First-mover firms in the transition towards the sharing economy in metallic natural resource-intensive industries: Implications for the circular economy and emerging industry 4.0 technologies

Resources Policy 66 (2020) 101596

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First-mover firms in the transition towards the sharing economy in metallic natural resource-intensive industries: Implications for the circular economy and emerging industry 4.0 technologies Charbel Jose Chiappetta Jabbour a, *, Paula De Camargo Fiorini b, Christina W.Y. Wong c, Daniel Jugend d, Ana Beatriz Lopes De Sousa Jabbour a, Bruno Michel Roman Pais Seles e, Marco Antonio Paula Pinheiro d, f, Hermes Moretti Ribeiro da Silva d a

Montpellier Business School, 2300, Avenue des Moulins, 34185, Montpellier C�edex 4, France Department of Administration, Federal University of S~ ao Carlos (UFSCar), Rod. Jo~ ao Leme dos Santos, SP-264, Km 110, Itinga, Sorocaba, SP, 18052-780, Brazil c The Hong Kong Polytechnic University, Business Division, Institute Textiles and Clothing, Hung Hom, Kowloon, Hong Kong d Production Engineering Department, S~ ao Paulo State University (UNESP), Bauru, SP 17033-360, Brazil e Production Engineering Department, S~ ao Carlos School of Engineering, University of S~ ao Paulo, Avenida Trabalhador S~ aocarlense 400, S~ ao Carlos, SP 13566-590, Brazil f Department of Mathematics and Industrial Engineering, Polytechnique Montr�eal, Canada b

A R T I C L E I N F O

A B S T R A C T

Keywords: Circular economy Sustainable operations management Sharing economy Sustainability Industry 4.0

The dilemma between consumption and preservation of natural resources has been repeatedly highlighted in recent literature, and is still an open discussion. The emerging concept of the circular economy brings new opportunities and business models for firms, such as the sharing economy. These new concepts are capable of promoting sustainable practices which aim to optimize and ameliorate basic resource consumption, especially in industries which are intensive in metallic natural resources. However, this topic remains relatively unexplored, especially considering genuine case studies in countries with emerging economies. There have been calls for more qualitative research in operations management to investigate real-world cases of companies transitioning from linear manufacturing towards the sharing economy. Addressing these contemporary knowledge gaps, this work unveils drivers, challenges, and opportunities for the sharing economy based on original evidence gathered from exemplary, “first-mover” cases in the Brazilian manufacturing industry which use metallic natural re­ sources. The main contributions of this study can be summarized thus: (i) there is no homogeneity in companies’ understanding of the sharing economy’s potential as a win-win approach; (ii) transitioning towards the sharing economy relies on radically changing the way firms develop and upgrade their portfolio of products; (iii) transitioning towards the sharing economy is more complex – due to its challenges, drivers, and barriers – than has been reported by the literature; (iv) more advanced companies in terms of sharing economy operations management practices have mastered the capability of combining key principles of the circular economy and key elements of the sharing economy, creating an important synergy between the circular economy and the sharing economy; (v) emerging industry 4.0-related technologies seem to play a vital role in unlocking the sharing economy, as applied to product development. This work offers novel implications for both the theory and practice of operations management for the sharing economy.

1. Introduction The world faces a dilemma between maintaining the consumption of

goods and services – and thus keeping the global economy running – and preserving the natural resources of our planet. The circular economy (CE), according to Korhonen et al. (2018, p.39), is “an economy

* Corresponding author. E-mail addresses: [email protected] (C.J. Chiappetta Jabbour), [email protected] (P. De Camargo Fiorini), christina.wy.wong@ polyu.edu.hk (C.W.Y. Wong), [email protected] (D. Jugend), [email protected] (A.B. Lopes De Sousa Jabbour), bruno_seles@yahoo. com.br (B.M. Roman Pais Seles), [email protected] (M.A. Paula Pinheiro), [email protected] (H.M. Ribeiro da Silva). https://doi.org/10.1016/j.resourpol.2020.101596 Received 21 July 2019; Received in revised form 3 September 2019; Accepted 18 January 2020 Available online 15 February 2020 0301-4207/© 2020 Elsevier Ltd. All rights reserved.

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constructed from societal production-consumption systems that maxi­ mizes the service produced from the linear nature-society-nature ma­ terial and energy throughput flow”. Therefore, the CE can pose a solution to the aforementioned dilemma. The CE is implemented through the use of cyclical material flows, renewable energy sources and cascading energy flows (Korhonen et al., 2018). The CE concept pro­ vides new opportunities and business models for firms, such as the sharing economy (SE), which is one of the most important business models developed from the CE concept, and which is already starting to be used on a large scale in a number of sectors. In this context, the CE and SE are capable of promoting sustainable practices, and aim to improve and optimize basic resource consumption (Luthra et al., 2019). In particular, industries which are intensive in their use of metallic natural resources are continually deteriorating the environment, and therefore require investigation and action concerning the transformation of their operations (Luthra et al., 2019). According to Choi et al. (2018), the sharing economy can be considered one of the most relevant contemporary topics in operations management (Acquier et al., 2017). Information technology (IT) has been widely used in SE business models, such as those of Uber, Airbnb and others; IT is an important pillar of this type of business. The use of IT in some business models based on the CE is directly linked to the in­ dustry 4.0 concept. Industry 4.0 is based on manufacturing systems which are driven by IT and, according to De Sousa Jabbour et al. (2018), industry 4.0 technologies, such as big data analysis, have the ability to assist in the implementation of CE concepts. The theory behind the sharing economy has advanced through a profusion of conceptual studies (Rong et al., 2018; Plewnia and Guenther, 2018; Cheng, 2016), which explore its theoretical basis. However, little is known about the drivers, challenges, and opportu­ nities of the sharing economy from the point of view of qualitative research, based on exemplary case studies (Choi et al., 2018). Besides, it is also important to identify potential organizational barriers to the implementation of CE principles and Industry 4.0 technologies to ach­ ieve more sustainable operations management (De Sousa Jabbour et al., 2018). Generally, the application of exemplary qualitative case studies is considered a crucial research strategy (Ketokivi and Choi, 2014; Voss et al., 2002; Eisenhardt, 1989), capable of shedding light on details regarding barriers, challenges and drivers towards more sustainable operations management (Agyemang et al., 2019; Kusi-Sarpong et al., 2016; Pagell and Wu, 2009). Drawing on the aforementioned research gaps and contemporary calls for research, this work uniquely explores the following research question:

