The effects of the EU’s legislative framework on circular economy implementation in firms operating in different EU markets : The case of Germany and the Netherlands.

Abstract

The consumerism has skyrocketed globally during the past century leading to the disastrous depletion of natural resources. The latter raised the understanding of and the need to shift toward a more sustainable and long-term oriented economy. As a response to these needs, the European Union implemented the new Circular Economy Action Plan in 2020, which includes many different legislative actions meant to enable a circular economic (CE) system, including more responsible production and consumption.

The aim of this thesis is to investigate how the EU legislative framework for circular economy is influencing firms and their intentions to adopt CE in different EU markets. The legislative measures address various industries. Because the food industry is considered among the most wasteful industries, the thesis analyzes the EU regulatory influences on companies operating in the food industry. The study is framed within the assumptions of the institutional theory and explores the EU regulatory influences on the implementation of CE through the institutional pressure concept.

The research adopts a qualitative research approach with a case study strategy. The data is collected through semi-structured interviews and supported by secondary data about six different companies operating in Germany and the Netherlands.

The results of this study suggest that the EU legislative framework on CE implementation influences firms in the food industry but with varying extent. The mandatory EU regulations are more influential than recommendations and are seen as important even without their direct adoption in the national regulatory framework. However, the study discovers that the influence of informal institutions, such as the food industry, consumer demands, and NGOs, are of equal if not higher importance in the eyes of the companies when considering company intentions to shift towards circularity. The latter finding suggests that national and supra-national regulatory institutions can have a direct influence on the companies, however, when assessing the impact of institutional isomorphism, the interactions of formal and informal institutions should be assessed simultaneously.