DEGREE PROJECT IN INDUSTRIAL MANAGEMENT,

SECOND CYCLE, 15 CREDITS

STOCKHOLM, SWEDEN 2021

The impact of Blockchain

Technology on the Transformation
of the Swedish Furniture Industry
towards Circular Economy

NIEK BEZUIJEN AND TOBIAS HÖRDEGEN

KTH ROYAL INSTITUTE OF TECHNOLOGY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT
The impact of Blockchain Technology on the
Transformation of the Swedish Furniture
Industry towards Circular Economy
by

NIEK BEZUIJEN
TOBIAS HÖRDEGEN

Master of Science Thesis TRITA-ITM-EX 2021:147

KTH Industrial Engineering and Management
Industrial Management
SE-100 44 STOCKHOLM
 Master of Science Thesis TRITA-ITM-EX 2021:147

The impact of Blockchain Technology on the

Transformation of the Swedish Furniture
Industry towards Circular Economy

Niek Bezuijen
Tobias Hördegen
Approved Examiner Supervisor
2021-06-11 Kristina Nyström Vladimir Koutcherov
Commissioner Contact person

Abstract

Circular Economy has gained a lot of interest by academia as well as companies and policymakers.
Sustainability goals of the European Union has mainly caused this acceleration. However, research
argued that the true impact and scale of CE will only be realized when companies deploy Circular
Business Models (CBMs) and Fourth Industrial Revolution technologies in a holistic manner to
capture new growth opportunities while also strengthening their core business. Especially digital
technologies are seen as one of the key enablers for that transition and have become a central topic
within the CE research agenda. This research looked at the potential role Blockchain technology
can play in the transition towards Circular Economy of the Swedish Furniture Industry based on
the identified challenges it currently faces. Based on the combination of literature - and empirical
research, there can be concluded that the role of Blockchain technology in the transformation
towards CE in the Swedish Furniture Industry is less significant than first anticipated. Based on
the empirical findings, there can be concluded that the key driver of Blockchain technology is an
environment where there is a systemic lack of trust related to transactions and data between
different parties. In such circumstances, Blockchain technology does imply significantly added
value due to its inherent features of decentralization, irreversibility, and transparency without the
need for intermediary third parties.

Circular economy can be seen as an ecosystem that consist of a complex network with different
actors that all need certain information to effectively participate. Based on this research, the
prominent implication for Blockchain technology in the Swedish Furniture Industry has been
found in the current discussed European Union Product Passport in combination with the chemical
regulation. Blockchain technology could play a prominent role in the aftermarket by enabling trust,
transparency, and irreversibility. In this way all actors in the Circular Economy can use and
contribute to the data in a uniform manner.

Key-words
Circular Economy, Blockchain Technology, Ecosystem, Furniture Industry
 Examensarbete TRITA-ITM-EX 2021:147

Blockkedjeteknologins inverkan på den svenska

möbelindustrins omvandling till cirkulär
ekonomi

Niek Bezuijen
Tobias Hördegen
Godkänt Examinator Handledare
2021-06-11 Kristina Nyström Vladimir Koutcherov
Uppdragsgivare Kontaktperson

