levels, since institutional re-configuration
2020). This in turn allows the overcoming of institutional tensions and patterns and associated value co-creation both influence and are influ­
conflicting goals of value co-creation existing between the different enced by these levels of the service ecosystem. In particular, a better
levels of context, and thus to continue with the realisation of ideated understanding is required of the conflicting economic and environ­
value co-creation opportunities. mental goals of value co-creation, as well as of the outcomes of actors’
institutional work on the different levels of context and the actors’ in­
6. Conclusions and future research fluence in pursuing value co-creation opportunities during circular
product development.
This paper demonstrates the importance of the interdependency and
interrelatedness between institutional re-configuration patterns of CRediT authorship contribution statement
resource integration within and between multiple levels of a service
ecosystem. The paper presents empirical evidence collected via long- Ann Vellesalu: Conceptualization, Methodology, Writing – original
term observations enabling an in-depth understanding of institutional draft, Writing – review & editing, Visualization. Olga Chkanikova:
re-configurations of a complex and dynamic circular product develop­ Validation, Writing – review & editing, Supervision. Daniel Hjelmgren:
ment process in a service ecosystem. In particular, it emphasises how to Validation, Writing – review & editing, Supervision. Nicklas Salo­
navigate the balance between stability and change in order to overcome monson: Validation, Writing – review & editing, Supervision.
tensions and manage the complex transition to circularity in a multi­
faceted system of actors, i.e. both within and between different levels of
context. In doing so, this research contributes to the development of SDL Declaration of competing interest
towards a practically-applicable midrange theory.
From a managerial perspective, the paper provides practitioners with The authors declare that they have no known competing financial
understanding of the enablers and barriers arising during circular interests or personal relationships that could have appeared to influence
product development, as well as how to manage these through institu­ the work reported in this paper.
tional work. The institutional arrangements that are key to enabling
circular product development relate to: 1) research project involvement, Data availability
2) the involvement of customers/end-users in product development, 3)
the proactive involvement of B2B actors in standards development, and The data that has been used is confidential.
4) informed regulatory frameworks. These institutional arrangements
are critical as regards to navigating the balance between stability and Acknowledgements
change when aligning business activities with circular economy princi­
ples due to their strong interdependency and interrelatedness with other The authors would like to thank all case organisations and in­
arrangements on different levels of context. terviewees, as well as Science Park Borås for partially supporting this
The first key institutional arrangement is research project research (project nr. 49769-1).

Appendix

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A. Vellesalu et al. Journal of Cleaner Production 414 (2023) 137682

Table A
Online questionnaire

Motivation and expectations

What is your motivation for participating in the project?
What are your expectations for the project’s final results?

Product
Describe the requirements for each product according to product standard?
Describe the requirements for each product according to materials standard?
What do you see need to be changed in procurement in order to achieve a circular model? For example, criteria, training of
buyers, decision-making, etc.
What groups do you think is most important to achieve a change in behaviour and attitude? For example, buyers, decision-
makers, users, etc. Feel free to motivate.

Feasibility
What are your expectations for the feasibility study?
List all materials used in TOP 3 products.
How many times are the TOP 3 products used before being discarded/recycled?
What are the customer requirements/values/needs that are answered with these TOP 3 products?
What are the most important resources required for these products? For example, materials, capabilities, etc.
What are the most important activities required for these products? For example, product development, market research,
etc.
Which costs are available for the feasibility study?

Table B
Semi-structured interview guide

Role of interviewee/organization and background

What is your role in your company?
What is your (your company’s) role in the project?
Why did you (your company) join the project?
What was the motivation behind choosing the product(s)?
What were the expected outcomes for your company?
Did you experience any challenges in the project?

Relationships and role of others

How well developed were your business relationships with these companies before the project started?
How do you see the role of each company in this project?
What are their different contributions?
How have you organised the work between your companies/departments?
How has the project affected your (your company’s) relationship with the other companies involved in the project?

Resources
What was your company’s input to the development of the product?
How did you access necessary resources to make the required changes in the product?
Did you lack any important resources?
Did any resources need to be adapted?
How has the project affected your (your company’s) resources?

Learnings and additional input

What will be most important challenges in the future for this kind of product?
What did you learn from this project?
Is there anything else you would like to add (e.g. any documentation, reports, other materials)
Are there other people in your company that could have an input on these questions?

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