Background - The textile and fashion industry is paving the way towards the circular economy to achieve economic and environmental value. Today the industry is mainly dependent on the linear production model of the take-make-dispose system. This linear model excels in making waste out of virgin raw materials that can utilize several lifetimes. In light of generating a wave for the future with the circular economy, the textile and fashion industry is implementing circular economy, business models. The organizations’ cascade use ability of recurrent and abundance resources leads to the circular economy future. Although the circular economy is rich in concept, academia and practitioners sense a lack of implementation of business models. Therefore, the organizations require to develop a unique set of capabilities to harness the benefits from circular economy business models. Purpose - To achieve successful circular economy business models, the organizations should develop capabilities that reinforce them to innovate their business models. Therefore, this study investigates the dynamic capabilities to gain competitive advantage while utilizing resources by cascade use to achieving economic and environmental values. This study provides the practitioners and academic guide to be a part of the wave of the circular economy. Methodology - This research conducts multiple case studies with an abductive reasoning approach to extend the theory of dynamic capabilities for cascade use in circular economy business models within the textile and fashion industry. Semi-structured interviews were conducted to gather primary data with three companies that practice cascade use in their businesses while strengthening the data gathered by reviewing company documents. The data were analyzed using thematic analysis. Findings - Results revealed dynamic capabilities facilitate cascade use in the circular economy business models. These dynamic capabilities undergirded by unique microfoundations. Sensing capability undergirded learning and knowledge creation on resources, information search on competencies, and market sensing to achieve the circular economy. Seizing undergirded microfoundations of business model innovation, collaborations, investments in innovations, and take-back systems. Transformation capability undergirded stakeholder engagement, revitalizing internal organization and transparency. The organizations gain maximum resources utility by these dynamic capabilities. Practical implications and research limitations - This thesis creates new insights on cascade use in circular economy business models facilitated by dynamic capabilities. The study assists the practitioners to understand and manage organizational activities to leverage cascade use in the circular economy business models to gain competitive advantage. The study limits by the selected interviewed companies with cascade use strategies implemented in their businesses, representing retailers in Sweden.

The surges in the deterioration on all fronts of sustainability have led to the conceptualization of the Circular Economy (CE). The compliance of production and consumption tightly knitted with the linear model has created a much-needed debate as well as a barrier to the transition towards the CE. In order to drive the transition from linear to CE, various typologies of CE business models have been derived. The Product-Service System (PSS), a business model for creating a circular flow of materials, necessitates the transformation of consumers from being owners into mere users. The textile industry, where the use of virgin materials is deemed to be a primary component for its production and consumption, requires the ingestion of CE-based business models. However, such a transition requires a constant and conscious effort from various actors as well as consumers.   The study takes a holistic perspective targeting both the PSS provider as well as the consumers in providing an understanding of frictions that occur between a PSS Business model and the existing consumption practices. As different actors form a network to drive a PSS business model, this study, firstly aims to develop an understanding of the interactions that take place between two different actors who aim to develop a PSS business model within the domain of textiles. Secondly, as there tend to be consumers who oppose business models that change their existing habits and routines, one such as PSS, this study focuses on analyzing the existing practices related to the consumption of textiles. By contemplating between the consumption side and the PSS provider side, the thesis concludes with a model on how a PSS business model can be made to stabilize the differences with respect to consumption practices by taking into account the factors that influence the consumption of a product.

Global consumption levels currently extend far beyond what planet Earth in terms of natural resources can regenerate in a sustainable manor and will by 2050 reach levels corresponding to what it would require three Earths to sustain. This overexploitation and unsustainable management of the Earth’s resources in combination with the necessity of mitigating climate change and reaching net zero CO2 emissions by 2050 require action across all sectors, not least the manufacturing industry. This thesis covers how large manufacturing enterprises can implement and utilize strategic targets and Key Performance Indicators (KPIs) to align with the principles of a Circular Economy (CE), and as a result, improve sustainability and business performance. Based on a case study conducted at Siemens Energy (SE) involving a literature study, interview study, and focus groups, a carefully selected set of strategic circularity targets and KPIs are presented to measure, evaluate, and drive circularity performance within large manufacturing enterprises. Since the thesis’ ambition was to provide valuable insights beyond SE, strategic circularity targets and KPIs specifically directed at SE were further generalized to be universally relevant for academia and other large manufacturing enterprises. Enterprises within the given sector share several key characteristics such as extensive material resource flows and complex value chains, hence strategic targets and KPIs emphasize material efficiency through decreasing virgin material dependency, increasing recirculation rates, and transitioning towards circular business models. While suggested targets and KPIs are universally directed at large manufacturing enterprises, individual organizations are recommended to conduct internal investigations and analyzes to further tailor and adapt strategic targets and KPIs towards the specific enterprise. In addition to strategic targets and KPIs, the thesis also presents an overview of opportunities, benefits, risks, and potential impacts for large manufacturing enterprises aspiring to increase circular initiatives, highlighting key principles to manage risk and capitalize on opportunities. The findings conclude that the main opportunity enabled by CE is to leverage synergies which align environmental, economic, and strategic corporate incentives, with key benefits including aspects such as decarbonization and reduced environmental impact, increased revenues and cost savings, risk management, and new business opportunities. Risks associated with CE include rebound effects, organizational insufficiencies, lack of material quality and safety, as well as a low product performance, which further can lead to potential impacts mitigating the positive effects of CE, or at worst setbacks causing a net negative output from implemented circular measures. In summary, the opportunities and benefits associated with CE are many, but implemented circular measures require risk awareness and continuous management to ensure efficiency.