Sammanfattning
Cirkulär ekonomi har rönt stort intresse inom den akademiska världen samt bland företag och
beslutsfattare. Det är främst Europeiska unionens hållbarhetsmål som har orsakat denna
acceleration. Forskningen har dock visat att den verkliga effekten och omfattningen av den
cirkulära ekonomin kommer att förverkligas först när företagen använder cirkulära affärsmodeller
(CBM) och tekniker från den fjärde industriella revolutionen på ett holistiskt sätt för att ta tillvara
nya tillväxtmöjligheter samtidigt som de stärker sin kärnverksamhet. Särskilt den digitala tekniken
ses som en av de viktigaste faktorerna för denna övergång och har blivit en central fråga på
forskningsagendan för CE. I denna forskning undersöktes vilken potentiell roll blockkedjetekniken
kan spela i den svenska möbelindustrins övergång till cirkulär ekonomi utifrån de identifierade
utmaningar som den för närvarande står inför. Baserat på kombinationen av litteratur - och
empirisk forskning kan man dra slutsatsen att blockkedjeteknologins roll i omställningen till CE i
den svenska möbelindustrin är mindre betydande än vad man först trodde. På grundval av de
empiriska resultaten kan man dra slutsatsen att den viktigaste drivkraften för blockkedjetekniken
är en miljö där det finns en systematisk brist på förtroende i samband med transaktioner och data
mellan olika parter. Under sådana omständigheter innebär blockkedjetekniken ett betydande
mervärde på grund av dess inneboende egenskaper i form av decentralisering, irreversibilitet och
öppenhet utan behov av tredje part som mellanhand.

Den cirkulära ekonomin kan ses som ett ekosystem som består av ett komplext nätverk med olika
aktörer som alla behöver viss information för att effektivt kunna delta. Baserat på denna forskning
har den framträdande implikationen för blockkedjetekniken i den svenska möbelindustrin hittats i
det för närvarande diskuterade Europeiska unionens produktpass i kombination med
kemikalieförordningen. Blockkedjetekniken skulle kunna spela en betydande roll för att
möjliggöra förtroende, transparens och oåterkallelighet. På så sätt kan alla aktörer i den cirkulära
ekonomin använda och bidra till data på ett enhetligt sätt.

(Translated with www.DeepL.com/Translator)

Nyckelord
Cirkulär ekonomi, blockkedjeteknik, ekosystem, möbelindustrin
Acknowledgement
We would particularly like to thank our supervisor Vladimir Koutcherov. He supported us
during the entire process of writing the thesis and facilitated our work by constructive advisory
based on his academic research experience. Further, we would like to thank Kristina Nyström
and Terrence Brown for the seminars, the interview partners for the valuable insights and all
the other peer-reviewers that enriched our work.

1
Table of Contents
ACKNOWLEDGEMENT ................................................................................................................................... 1
LIST OF ABBREVIATIONS ................................................................................................................................ 3
LIST OF TABLES .............................................................................................................................................. 3
LIST OF FIGURES ............................................................................................................................................ 3
1 INTRODUCTION .................................................................................................................................... 4
1.1 RESEARCH PURPOSE AND AIM .................................................................................................................... 5
1.2 RESEARCH QUESTION ............................................................................................................................... 5
1.3 DELIMITATIONS ....................................................................................................................................... 5
1.4 CONTRIBUTION........................................................................................................................................ 5
1.5 SUSTAINABILITY ....................................................................................................................................... 6
1.6 DISPOSITION ........................................................................................................................................... 6
2 LITERATURE REVIEW ............................................................................................................................ 7
2.1 CIRCULAR ECONOMY TRANSFORMATION ...................................................................................................... 7
2.1.1 Circular Economy............................................................................................................................ 8
2.1.2 Circular Ecosystem ......................................................................................................................... 9
2.1.3 Circular Business Model Innovation ............................................................................................. 10
2.1.4 Circular Business Model Framework and its challenges ............................................................... 11
2.2 BLOCKCHAIN TECHNOLOGY ...................................................................................................................... 14
2.3 BLOCKCHAIN AND CIRCULAR ECONOMY ..................................................................................................... 16
2.4 LITERATURE SYNTHESIS ........................................................................................................................... 17
2.5 THEORETICAL FRAMEWORK ..................................................................................................................... 17
3 METHODOLOGY ................................................................................................................................. 19
3.1 RESEARCH PARADIGM............................................................................................................................. 19
3.2 RESEARCH METHOD ............................................................................................................................... 19
3.3 DATA COLLECTION & ANALYSIS ................................................................................................................ 20
3.4 LIMITATIONS ......................................................................................................................................... 22
3.5 ETHICS ................................................................................................................................................. 22
4 RESULTS ............................................................................................................................................. 23
4.1 SWEDISH FURNITURE INDUSTRY ................................................................................................................ 23
4.2 CIRCULAR BUSINESS MODEL .................................................................................................................... 24
4.3 CHALLENGES IN THE TRANSITION TO CE ..................................................................................................... 26
4.3.1 Coordinating Circular Value Chains .............................................................................................. 26
4.3.2 Circular Product Design ................................................................................................................ 28
4.3.3 Use, Reuse, Share, and Repair ...................................................................................................... 28
4.3.4 Collection & Reverse Logistics ...................................................................................................... 29
4.3.5 Sorting & Preprocessing ............................................................................................................... 29
4.3.6 Regulations & Policies .................................................................................................................. 30
4.3.7 Financial & Economic ................................................................................................................... 31
4.4 BLOCKCHAIN TECHNOLOGY FOR CE ........................................................................................................... 31
5 DISCUSSION ....................................................................................................................................... 37
6 CONCLUSION ...................................................................................................................................... 40
7 FUTURE RESEARCH AND LIMITATIONS ................................................................................................ 41
REFERENCES ................................................................................................................................................ 42