have called for researchers to provide evidence and lessons from real-world cases of companies transitioning towards the sharing econ­ omy. In accordance with this perspective, it is important to recognize that empirical studies have not yet explicitly addressed the dynamics of the sharing economy (Plewnia and Guenther, 2018; Mair and Rei­ schauer, 2017). At the same time, this article also adds in-depth details on barriers, challenges and drivers of the sharing economy at the com­ pany level in emerging nations (Luthra et al., 2019). Scholars from a variety of disciplines have addressed the challenges and opportunities of the sharing economy (Cheng, 2016; Kathan et al., 2016); however, production and operations management research can provide new insights in this debate (Choi et al., 2018). In order to contribute to this debate, this work adds evidence from manufacturing companies, bringing implications for new product development processes. Overall, there is a persistent lack of research on CE-related topics, including the sharing economy (Korhonen et al., 2018), and particularly concerning emerging economies (Luthra et al., 2019; Plewnia and Guenther, 2018). To overcome this current limitation, original data from Brazilian companies is presented herein. Finally, there is a demand for more qualitative research on sustain­ able operations-related topics (Pagell and Wu, 2009), through the ex­ amination of exemplary case studies (Ketokivi and Choi, 2014; Eisenhardt, 1989). This research offers a unique set of lessons on tran­ sitioning towards the sharing economy by conducting qualitative, exemplary case studies. Following this Introduction, Section 2 presents the conceptual background of this work. Section 3 contains the research methodology, while Section 4 addresses the research results. Section 5 presents a discussion based on cross-case analysis. Finally, Section 6 encapsulates our final remarks, implications for theory and practice, as well as research limitations and topics for further investigation. 2. Conceptual background 2.1. The sharing economy With the rapid emergence of new technologies and increasing con­ cerns around sustainability, a variety of different business models have arisen (Cohen and Kietzmann, 2014; Geissinger et al., 2019; Asian et al., 2019). These new models have also been largely based on the recent sharing economy (SE) perspective (Mair and Reischauer, 2017). The rise of the SE holds relevance for both practitioners and policymakers, since it is predicted to have a significant societal impact (Hamari et al., 2016). Although there is still no single canonical definition of the sharing economy, Lessig (2008) states that the SE represents “collaborative consumption made by the activities of sharing, exchanging, and renting resources without owning the goods”. For Mair and Reischauer (2017), the sharing economy manifests when individuals access resources mediated by a digital platform that is designed and operated by a firm. Hamari et al. (2016) consider the sharing economy to be an umbrella concept that endorses the shared consumption of goods and services. The SE offers the opportunity to transform current business models in terms of design and daily decision-making, which carries profound im­ plications for practitioners, both as an opportunity and as a challenge (Cheng, 2016). The SE has spread into various sectors of the economy and offers a number of developmental paths (Matzler et al., 2015; Acquier et al., 2017; Geissinger et al., 2019). The accelerated growth of SE during the past decade is mainly related to the benefits it offers in terms of promoting sustainable practices (Cheng, 2016). The SE is a theme that has been much explored in sustainability research recently, since it claims economic, environmental and social benefits. Heinrichs (2013) has stated that the SE could be a possible new pathway to sustainability, directly contributing to sustainable develop­ ment (Plewnia and Guenther, 2018). The Brundtland report ‘Our Common Future’ considers sustainable

� How have manufacturing companies embarked on the transition from linear manufacturing to a shared economy? Based on this research question, this work has the following objectives: � To identify and analyze the drivers to embarking on the journey towards a shared economy; � To identify and analyze the barriers and challenges to embarking on the journey towards a shared economy; � To identify and analyze the opportunities of a shared economy. Our research findings reveal emerging and so far unexplored topics, such as the role of synergy between principles of the circular economy (Ellen MacArthur Foundation, 2015; Jakhar et al., 2019; Sharma et al., 2019) and the sharing economy, and the vital role played by emerging industry 4.0-related technologies (De Sousa Jabbour et al., 2018; Mok­ tadir et al., 2018) in adapting firms’ product portfolios to the sharing economy. The contribution made by this work can be understood through the following justifications. First, a number of scholars (Choi et al., 2018) 2

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et al., 2018). �lez-Benito Studies such as those by Gonz� alez-Benito and Gonza (2006) and Albino et al. (2009) emphasize that the development of products which address such environmental concerns should consider elements such as the following in the design phase: replacement of polluting materials and components; reduction in the consumption of resources (such as water and energy) and generation of waste during production, use and distribution of the product; dismantling, remanu­ facturing, refurbishment, reuse and recycling at the end of the product’s life cycle and its possible ‘rebirth’, via the approaches presented by the circular economy (CE) (Agyemang et al., 2019; Ellen MacArthur Foun­ dation, 2015; Prieto-Sandoval et al., 2018). The successful adoption of CE practices also depends on the adoption of practices associated with the NPD process (Singh and Ordonez, 2016; den Hollander et al., 2017), since decisions about new products and projects must plan for the use of materials and energy circulation prin­ ciples, as well as the regeneration and preservation of materials from the early stages of the NPD process (Geng and Doberstein, 2008). One of the main ways to operationalize CE principles in the NPD process is through the proposed ReSOLVE model (Ellen MacArthur Foundation, 2015; Pinheiro et al., 2019), which includes the following principles: (i) regenerate, (ii) share, (iii) optimize, (iv) loop, (v) virtualize, and (vi) exchange. It is important to note that one of the founding principles of the ReSOLVE model is precisely the sharing of products and services, with the aim of sharing products, intensifying their reuse and extending their life cycle. In terms of business models, the principles of product sharing can be operationalized through the adoption of the product service system (PSS) and inclusion of SE principles from the product planning stages onwards (Pinheiro et al., 2019). In this process, products must be designed to have greater durability and anticipate possible updates throughout their life cycle (Ellen MacArthur Foundation, 2015; den Hollander et al., 2017). The sharing of products and services, through the intensified use of industry 4.0 technologies (De Sousa Jabbour et al., 2018), the internet, information technology (Bai et al., 2017; Ellen MacArthur Foundation, 2015; McAloone and Pigosso, 2017) and the adoption of mobile apps, can also encourage the development of sharing products. Jabbour et al. (2019) emphasize that industry 4.0 technologies such as the Internet of Things (IoT) and additive manufacturing are fundamental to meeting the needs of firms and clients inclined towards greener choices. This is because these technologies facilitate product sharing and optimize the traceability of products, as well as the circularity of materials, compo­ nents and products (Jabbour et al., 2019). In this context, a number of companies have originated from entirely new and innovative business models based on SE and new technologies, such as the prominent cases of Airbnb and Uber, while other more traditional institutions – such as manufacturing companies – are seeking to adjust their business models in order to remain competitive. In this sense, the product service system represents an opportunity for manufacturing companies to adapt their activities according to the new trend for circular and sharing economies. A PSS is an integrated combination of tangible products and intan­ gible services which is designed to fulfill customers’ needs. It empha­ sizes the “sale of use” rather than the “sale of products” (Baines et al., 2007; Akbar and Hoffmann, 2018). In this sense, the service provided by the company consists of giving the consumer access to a product, while the company retains the ownership of it (Frenken and Schor, 2017). Product sharing through product service systems enables reduced resource input. Therefore, the diffusion and adoption of PSSs can potentially mitigate the adverse external effects of consumption on the environment and move society towards a resource-efficient economy (Mont, 2002; Akbar and Hoffmann, 2018). SE and PSS enable the creation of new innovative products and accelerate the development of worldwide standards, which brings im­ plications for product development. In these value chains, development

development to be progress that meets the needs of the present without compromising the ability of future generations to meet their own needs (World Commission on Environment and Development, 1987). In this sense, the sharing economy can improve aspects of both social equality and environmental concerns (Rong et al., 2018). According to Midgett et al. (2017), for example, sharing economies in accommodation, such as Airbnb, are sustainable alternatives to traditional travel accommodation because, in this type of business, less energy and resources are consumed. Furthermore, the SE can generate benefits for entire industries (Fang et al., 2016). In the case of accom­ modation, the SE can also create new jobs, since the lower cost of ac­ commodation can attract more tourists. However, low-end hotels could be negatively affected by sharing economy businesses such as Airbnb (Fang et al., 2016). In addition, one central argument is that the sharing economy en­ ables a shift away from a culture where consumers own assets, moving towards one where consumers instead share access to assets. This is a change induced and facilitated by internet platforms and technologies, which connect consumers and enable them to make more efficient use of underutilized assets (Martin, 2016). In this sense, the SE also offers the possibility of creating meaningful contacts and increasing socializing (Frenken and Schor, 2017). The positive economic effects of the sharing economy are evident (Frenken and Schor, 2017), since consumers can obtain cheap access to goods and become less dependent on ownership, which in turn can be presumed to reduce the total number of new products produced. Aside from the economic dimension, the environmental benefits of SE include lower overall resource deployment, extended product life-span, maxi­ mized usage and the redistribution of goods, all of which allow for the reduction of waste and carbon emissions (Kathan et al., 2016). Furthermore, purchasing products and services online and sharing transportation also reduce human environmental impact (Cohen and Kietzmann, 2014; Kathan et al., 2016). Despite these benefits, which are discussed in the literature, some works also point to possible negative externalities of sharing economy business models (Verboven and Vanherck, 2016; Frenken and Schor, 2017). Verboven and Vanherck (2016) suggest that “sharing economy models do not always maximize environmental benefits due to negative side-effects of the model”. One example of a negative side effect is an increase in transportation, because goods are required to be available for customers at different times and places (Verboven and Vanherck, 2016). In the case of sharing housing, Frenken and Schor (2017) explain potentially undesirable effects on the supply and price of housing, such as increasing rents for residents in neighborhoods where home sharing is prevalent. Regarding the challenges of the sharing economy, studies suggest that although there are several benefits to sharing, consumers generally still choose to purchase and own products instead of making shared use of them, because they value having complete control over their products (Tukker, 2015; Akbar and Hoffmann, 2018). As can be seen, there are several benefits related to sustainable as­ pects of sharing economy business models, but it is also possible to point out disadvantages and challenges. 2.2. Developing new products for the sharing economy The development of products for the sharing economy can be asso­ ciated with concern for the development of environmentally sustainable products, as it aims to extend the product life cycle by sharing product usage and increasing customers’ tendency towards dematerialization (Vezzoli and Manzini, 2008), whether business-to-business (B2B) or business-to-consumer (B2C). Environmentally sustainable products are designed to minimize environmental impact throughout their entire life cycle; from raw material extraction through manufacturing, use of non-toxic materials, minimization of resource consumption, distribution to customers, use, disposal and reverse logistics (Fiksel, 2012; Pinheiro 3

