ACCELERATING THE ADOPTION OF A CIRCULAR ECONOMY: An extended diffusion model for understanding consumer perceptions of circular economy products

Abstract

Scaling the transition to sustainable economies will require accelerated adoption of eco-innovation (products and processes). However, traditional innovation diffusion models tend to take the perspective of branded ‘new’ products competing against other new products in the market, and do not sufficiently explain the diffusion and adoption of eco-innovations that yield the ‘circular’ products which are central to the circular economy (CE), such as value-retention processes (VRPs) – remanufacturing, refurbishment, repair, and reuse. This chapter approaches CE catalysation from the perspective of the consumer, exploring the factors influencing consumer perceptions of VRPs, and presenting an extended diffusion model for VRP products that synthesise existing diffusion theory and considerations unique to VRPs. An expanded set of parameters and relationships are modeled to clarify how ‘circular’ VRP products are differentiated in the minds of consumers, and international case study data for China and the United States are applied to demonstrate the model. Analytical results reveal important and practical strategic insights for VRP business decision-makers and value-chain stakeholders, including the critical need for greater consumer education about VRPs, explicit acknowledgment and mitigation of perceived risks associated with VRPs, and clear differentiation of VRPs from new product options based on product quality.