2
List of Abbreviations
BM Business Model
CBM Circular Business Model
CE Circular Economy
EU European Union
FIR Fourth Industrial Revolution
LBM Linear Business Model
LE Linear Economy
SDG Sustainable Development Goal
WCED World Commission on Environment and Development

List of Tables
Table 1: CE challenges related to the Furniture Industry ........................................................ 13
Table 2: Participants in research.............................................................................................. 21

List of Figures
Figure 1: Butterfly diagram by Ellen MacArthur Foundation................................................... 8
Figure 2: CBM presented as an ecosystem.............................................................................. 10
Figure 3: Circular value chain created by Board of Innovation .............................................. 12
Figure 4: Conceptual Blockchain Structure ............................................................................ 14
Figure 5: Theoretical Framework ............................................................................................ 18
Figure 6: Qualitative semi-structured interview areas............................................................. 20

3
1 Introduction
The Furniture Industry represents an industry with enhanced product consumption due to
fashion- and seasonal trends that lead to a high replacement rate of furniture items (Schoonover,
Mont and Lehner, 2021). Every year, businesses and consumers within the European Union
(EU) discard more than 10 million tons of furniture. Between 80 and 90 percent of this furniture
waste is either brought to a landfill or incinerated after the use phase. In particular,
remanufacturing activities are perceived as sparse, accounting only for two percent of the
revenues of the European Furniture Industry (Forrest et al., 2017). This illustrates that the
current practices within the Furniture Industry are predominantly coined by a Linear Economy
(LE), whereby products are typically produced, used and disposed.

However, linear material flows create deteriorations within the environment as they do not only
claim resources but also release waste and emissions (Kirchherr et al., 2018). Hence, the
historical paradigm of a LE leads to the reduction of the quantity and quality of the global
ecosystem that provides essential functions for the preservation of human life (Kirchherr et al.,
2018). Complex challenges and socioeconomic consequences that stem from altering
ecosystems keep therefore reinforcing the focus on sustainable development (Roy, 2021).
According to the World Commission on Environment and Development (WCED), sustainable
development is about “meeting the needs of the current generation without compromising the
ability of the future generations to meet their own needs” (Brundtland, 1987).