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of new products can be improved by increasing perceived product value and extending customer services. In the context of developing new products in a sharing economy, Barnes and Mattsson (2016) study an SE model which requires NPD in the search for, discovery, development, imitation, and adaptation of new products, services, and production processes. In this case, the dominant driver for consumers is access to resources, rather than ownership. The authors argue that the uncertainty associated with starting up a business is amplified by a continual stream of innovations, where emerging new trends and stable established trends can both quickly change the roles played by businesses. Pisano et al. (2015) discuss the features and trends that could help companies to create, modify, change or re-define their business models, focusing on better matching NPD to market needs. These authors found that a multi-faceted business model should focus on customers’ needs and resources to produce useful products intended for sharing at a low price. It is relevant to note that extending product life cycle tends to increase maintenance costs. Luchs et al. (2016) also point out that collaborative consumption brings implications for NPD regarding the development of more durable and reliable products, given the longer period of usage, as well as necessitating product design that enables usage of the same product by different customers with different needs and preferences. It is also possible to identify barriers to the adoption of the sharing economy in the NPD process, as well as in other business processes. Depending on a company’s product pricing decisions, consumers may decide to compare, buy or rent a product, or even leave the market (Wang et al., 2020). Additionally, aspects of the ‘sharing’ dimension of CE elements, such as institutional, market and technological un­ certainties, may inhibit the adoption of sharing practices (Ritz�en and €m, 2017; Jesus and Mendonça, 2018). The innovation effort Sandstro required to adopt a shared economy-based business model, which may present a discontinuous innovation for the company, can also be a barrier (Weber et al., 2019). Since this is an emerging business model, many consumers may not be willing to share products. In this sense, Retamal (2019) points out that social, personal and cultural elements can discourage collaborative consumption. Table 1 presents a summary of the drivers and barriers to the adoption of the sharing economy. Despite the presence of a number of initial works, the implications of the sharing economy for NPD are still incipient in the literature. Strong integration is required between all the constitutive elements of NPD and SE to explore drivers, barriers and opportunities, and particularly to focus on PSS as a means for traditional manufacturing companies and

those intensive in metallic natural resources to adapt to the new competitive environment (Fig. 1).

Table 1 Drivers and barriers to sharing economy adoption.

3. Research method

Drivers

Authors

Meeting customer needs The price of sharing in the market (i.e. sharing price is more attractive than product purchase) Trend towards dematerialization Compliance with legislation Lower production and transportation costs Technology (e.g. using apps and industry 4.0 trends)

Pisano et al. (2015); Barnes and Mattsson (2016); Akbar and Hoffmann (2018); Jesus and Mendonça (2018); Asian et al. (2019); Jabbour et al. (2019); Weber et al. (2019); Wang et al. (2020).

Barriers

Authors

Innovation risk (radical or discontinued) Lack of regulation The price of sharing in the market (i.e. product purchase price is more attractive than sharing price) Cultural, social and personal aspects related to collaborative consumption Market uncertainty Economic uncertainty

Ritz�en and Sandstr€ om (2017); Jesus and Mendonça (2018); Retamal (2019); Weber et al. (2019); Wang et al. (2020).

2.3. The sharing economy in emerging economies The sharing economy is a field which has been gaining prominence in emerging economies. This is clear when looking at the study by Hamari et al. (2016), which highlights the sharing economy as an emerging economic and technological phenomenon that is fueled by de­ velopments in technology, growing consumer awareness, the prolifera­ tion of collaborative web communities and social sharing. To analyze the status of the sharing economy theme in emerging economies, approaches from studies such as Tranfield et al. (2003), Yadav and Desai (2016) and Yadav et al. (2018) were chosen. These studies used systematic literature reviews in the operations management field. The Scopus database was chosen because of its size and superlative rigorousness (Luiz et al., 2019). The keyword search used to identify relevant articles was: (“sharing economy”) AND (“qualitative” OR “case study”) AND (“emerg* econom*” OR “developing econom*” OR “Brazil” OR “China” OR “India” OR “Russia” OR “South Africa”). That is, articles on the sharing economy in emerging or BRICS (Brazil, Russia, India, China and South Africa) countries that applied either a qualitative or case study method. This search was conducted in August 2019, using the Article Title, Ab­ stract and Keyword search fields. The initial results of this search yielded 28 articles. These results were then filtered, excluding: (i) non-English articles; (ii) books and book chapters; (iii) conference papers; (iv) articles that did not focus on emerging economies. Ultimately, 16 relevant articles were identified (Table 2). Table 2 presents an overview of the recent research on the sharing economy in emerging economies. Among these studies, most focus on China and Asia. It can also be noted that there is only one article focusing on a South American country (Brazil). There is a notable focus on analyzing the use of apps, and in particular those which facilitate collaborative consumption, in areas such as food, bikes, drivers and transportation. On the other hand, this prior research has not focused on manufacturing companies that are making the transition to the sharing economy. This research contributes to this field of knowledge by pre­ senting results on manufacturing companies that are undergoing this transition. Furthermore, results from a region that is still little explored with regard to the sharing economy are presented and discussed: South America and Brazil in particular, a country which is a representative of the BRICS and one of the largest consumer markets in the world.

This research is based on the case study method, and focuses on two companies operating within both the B2B (business to business) and B2C (business to consumer) environments, with their products reaching final consumers through distribution channels. The choice of this qualitative approach is appropriate due to the SE theme being emergent in the operations management field, and thus far little explored in terms of product development (Choi et al., 2018). This study can also be classi­ fied as inductive, since it does not intend to test a theoretical research framework, but rather to identify and understand practical evidence on the topic. Empirical evidence was observed in two traditional manufacturing firms which are intensive in metallic natural resources. Both companies are currently transitioning to the sharing economy, representing emblematic cases in the Brazilian context, which deserves more studies (Figueiredo and Piana, 2018). Table 3 presents an over­ view of the companies studied. It is worth noting the important role played by Brazil in the field of metallic natural resources. According to Schaffartzik et al. (2016), during the last decades, the BRICS countries have experienced dramatic economic expansions, which has led to large consumption of natural 4

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Fig. 1. Research framework.

resources, and consequently serious environmental issues. Wu et al. (2017) state that since 1950, metal extraction has shifted from devel­ oped countries into the emerging economies, and that in 2010, 76% of all metals and 80% of all iron mined globally was extracted in just four countries: Brazil, China, India, and Australia. Furthermore, Brazil’s metal footprint was found to be above the global average (Wu et al., 2017). This is an emerging and exploratory theme, especially in a country like Brazil, where few companies have adopted the principles of the sharing economy. This fact would make quantitative research unviable due to the lack of a significant sample of companies. Therefore, a qualitative approach using case studies was chosen. According to Yin (2003), the case study method is appropriate for studies aiming to achieve a greater understanding of the current state of the area under research. In addition, the case study method allows for a deep analysis of a relatively small number of situations, and the number of cases can be reduced, since the emphasis is on a broader understanding of the reality of the phenomena chosen for research (Yin, 2003). In line with the chosen research method and inspired by the studies of Mangla et al. (2015) and Thakur and Mangla (2019), the researcher’s

role in capturing and understanding the perceptions of the professionals involved in SE-based product development projects in firms was considered important, in order to obtain a greater number of reports and better evidence concerning the object of study. Given the exploratory nature of this research, the questionnaire was constructed using predominantly open questions, which had the main intention of understanding the motivators, barriers and opportunities in the transition to the SE and implications for the NPD process. The development of the questionnaire was based on the available literature on SE, sustainability, and the circular economy in NPD. The question­ naire was composed of questions such as: (i) “is the company interested in focusing more on services to become part of the sharing economy, in which consumers now want services and no longer seek product ownership?”; (ii) “what are the main challenges and opportunities of a sharing economy?”; (iii) “what information and resources would be needed to support the SE?”; (iv) “what would change in terms of product

Table 3 Information on the companies studied.

Table 2 Studies on the sharing economy in emerging economies.

Size (based on Brazilian law)

Author

Country

Area of application

Cai et al. (2019) Carmody and Fortuin (2019) Du et al. (2019) Li et al. (2019a) Li et al. (2019b) Ma et al. (2019) Retamal (2019)

China South Africa

Ride sharing Ride sharing

Industry and products

China China China China Southeast Asia China

Bike sharing Joint distribution alliance Crowd logistics platforms Sharing mobility Collaborative consumption

Market(s) Selected Features

Chan (2018) Kashyap and Bhatia (2018) Vaclavik and Pithan (2018) Tang et al. (2018) Zhu et al. (2018) Dreyer et al. (2017) Lan et al. (2017) Retamal (2017) Ukolov et al. (2016)

India

Communication and mobile technology Sharing mobility

Brazil

App drivers

China China South Africa China Southeast Asia UK and Russia

Shared battery Ride hailing Transport and cleaning services Bike sharing Product-service system (PSS)

Metallic Natural Resources Used R&D Investment Certifications Model of transition to SE

Food sharing

5

Company A

Company B

Medium size 450 employees (Brazilian unit) 2 units in Brazil Manufacturing: lighting, lamps and lighting fixtures

Medium size 450 employees 3 units in Brazil

B2B and B2C Industry leader in the Electrical Components and Equipment category of the 2018 Dow Jones Sustainability Index Brazilian units only serve the domestic market Steel and Aluminum Approximately 4.5% ISO 9001, ISO 14001, OHSAS 18001 From manufacturing traditional lamps to automated lamps and fixtures, and lighting system service solutions

Manufacturing: garden equipment, kayaks for fishing, fitness and gym equipment B2B Leader in professional gym and fitness equipment in Latin America (60% market share) Leader of kayaking for fishing in Brazil Carbon Steel, Steel, Aluminum, Copper, Chrome and Zinc Approximately 6 and 7% ISO 9001 From traditional gymnastic equipment to rental of smart equipment with embedded sensors and IoT functionality

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and service development?”; and (v) “does the company have any ex­ amples of a project in which product development has included align­ ment with environmental sustainability?”. The context of this research can be described as purposefully choosing recognized companies located in Brazil, which have been transitioning from manufacturing operations towards a product service approach. The sample selection also included the following required criteria: using SE principles in NPD; presenting environmental concerns; having a diversified portfolio of products; developing and producing products for different types of customers (such as both private and public lighting products, and gym equipment for academies); and pos­ sessing an R&D department with the specific attribution of developing technologies. In addition, in terms of selection criteria, it is worthy to highlight that both companies involved in this research transform metallic min­ erals into finished products. One is a multinational with a subsidiary in Brazil, while the other is a medium-sized Brazilian company. Therefore, it is relevant to analyze the sharing economy practices in these two companies, which have different organizational and technological characteristics and present different stages of maturity in environmental management and sharing economy practices. After verifying that the companies selected already had new products and/or projects based on the SE, first contact was made, and the ques­ tionnaire was subsequently sent by email to the target respondents (an environmental sustainability coordinator and an R&D manager). The interviews were then carried out. In addition, following other recom­ mended procedures for conducting case studies (Gibbert and Ruigrok, 2010), the interviews were accompanied by informal conversations and by reading documents provided by the companies or accessed through their website (for example, sustainability and NPD projects). Via such procedures, it was possible to obtain new information and different perceptions about the topic of research. The interviews were recorded, transcribed and subjected to content analysis (Ritchie and Lewis, 2013). Considering the relatively small scale of this study, the content analysis and coding were performed manually (Rymaszewska et al., 2017), based on the recommendations of ~ a (2015). The coding was guided by the research objective and Saldan the following variables: drivers and opportunities, challenges and bar­ riers, implications for the NPD process, and sustainable practices (Agyemang et al., 2019). To avoid criticism concerning potential biases in qualitative research, and to ensure scientific rigor, the aspects mentioned by Rymaszewska et al. (2017) were considered. These include: (i) sampling – choosing interviewees with adequate knowledge for the study; (ii) reliability of the analysis – cross-referencing of data collected directly through in-depth interviews with target respondents and document analysis; (iii) internal and external validity – using multiple sources of evidence and combination of interview audio records with written notes and discussion of empirical results in light of the current state of the research field. Finally, the concept of saturation was employed to ascertain the ideal number of companies to take part in the study (Eisenhardt, 1989). As a result, a third case study was initiated, but its results proved to be too incremental and marginal to be included. In the next section, the cases are presented separately to achieve a deep understanding of each business’s transition towards a sharing economy; following this, the cases will be analysed jointly in a holistic manner in order to satisfy the research objective.

the internal market. While its administrative office is located in Sao Paulo, the production unit is in the state of Minas Gerais. Its portfolio includes lamps and lighting fixtures for consumers as well as lighting systems for professionals. The company’s R&D efforts are directly con­ nected to its global unit. Company A was traditionally manufacturing-focused, but has more recently incorporated services into its business. At the time of the interview, services accounted for about 15% of its business. However, the company has a goal to increase the level of services provided. The company initially focused on the production of light bulbs. Motivated by the market and by top management vision, the company has started shifting its core business towards a service approach in order to remain competitive in the market. On one hand, for consumers, value has been added to the traditional products by integrating automated systems, such as wireless lighting systems connected to applications controlled by the client. On the other hand, a product-service solution is also now offered to professional clients, based on industry 4.0 technologies, such as embedded sensors and Internet of Things (IoT) technology, enabling data collection for smart lighting control. With the sharing economy perspective, a concern for sustainability issues is inevitable. This company has a clear sustainability-oriented vision, which is demonstrated by the sustainable practices it has implemented and its commitment to sustainable development goals. It has a family of sustainable products, mainly aimed at energy efficiency. In addition, it has set goals to achieve zero carbon emissions and zero waste destined for landfill. So far, the company is able to obtain about 80% of the electricity it uses from renewable sources. Regarding social sustainability, the company executes social actions through partnerships with non-governmental organizations (NGOs), and also has an institute dedicated to taking the company’s products and services into marginal areas in which lighting is currently inadequate. The introduction of services and sustainable concerns to the com­ pany’s products has brought implications for product development. Considering the company’s new portfolio, the migration towards a PSS approach is noticeable. Consequently, new practices have been adopted in the development process to provide the expected value for customers. It is possible to note that eco-design practices, such as the minimization of material and energy consumption and reduction of the use of haz­ ardous materials, are among the most evident, as reported by the interviewee: “The main point is economy and energy efficiency … for five years we have been migrating from our conventional products … to LED products, which consider longer durability, the removal of dangerous materials, lower time of maintenance …”. “We have a family of lamps which are modular, so we can take them from one project and put them in another, it also has easy maintenance and longer durability”. Additionally, the company has considered aspects such as design for modularity, disassembly, extended product durability, and also repar­ ability and maintenance. To fulfill professional customers’ needs, new software and technologies have had to be incorporated into this process. In this sense, the interviewee mentioned that new competencies and resources have been required to support the transition. For example, there was a need to hire a new engineer exclusively to deal with new systems and technologies. The products and systems demand the use of new devices such as sensors, IoT devices and big data platforms. It was also mentioned that adopting a PSS approach requires the involvement of all organizational areas, including R&D, sustainability, human re­ sources, supply chain, technology and even the legal department, since new types of contracts arise when providing services. Considering possible challenges to the transition process, the inter­ viewee mentioned the lack of consciousness and acceptance among consumers of the shift towards a product-service system and the benefits of sustainable products. In this regard, it was highlighted that the