One of the central topics within the agenda of sustainable development is the concept of
Circular Economy (CE), an alternative economic system that is based on the idea of a cyclic
material flow model (Korhonen, Honkasalo and Seppälä, 2018). It aims to ensure the alignment
of economic and environmental development by reducing the need for primary materials and
waste production while stimulating new business opportunities (Korhonen, Honkasalo and
Seppälä, 2018). The systemic transition to a CE requires significant changes at different levels,
incorporating business model (BM) innovations in organizations, the restructuring of value
chains, and the introduction of supporting policies (Furn360, 2017). However, many companies
face significant challenges in the transition to implementing circularity into their business
(Oghazi and Mostaghel, 2018). It is argued that the true impact and scale of CE will only be
realized when companies deploy Circular Business Models (CBMs) and technologies of the
Fourth Industrial Revolution (4IR) in a holistic manner to capture new growth opportunities
while also strengthening their core business (Lacy, Long and Spindler, 2020). Especially digital
technologies are seen as one of the key enablers for that transition and have become a central
topic within the CE research agenda (Ranta, Aarikka-Stenroos and Väisänen, 2021). One of
those technologies is Blockchain, which constitutes a revolutionary way of sharing and
managing data in a decentralized, open and peer-to-peer manner. After its breakthrough with
the introduction of the cryptocurrency “Bitcoin” in the year 2008, the associated research on
its potential applications is rapidly evolving (Upadhyay et al., 2021). Recent publications argue
that the unique capabilities of Blockchain could have the potential to effectively encourage CE
initiatives in various ways (Kouhizadeh, Zhu and Sarkis, 2020).

4
1.1 Research Purpose and Aim
The purpose of this research is to elaborate on the implications of Blockchain technology in
the context of CE. As existing publications on Blockchain technology in relation to CE are
mostly kept on a high level with the outline of general possibilities, this research delves deeper
and critically evaluates the practical implications of the technology for a specific industry. This
research aims to provide specific implications for the Swedish Furniture Industry whether and
to which extend Blockchain technology could help to accelerate the transition towards the CE.
The first part of the research aims to identify and validate the challenges of the Swedish
Furniture Industry in the transition to a CE. Based on these challenges, the research analyzes
the potential impact of Blockchain technology. This with the ambition to contribute to the
accomplishment of the sustainability goals and bring the industry closer to a true CE.

1.2 Research Question

To concretize the research purpose, the following research question has been formulated, to
which the research should give answer:

What could be the potential role of Blockchain technology in the transformation towards a
Circular Economy in the Swedish Furniture Industry based on the perceived challenges?

1.3 Delimitations
Even though Blockchain technology and the research on its impact on CE is still in an infancy
phase, this study focuses on the implications for the Swedish Furniture Industry. Further, the
technology of Blockchain is described only on a conceptual level without delving into the
details and requirements of the technology itself. As the research is mainly based on empirical
data that is derived from a limited set of experts and organizations in the Swedish Furniture
Industry, it is to consider that the conclusions might be distorted and not generalizable. This
since experts have individual opinions, and the Swedish Furniture Industry represents a very
fragmented market consisting of companies of different sizes, customer segments, and
products.

1.4 Contribution
The contribution of this thesis is twofold and can be divided into theoretical and practical
dimensions. Regarding the theoretical dimension, this research adds to the literature dealing
with the role of digital technologies, respectively Blockchain, for circular business
transformation. Lacy, Long, and Spindler (2020) emphasize that the disruptive technologies of
the 4IR enable CBMs by increasing efficiency, innovation, information transparency, and
reducing reliance on resource-intensive materials. In their book, they elaborate on multiple
technologies including Blockchain technology, but do not provide any specific implications.
In addition to the statement of Lacy, Long, and Spindler (2020) on the importance of disruptive
technologies for enabling CE, the paper of Kouhizadeh, Zhu and Sarkis (2020) investigates
how Blockchain technology can advance the realization of CE by critical reflections from
multiple case studies of Blockchain applications in different sectors. However, based on these
two publications, it can be concluded that there is still a need for further research on the
fundamental role of Blockchain technology for the CE transformation in different industries.

5
To the best knowledge of the authors, there is no previous research done in regard to the
Swedish Furniture Industry. In particular, this research adds to the research of Kouhizadeh,
Zhu and Sarkis (2020) and provides hands-on implications for the Swedish Furniture Industry
by looking at the fundamentals of Blockchain and the challenges the industry faces by the
transition towards CE. Consequently, it contributes to close the overall research gap on the
implications of Blockchain technology for specific industry practices.