4. Research results 4.1. Company A Company A is the Brazilian subsidiary of a multinational enterprise and one of the world leaders in LED lighting systems. Its Brazilian branch has around 450 employees, and is dedicated to supplying only 6

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Table 4 Sharing economy implications found in company A. Sharing economy

Company A Summary

Example Quotations

Implications for NPD

� Development of projects considering lighting as a service (from design and installation to maintenance). � Introduction of new technologies and software (sensors, IoT, big data). � Creation of a family of sustainable products. � Implementation of several practices related to eco-design: modularity, disassembly, extended product life cycle, durability, reparability and maintenance, reduction of use of hazardous materials. � Adoption of circularity into product design.

Sustainable practices

� Products aligned with sustainability aspects. � Commitment to goals such as zero carbon, zero waste to landfill, and increasing the sale of sustainable products. � Circular economy thinking to maximize reusability and minimize value destruction. � Implementation of sustainable supply chain principles. � Use of electricity from renewable sources. � Partnership with NGOs to carry out social actions. � Social projects committed to taking the product to places with inadequate lighting. � Reverse logistics system implemented.

Drivers and opportunities

� The main driver is the necessity of adapting the company’s core business to the new trends of sustainability and service to remain competitive in the market. � Exploring services with final consumers, private companies and public illumination. � Increasing the level of service provided by the company. � Integration between the latest technologies and software. � Introducing the use of recycled material into the production process. � Need to involve the market and retail to properly implement reverse logistics. � Lack of consumer consciousness regarding the shift towards a PSS approach and the benefits of sustainable products. � Employee engagement and awareness of the new type of business. � Developing new competencies and resources to support the business: hiring human resources, developing new types of technologies, ability to handle the maintenance and upgrade of products, skilled labor. � Involvement of all organizational areas: human resources, sustainability, technology, R&D, supply chain, production, financial, and legal department.

“The lighting business is changing. We want to decrease the sale of products to increase the sale of services. The most significant point is to add value to the product.” “We have had a considerable portfolio change, we have been changing our product, which was mainly light bulbs and reactors, and now we adopt technological lighting, lighting systems, and services.” “We have a domestic lighting product that already includes automation, connection with applications, and various functions to use such as alarm clock, timers, intensity of illumination depending on the movie you are watching …” “The services offered are of various types, which goes into the question of the circular economy. It is a very new topic here in Brazil, but outside Brazil the circular economy for lighting is more mature and has been happening … we are implementing a circular economy project that is based on service, and the client pays for the lighting received. For each environment it is determined the amount of light that will be received … The company provides all products, design, installation, and maintenance.” “When you provide these types of service, it is a generalized win-win situation, and the environment is the one that wins the most, because the products last longer, consume less, are of higher quality, and do not have dangerous materials in their composition, so there are several benefits.” “We have been migrating our products to LED technology, which has a number of environmental and sustainable benefits, such as energy efficiency, longer durability and no mercury use, which is a serious problem with conventional lighting.” “We have set global sustainability goals, and most of them are also social goals. For example, increasing the number of products considered sustainable, reaching 80% of sales with sustainable products.” “We have a foundation that acts to take the products to where there is not quality lighting … Social projects that will take illumination to places where there is no lighting, and also partnerships with NGOs to choose the areas in need.” “We needed to involve all aspects of commerce and retail in the reverse logistics operation. We created a management unit that has the goal of visiting 100% of cities with more than 25,000 inhabitants within 5 years [in relation to the reverse logistics system].” “The motivation is the fact that it is the company’s business today. For example, top global management has raised the issue of sustainability, bringing aggressive sustainability goals such as zero carbon.”

Challenges and barriers

company is not yet able to remove traditional bulb lamps from the Brazilian market, because consumers still do not fully accept or under­ stand the benefits of the new LED technology. Finally, Table 4 presents the implications of the sharing economy, as noted by Company A.

“We have not yet used recycled products. We have already had a project attempt, but we have not got the amount of material needed to carry it forward.” “The biggest difficulty related to the professional consumer is to present this new technology, that the lighting product is no longer simply a lamp, but a service … I think that is the greatest difficulty in the face of the maturity of the economy and companies.” “Considering the final consumer, it [the main challenge] is education. Today the consumer still does not want to know if the product has quality and durability … The majority do not have the maturity for a conscious purchase, leading to a general lack of awareness regarding the environmentally sustainable product.” “As we are changing the business of the company, all areas need to adapt … All areas end up being involved in the need for awareness. Even the legal department, because this requires a much more defined contract. Other areas, such as financial, supply chain and information technology as well.” “We needed to hire a specific manager to pioneer and present this new technology related to services.” “We will need manpower, like a field engineer giving support in all areas. Today a major difficulty is the interface between the software systems and the products, needing development in the area of IT.”

products such as lawnmowers and coffee harvesters for family farming); (ii) kayaks for fishing; and (iii) fitness gym equipment (development and manufacturing of fitness machines for gyms). Fitness equipment is the main product line of the company. Company B exports its equipment to Argentina, Colombia, Chile and Paraguay, and is currently the market leader in Brazil and South America in the fitness equipment industry. The firm has its own R&D structure and invests between 6 and 7% of revenue into research and innovation. This company’s transition to the sharing economy has been demonstrated by its development efforts towards the integration of sensors and internet of things technologies to monitor the use of gym­ nastics machines in new product designs. Within the firm, there is an

4.2. Company B Company B has about 450 employees, is Brazilian in origin and operates two production units: one in the state of Sao Paulo and the other in Amazonas. The company’s portfolio of operations includes three lines of business: (i) garden equipment (developing and producing 7

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intense perception that the sharing economy and servitization are prevalent trends in the market in which the company operates – that is, gyms (B2B market). This trend has influenced not only the company’s R&D but also its product project activities. This was reinforced by the company’s R&D manager:

the company’s business goals and environmental goals. This is aligned with recent studies that suggest the evolution from eco-design to PSS and circular economy trends (McAloone and Pigosso, 2017; Pinheiro et al., 2019). However, Company B is driven mainly by market demand, and still considers sustainability an extra cost. This shows that the coupling of the sharing economy and sustainability does not hold true for all companies, and may depend on the company’s environmental maturity level. Regarding these companies’ respective transitions, both presented specific projects related to the sharing economy and the intention to completely adapt their business to the concept of sharing. It was observed that there is a greater adherence to PSS operations in Company A’s product portfolio, and this company also seemed to be more mature in terms of adopting new technologies to assist the sharing of products and services. Company B has already initiated development efforts for the integration of sensors and internet of things technologies as a trend in new market demands. Therefore, it was noted that both firms are transitioning to SE business models, which reinforces other studies’ assertion that this is an emerging business model (Cheng, 2016; Hamari et al., 2016). In Company A, for example, the interviewee expressed the wish “[…] to decrease the sale of products to increase the sale of services”. The interviewee concluded that “[…] The most significant point is to add value to the product”. To add value to the product, the company devel­ oped projects which consider lighting as a service, requiring the intro­ duction of new technologies and software. This was also noted in Company B, which has started a new business model based on the leasing of gym equipment and the integration of embedded sensors and internet-enabled devices to add value to the product. These actions are in tune with the study of Pinheiro et al. (2019), which claims that principles of product sharing can be operationalized through the adop­ tion of the PSS and SE from the product planning stages. The development of products for the sharing economy has brought a series of implications for the projects, processes, and design of products, as presented in Tables 4 and 5. In the words of Company B: “We are starting with the rental of machines and implementing sensors and IoT technology for monitoring the use of machines […] Today we are testing in several gyms. From the factory, we monitor everything the user does on the treadmill. We have started with the study of that equipment, and now we have expanded to weight machines. The tendency is to sell tracking and monitoring services, retaining ownership of the product, because then the company knows what is going on.” Similarly, Company A stated that: “We have a domestic lighting product that already has automation, connects with applications, and provides various functions to use such as an alarm clock, timers, intensity of illumination depending on the movie you are watching […]”. It was observed that the transition to the SE involves the company not only owning the product and leasing it to customers, but also of­ fering additional functionalities, such as apps, through industry 4.0related technologies. This is a real piece of evidence that the use of the internet, information technologies and adoption of mobile apps can also be used in the design of products intended for sharing (Bai et al., 2017; Ellen MacArthur Foundation, 2015; McAloone and Pigosso, 2017). Therefore, investments in industry 4.0 technologies such as embedded sensors, IoT, big data analytics, and artificial intelligence are required to unlock the full potential of the sharing economy (De Sousa Jabbour et al., 2018; Jabbour et al., 2019). Considering the situation in which products continue to be the companies’ assets, this has generated significant changes in the NPD process. Among these changes, the greatest concern is in the project stage, with the extension of the product life cycle, greater durability and reliability, and shared use by a number of different types of consumers (Luchs et al., 2016). These factors, added to the need for continuous monitoring of the product, have led the companies studied to integrate innovative technologies into product development, such as sensors, IoT devices, artificial intelligence and big data platforms. This concern for the greater durability of products generates pres­ sures for the development of more durable products. This in turn tends

“A turning point that will happen is servitization with the internet of things. We are installing sensors with batteries on the weight machines, and then we know what weight the client put, how many sets he/she performed. This information goes to the client’s cell phone and also to the factory, tracking everything a machine produces. We have data on everything that is happening”. “… Then we have gym balls and tennis rackets that communicate with cell phones, all with embedded sensors to send data, this is a trend”. Addressing the qualification for the adoption of the sharing economy in the NPD process, it was noted that the company feels the need to invest in the technologies of big data and artificial intelligence. The main objective is to prepare in terms of knowledge and infrastructure to qualify and incorporate these technologies into future projects with new products that have a tendency towards the sharing economy. In the development of environmentally sustainable products, one important barrier which has been highlighted is the increase in product costs; another is the consequent impact on reducing competitiveness. This has been justified by the integration of certain materials and sys­ tems (such as green engines) into products that are more environmen­ tally appropriate but at the same time costlier. On the other hand, the effort to develop innovative gym equipment was highlighted, in which the user himself generates the energy necessary for the machine to function (for example, on exercise bikes and running machines) and, therefore, the consumption of electric energy is reduced. Among the stimuli, it was emphasized that stakeholder pressure and environmental regulations are factors that drive the development of environmentally sustainable products. In terms of the ‘triple bottom line’ view of sustainability, it has been observed that the company carries out social actions, such as the donation of gymnastic equipment to charitable institutions for the physical activity of its users, mainly children in need and people in rehabilitation in hospitals. Table 5 summarizes the results found in Company B. 5. Discussion based on cross-case analysis: unveiling the role of CE and industry 4.0 technologies Company A has increased the level of services in its products, not only to better serve its customers through applications such as wirelessly controlled lighting, but also to keep its business competitive. In this sense, it has expressed interest in adopting SE as a means to achieve its environmental sustainability objectives, such as zero carbon emissions. This finding is aligned with the works of Plewnia and Guenther (2018) and Rong et al. (2018), whose work points to the SE as pathway to environmental sustainability. Company B, on the other hand, is smaller and serves a more restricted market (its main product line in transitioning to the SE is gym equipment, in the B2B market). In this company, it was noted that the motivation for adopting the SE is mainly due to the demands of its key customers, who have already demonstrated that they do not wish to permanently acquire the company’s products. Besides that, environ­ mental sustainability was not highlighted as a significant boost for the adoption of the SE. Differently from the first case studied, Company B tends more towards the discussion of Wang et al. (2020), which presents market and customer needs as drivers for SE. Although Cheng (2016) and Vezzoli and Manzini (2008) argue that the growth of SE has been mainly due to its sustainability benefits, this was observed only in Company A, which made clear that the incorpo­ ration of the product-service perspective means a win-win situation for 8

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Table 5 Sharing economy implications found in Company B. Sharing economy

Company B Summary

Example Quotations

Implications for NPD

� Development of projects which couple products to new technologies and software (embedded sensors, IoT, big data analytics, artificial intelligence). � Design products with extended life cycle focusing on durability, assembly and disassembly.

Sustainable practices

� � � � � �

Drivers and opportunities

� The main driver of a PSS approach is customer and market need. � Compliance with European standards. � Further explore the business of environmentally sustainable products.

Challenges and barriers

� Lack of experience and knowledge to transition to a PSS business model. � Difficulties in extending the product life cycle. � Shortage and difficulty of introducing sustainable alternatives in production. � Environmental cost and competitiveness. � Development and integration of new technologies.

“We are starting with the rental of machines and implementing sensors and IoT technology for monitoring the use of machines.” “We are looking to offer remote monitoring of assets. By generating data, we can provide tracking of all equipment. We can offer a monthly operations management report stating which equipment is highly used and which is little used, recommending removal of products and replacements.” “Today we are testing in several gyms. From the factory we monitor everything the user does on the treadmill. We started with the study of that equipment, and now we have expanded to weight machines. The tendency is to sell tracking and monitoring services, retaining ownership of the product, because then the company knows what is going on.” “Given the existence of government action to reduce taxes of recycled material, for example, we would withdraw the fee for such material and would be able to be more competitive. In such a case, this environmental action would certainly carry forward in the company, studying how to use this material in production. It would be a direct stimulus.” “There is a tendency for the consumer to demand more environmental products. Even in gardening, there is a concern with combustion engines, coming from the customers themselves. There are gyms with the idea of the user generating energy for the equipment, thus economizing electrical energy. That has both economic and environmental impacts.” “As good practice, we look at European standards to develop products, even when they are supplied in Brazil.” “There is a directive called ROHS that is for hazardous materials, and every type of heavy metal has a standard. If you use it in a product, you have to declare this, and the quantity cannot exceed a certain percentage. Otherwise, the product cannot be marketed in Europe. This directive makes the company look at all kinds of materials to make sure they do not include heavy metals, from painting materials, electronic boards, and parts with special zinc coating treatment. Because of this directive, we seek to avoid those toxic materials and request a statement from multiple vendors that comply with ROHS.” “Customers already feel the need to buy a result and not a product.” “In negotiations, customers have already expressed that they do not want to buy the equipment, but to lease it. One client said that they want to pay for hours spent on the treadmill. This has implications for product development.” “We already talked to a big gym company about that. They said ‘let’s build a business model, and we split the risk half and half’. We assemble the model and test it [with regard to shared economy models].” “If the asset is ours, after two or three years, I need to change the products and bring them back. In such a case, what should we do with them? Will we rework them? Should we sell them as remanufactured? Or should we put them in another business?” “We currently lack models [for the shared economy]." “Our product has a very small cycle. Compared to an agricultural product that has a ten to fifteen year cycle, our cycle is four or five years, at which point we already have to launch a new product [with regard to the difficulties in extending the product life cycle].” “We have a shortage of sustainable alternatives [as suppliers do not share our environmental concerns].” “[within the company] there is a paradigm of when you do something for sustainability, it will have a higher cost for the product. For example, using recycled materials is more expensive. As the competitor will not use that, we could lose our profit margin and become less competitive.”