1.5 Sustainability
The members of the United Nations have agreed upon the 2030 agenda for sustainable
development that incorporates 17 Sustainable Development Goals (SDGs) at its heart. Those
goals aim to find strategies to reduce inequality, improve health and education as well as
economic growth while preserving the ecosystem and encounter climate change (United
Nations, 20201). The research addresses the role of Blockchain technology in the transition
towards a CE within the Swedish Furniture Industry. Hence, it aims to contribute knowledge
to the field of CE and the facilitation of its diffusion. In the perception of the authors, CE mainly
covers the environmental and economic pillars of the SDGs with only a minor focus on social
goals. In particular, the main SDG goals that are addressed by CE, and hence indirectly
addressed by this research, are Responsible Production & Consumption, Climate Action as
well as Industry, Innovation & Infrastructure.

1.6 Disposition
After the introduction to the research topic, a literature review in chapter two follows in which
the key variables and theoretical concepts addressed within this research are explained. This
includes information about CE, CBMs as well as Blockchain technology. At the end of the
literature review, a synthesized framework is presented that served as the basic construct for
the subsequent analysis. Chapter three explains the methodology and design of the study the
approaches for data collection and analysis. In chapter four, the empirical findings of the study
are presented and connected to the synthesized framework in the literature review. The findings
of the study are then discussed in the following chapter five. In the last section, chapter six, the
results of the study are summarized and implications as well as suggestions for further research
are presented.

6
2 Literature Review
The following section includes a review of relevant theories and fields that were considered as
relevant to the research. At the end of the literature review, there is given a summary that
elaborates on the essential findings and the empirical research approach.

2.1 Circular Economy Transformation

First, transformation can be described as a complete change in the appearance or character of
something. The process of industrial transformation has been studied by an increasing number
of researchers. The current model of a linear economy (LE) which has been applied for many
decades on a global scale is considered unsustainable by many researchers, economists, and
ecologists (Sillanpää, 2019). The LE can be briefly summarized by the process of “take-make-
use-dispose” and revealed serious conceptual and structural limitations (Sillanpää, 2019). This
has led to a pressing need for more sustainable socio-technical systems (Geissdoerfer et al.,
2017).

In response to a more sustainable economy, the “circular” economy offers a powerful way
forward (Lacy, Long and Spindler, 2020). Circular Economy (CE) requires a massive
transformation from the legacy linear economy towards new ways of doing business (Lacy,
Long and Spindler, 2020). This fundamentally decouples economic growth from resource
usage and recouples economic growth with societal progress (Lacy, Long and Spindler, 2020).
The concept of CE has gained increasing attention throughout the last years (Wiesmeth, 2021).
It is broadly agreed that CE contributes to sustainable development by the creation of economic
benefits, environmental quality, and social equity (Kirchherr et al., 2018). However, the
concept of CE is not completely new as it has historically evolved even before the
industrialization in hand with the emergence of activities such as recycling, remanufacturing,
and reuse (Lieder and Rashid, 2016). Nevertheless, it is a research field that is subject to further
exploration, which is expressed by the fact that various interpretations and definitions of the
term CE can be found in the theoretical literature (Korhonen, Honkasalo and Seppälä, 2018).

Kirchherr et al. (2018) conclude that the concept of CE is an economic system that replaces the
end-of-life concept with reducing, alternatively reusing, recycling, and recovering materials in
production, distribution, and consumption processes. In contrast to the traditional concept of
linear material flows, the concept of CE aims to create a system where resources flow (Bocken
et al., 2016). Particularly, this system is based on two fundamental principles which are the
slowing of the resource loops as well as their closing. On the one hand, the slowing of the
resource loops aims to ensure a long product life and the extension of it by actions like
repairing, remanufacturing, and reusing. This results in a slowdown of the resource flow due
to the extended utilization time of the products. Closing the resource loop, in turn, means that
the material resources of the products undergo a circular flow and are used for the production
of new products by recycling processes (Bocken et al., 2016).