Implement practices based on costs and stakeholder input. Avoid the use of heavy and hazardous materials. Products designed to be energy self-sufficient. Social actions, e.g. donation of equipment to charities. Offer sponsorship for grassroots athletes in needy communities. Promote social areas of physical activity.

to generate positive environmental impacts, as it discourages the manufacture of new products, reducing the extraction of virgin mate­ rials from nature and other potentially polluting processes, such as manufacturing and distribution. In this sense, it is interesting to note that the adoption of well-established eco-design (Rossi et al., 2016) and circular economy practices (den Hollander et al., 2017), such as design for reuse, reduce, recycle, modularity, updating, maintenance and others favor the extension of the product life cycle and also support the adoption of the SE. It is interesting to highlight the synergy between the sharing econ­ omy and the circular economy, as perceived in Company A. As this interviewee mentioned: “The services offered are of various types, which goes into the question of the circular economy. It is a very new topic here in Brazil, but outside Brazil the circular economy for lighting is more mature and it has been happening … we are implementing a circular economy project that is based on service, and the client pays for the lighting received. For each environment the amount of light that will be received is determined … The company provides all products, design, installation, and maintenance.”. This demonstrates that the transition to a service approach can be the basis for a circular economy project, particularly in those companies that

present proactive environmental practices. These proactive practices can be observed in Company A through its sustainable goals, such as zero carbon emissions and zero waste to landfill, as well as its clear commitment to the sustainable development goals highlighted by the United Nations. Therefore, both PSS and SE can help organizations gain insights into new business models to move towards a CE (Homrich et al., 2018). Based on these findings, it is possible to propose the following (Fig. 2). Concerning sustainable practices, Company A has presented a family of products aligned with aspects of sustainability, emphasizing the environmental dimension. Company B, in turn, adopts some practices, such as avoiding the use of heavy and hazardous materials, but still has difficulty in introducing sustainable alternatives in its production. Nevertheless, when integrating eco-design into the product portfolio, environmental and social practices are considered to be relevant (Pin­ heiro et al., 2018). It can be noticed, for example, that besides the environmental practices applied in their products, Company A is currently employing a social action committed to taking their products to places with inadequate lighting, while Company B is promoting social areas of physical activity by donating equipment to charities. 9

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Despite the discussion above, the adoption of the SE does also present challenges. The main challenges observed in this study are related to the development of technologies, new business models and market accep­ tance. The lack of theoretical models of management-oriented SE is a difficulty in terms of its adoption in Company B, as is finding partners in the supply chain that support the SE, for example by providing materials that are more durable. The lack of maturity of markets in understanding the benefits of SE has also been identified as a challenge. In this sense, Company A pointed out that while these products have a longer life cycle, are more envi­ ronmentally friendly and present more features, the higher initial price discourages many customers (notably in the B2C market). This finding is in accordance with studies which suggest that consumers still generally choose to purchase and own products instead of making shared use of them (Tukker, 2015; Akbar and Hoffmann, 2018). On the other hand, this perspective is challenged by Company B’s assertion that many customers already prefer to lease products than to own them, forcing the creation of new business models and PSS strategies. In this context, it can be argued that the B2B market is more mature in terms of receiving product-service offerings than the final customer (B2C) market, which still has a more traditional view of what a product is. Certain barriers can also be emphasized. While Company B presents a lack of experience with practices and tools for the transition to a PSS business model, Company A seems to deal with more technological and organizational aspects, such as integration between the latest technol­ ogies and software, introducing the usage of recycled materials, and involving stakeholders to optimally implement the business model. Regarding the integration between technologies and software, Company A highlights that this currently represents a major difficulty, requiring developments in the IT area. Indeed, Rymaszewska et al. (2017) explain that products equipped with sensors require suitable software for the proper operation of the whole product-service system. Finally, based on our results, it is possible to discuss the resources and competencies required for the transition from a traditional manufacturing operation to an SE approach. Company A mentioned that adopting a PSS approach requires the involvement of all organizational areas, including R&D, sustainability, human resources, supply chain, technology, and even the legal department, considering that providing services requires new types of contracts. Besides that, to support the new business model it is necessary to hire new employees who have adequate skills to handle the latest technologies, and finally, both Companies A and B indicated the need for developing new technologies and capa­ bilities to handle the ownership of products, e.g. dealing with the maintenance and upgrade of products. These results are also in line with recent research regarding sustainable innovation practices in the manufacturing sector (Aldieri et al., 2019; Kusi-Sarpong et al., 2019; Shen et al., 2015).

Fig. 2. Proposed synergy between the SE and CE.

motivation for adopting the SE is mainly due to the demands of its key customers, who have already demonstrated that they do not wish to permanently acquire the company’s products. Besides that, environ­ mental sustainability was not highlighted as a significant boost for the adoption of the SE. The main findings of this work can be summarized as follows: � Both firms are transitioning to SE business models; however, this transition has relied on modifications of their existing product portfolios. Thus, product development is a key component of the transition to the sharing economy. � The green appeal of the sharing economy may vary, depending on the company’s environmental maturity level. � Product sharing can be operationalized through the adoption of the PSS and the SE from the product planning stages onwards. � There is evidence that industry 4.0-related technologies, such as the use of the internet, information technology and the adoption of mobile apps can also be used in the design of products for sharing. � Circular economy practices, such as design for reuse, reduce, recycle, modularity, updating, maintenance, and others favor the extension of the product life cycle and also support the adoption of the SE. Furthermore, these practices favor the amelioration and optimiza­ tion of resources in these firms, by minimizing the necessity of raw materials, energy consumption and the use of hazardous elements, which significantly affects the exploitation of natural resources. � There is significant potential to unlock the sharing economy through the continuous monitoring of products. The companies studied have tried to integrate technologies such as sensors, internet of things supported devices, artificial intelligence and big data platforms into their products. � Additionally, to support these new business models it is necessary to hire employees who have adequate skills to handle the latest technologies.

6. Final remarks: research implications and limitations This work presents real-world evidence from firms located in Brazil which can be considered first-movers in terms of transitioning from linear production to the sharing economy. A number of expected and unexpected findings – such as the relevance of synergy between prin­ ciples of the circular economy and the sharing economy, and the vital support of industry 4.0 in unlocking the sharing economy – are unveiled and presented through first-hand data. Company A has increased the level of services among its portfolio, not only to better serve its customers through applications such as wirelessly controlled lighting, but also to keep its business competitive. In this sense, it has expressed interest in adopting SE as a means to achieve its environmental sustainability objectives, such as zero carbon emissions. Company B, on the other hand, is smaller and serves a more restricted market (its main product line in transitioning to the SE is gym equipment, in the B2B market). In this company, it was noted that the

6.1. Implications for theory First of all, this work extends the body of knowledge related to real10

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world cases of businesses which are first-movers in transitioning to the sharing economy. We therefore aim to extend the body of knowledge on production and operations management by bringing first-hand insights into the sharing economy, as called for by Choi et al. (2018). To the best of the authors’ knowledge, this work contributes unique and original evidence to calls for more research on the sharing economy (Acquier et al., 2017; Rong et al., 2018; Plewnia and Guenther, 2018), with a focus on operations management. Our research findings highlight that companies’ transitions towards the sharing economy can be non-homogenous. We thus extend the literature on sustainable operations management by confirming that, indeed, different firms can be categorized according to different sus­ tainability maturity levels (Teixeira et al., 2012), but in this case, spe­ cifically related to the sharing economy. This understanding can be considered a new insight into the state-of-the-art literature on the sharing economy (Mair and Reischauer, 2017; Kathan et al., 2016). For companies operating within supply chains, this fact can either facilitate the sharing economy or block efforts towards the sharing economy. This has implications, therefore, for the sustainable supply chain-related literature (Kusi-Sarpong et al., 2015; Pagell and Wu, 2009). We bring first-hand real-world evidence that the principles of the circular economy (Ellen MacArthur Foundation, 2015) can enhance the sharing economy, and vice-versa. This suggests that the circular econ­ omy and the sharing economy may be synergistic. Although previous literature on the circular economy has suggested a relationship between the circular economy and the sharing economy (Ellen MacArthur Foundation, 2015; Jabbour et al., 2019), we believe this to be the first work to suggest this potentially synergistic relationship. Thus, we extend contemporary works on the circular economy (Ellen MacArthur Foun­ dation, 2015; Jabbour et al., 2019; Tukker, 2015), which have not been clear on this synergistic effect. Our research findings also add evidence to the literature on product development (Albino et al., 2009) and products’ portfolio management (Akbar and Hoffmann, 2018; Baines et al., 2007). We suggest that product development should establish a vital dialogue with operations management in the sharing economy. Changes in product development processes were shown to be at the heart of transitioning towards the sharing economy. In this context, we highlight the unique potential of industry 4.0-related technologies (De Sousa Jabbour et al., 2018) to unlock PSS and the adoption of the sharing economy. To conclude, we point out that both cases reported difficulties in finding sufficient human capital to support the transition towards the sharing economy. Our findings extend the literature on operations management and human resources (Boudreau et al., 2003) by adding evidence that capacity building and the management of human re­ sources are also key to the sharing economy. This dimension – the ‘human’ or ‘soft’ side of the sharing economy – has been widely neglected by the state-of-the-art literature. We reinforce the need for integrating human resources and sustainability-related topics (Jackson et al., 2011; Teixeira et al., 2012), such as the sharing economy. There have been calls for more qualitative research in operations management – particularly case studies (Eisenhardt, 1989; Pagell and Wu, 2009) – which is capable of exploring real-world cases of companies transitioning from linear manufacturing towards the sharing economy (Choi et al., 2018). In addition, this work addresses the need to inves­ tigate product sharing practices in companies which are intensive in metallic natural resources from the perspective of an emerging economy (Luthra et al., 2019). Anchored in these contemporary state-of-the-art knowledge gaps, this work unveils drivers, challenges, and opportu­ nities for the sharing economy based on original evidence gathered from exemplary first-movers in the Brazilian manufacturing industry.

economy can learn from and improve their firms’ performance based on the following lessons:

6.2. Practical implications and lessons for managers

Supplementary data to this article can be found online at https://doi. org/10.1016/j.resourpol.2020.101596.

� Managers should be aware of the fact that companies tend to be positioned at different maturity levels concerning the transition to­ wards the sharing economy. Thus, in a supply chain, it may be possible to find significant heterogeneity among focal firms, sup­ pliers and customers in terms of expectations from the sharing economy. � Practitioners can benefit from our suggestion that if a company has adopted principles of the circular economy, transitioning towards the sharing economy would be facilitated for them. The synergistic effect between the circular economy and the sharing economy should be recognized. � It is important to note that the sharing economy may significantly change product development processes and firms’ product portfo­ lios. Thus, involving the areas of product development and R&D would be relevant when strategizing about the sharing economy. � Managers of companies which are intensive in their use of metallic natural resources should recognize that SE practices aligned with product development processes, such as extended product durability, reparability, and maintenance, are capable of optimizing and ameliorating natural resource exploitation through the minimization of material consumption and reduction of the usage of hazardous substances. � Managers should be aware of the fact that if they want to invest in the sharing economy, they will also need to invest in industry 4.0-related technologies. Finally, we suggest that attention should be paid to the ‘human’ and ‘soft’ side of operations management in the sharing economy, which may require customized training and development programs on sharing economy-related topics. 6.3. Research limitations and opportunities to further understand the sharing economy This work possesses certain limitations, as usually affect qualitative case studies. Thus, the findings of this work should be contextualized. This research and its findings are related to first-mover manufacturing firms operating in Brazil. The limited quantity of cases can be justified by the exploratory nature of this work and by scientific justifications such as saturation in case study approach (Eisenhardt, 1989). These research findings may not be entirely applicable for other contexts. However, we believe the insights we bring may be useful for future research. For example, we would suggest that future studies explore the following research opportunities: (i) replicating this research in mature and more developed economies; (ii) going beyond exploration, through the use of quantitative studies; (iii) developing a scale to measure ‘transition towards the shared economy’, which would be useful for conducting survey studies; (iv) further understanding the role of circular economy principles and industry 4.0 in unlocking the full potential of the sharing economy; (v) better understanding the ‘soft side’ of the sharing economy in manufacturing firms. Acknowledgements The authors would like to thank S~ ao Paulo Research Foundation (FAPESP). Grant: nº: 18/23972-1 Appendix A. Supplementary data

Our research findings suggest that managers in charge of tran­ sitioning their operations management departments towards the sharing 11

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Resources Policy 66 (2020) 101596

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Charbel Jose Chiappetta Jabbour: He has been a Professor at Montpellier Business School, France; and a Visiting Global Professor at the University of Lincoln, Lincoln In­ ternational Business School, UK. He is an Associated Editor of Journal of Cleaner Pro­ duction. His research has been published in first-tier journals, such as European Journal of Operational Research, Tourism Management, Business Strategy and The Environment, International Journal of Production Research, and Journal of Environmental Management. Paula De Camargo Fiorini: She is Assistant Professor at Federal University of Sao Carlos (UFSCar), Brazil. Her research interests include: information systems and sustainability, sustainable operations management, and industry 4.0 technologies. She has published in journals such as International Journal of Production Research, International Journal of Production Economics, and Journal of Cleaner Production. Christina W.Y. Wong: She is a Professor in the Business Division, Institute Of Textiles and Clothing, The Hong Kong Polytechnic University. Prof. Wong is an associate editor of Journal of Operations Management. She has published in journals, including Journal of Operations Management, Production and Operations Management, International Journal of Production Economics, Resources, Conservation, and Recycling, Journal of Cleaner Production, Environmental Pollution, and others. Daniel Jugend: He is Associate Professor at Production Engineering Department, Sao Paulo State University (UNESP), Brazil. His research interests include: new product development, circular product design, eco-design, product portfolio management, inno­ vation and sustainability. He has published in journals such as Technovation, and Journal of Cleaner Production. Ana Beatriz Lopes De Sousa Jabbour: She is an Associate Professor at Montpellier Business School, France. She has worked as an academic in a number of countries, including Brazil, and the UK. She has been published in first-tier journals, such as Euro­ pean Journal of Operational Research, International Journal of Production Economics, International Journal of Production Research, Business Strategy and the Environment. Bruno Michel Roman Pais Seles: He is currently a postdoctoral fellow at the Production Engineering Department, S~ ao Carlos School of Engineering, University of S~ ao Paulo. Bruno Michel has a master’s and a Ph.D. degree in Production Engineering: Operations and Systems Management from the Sao Paulo State University. His research interests include operations management, circular economy, environmental management, corporate social responsibility, and sustainable supply chain management. Marco Antonio Paula Pinheiro: He is a Research Intern at Polytechnique Montreal, Canada. He is a Ph.D. candidate and holds a Master’s degree in Production Engineering from Sao Paulo State University (UNESP), Brazil. He has published in journals such as Management Decision, and Journal of Cleaner Production. Hermes Moretti Ribeiro da Silva: He is Assistant Professor at Sao Paulo State University (UNESP), Brazil. Hermes holds a Ph.D. in Administration from Fundacao Getulio Vargas (FGV), and M.Sc. in Administration from University of Sao Paulo (USP). He is Editor-inChief of GEPROS – Journal of Production, Operations and Systems Management. His research interests include marketing management, consumer behavior, marketing research, circular economy, and sustainability.

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