7
2.1.1 Circular Economy

Kirchherr et al. (2017) elaborate on the distinction between two core principles of CE: The R-
imperatives and the systems perspective. The R-imperatives are well-established and provide
a how-to approach for CE illustrated in cycles (Ghisellini, Cialani and Ulgiati, 2016), whereas
the system perspective emphasizes that the transition towards CE is fundamental and needs to
occur at the macro, meso, and micro level of the system (Kirchherr, Reike and Hekkert, 2017).
Regarding the nature of this thesis, the R-imperatives principle fits best to the practical and
detailed approach chosen for the research.

The R-imperatives are sometimes also referred to as R-hierarchies or strategies. Various

sequences of R's are mentioned in the literature, which differs in their level of detail. However,
these different R-imperatives share the same principle in that they outline a series of value
preservation options that can be initiated to derive added value at an operational level. (Reike,
Vermeulen and Witjes, 2018; Campbell-Johnston et al., 2020). The hierarchy aspect of these
imperatives is that every R represents a form of value retention whereby the highest R-number
yields the highest potential of value retention (Campbell-Johnston et al., 2020). In this way, it
is favorable to try to maintain the value of products at the lowest R-level. The sequence of Rs
is ranging from 3 to 10, whereby Reike, Vermeulen and Witjes (2018) state that an analysis of
69 academic articles shows that there is no clear trend visible which sequence is most used in
the last 5 to 10 years. For this research, there was decided to use the 4R typology since it is not
too complex for the initiation of CE in the furniture industry and embraces sufficient cycles to
look at the effect of Blockchain technology. The amount of Rs can always be expanded after
successfully implementing a simplified R-sequence.

Within the literature there is no consistent definition of the 4R typology (Reike, Vermeulen
and Witjes, 2018). Also, in the furniture industry, there is not yet defined a specific CE model.
In this regard, there is chosen the most famous and widespread CE system diagram (illustrated
in), also known as the Butterfly diagram (Ellen MacArthur Foundation, SUN and McKinsey
Center for Business and Environment, 2015; Bianchini, Rossi and Pellegrini, 2019).

Figure 1: Butterfly diagram by Ellen MacArthur Foundation (2021)

8
This diagram is made by the Ellen MacArthur Foundation in collaboration with businesses,
policymakers, and academia. The Butterfly diagram illustrates the classic relationship between
natural and technological systems and what activities enable industrial systems to close
resource loops (Ellen MacArthur Foundation, SUN and McKinsey Center for Business and
Environment, 2015; Bianchini, Rossi and Pellegrini, 2019). Because of the nature of this
research, the finite materials side has been further examined which contains the following
cycles:

• Maintain/Prolong: this strategy aims to keep products and materials in use by

prolonging their lifespan as long as possible. This by designing products in a way they
can be repaired a maintained. Prolonging product lifetime includes sharing among users
which leads to removing the need to create new products.

• Reuse/Redistribute: this strategy aims to reuse products and materials multiple times
by redistributing to new users. The product or materials themselves are kept in their
original form or subject to little enhancements.

• Refurbish/Remanufacture: this strategy aims to restore value to a product. By

remanufacturing the product is disassembled and rebuilt to as-new condition with the
same warranty as a new product. Refurbishing a product is an approach whereby
products are repaired as much as possible without disassembling and replacing
components.

• Recycle: this is the process of reducing a product back to its basic material level.
Recycling makes it possible to remake new products with raw materials.

As mentioned, each cycle of the model decreases the value of the initial product or material
and is subject to losses in labor and energy. Besides the losses, there is also new labor, and
energy required to repurpose the product or materials. Meaning that it is favorable to keep the
products and materials circulate in the smallest cycle of the model as possible (Ellen MacArthur
Foundation, 2021).

2.1.2 Circular Ecosystem

Antikainen and Valkokari (2016) state that CE systems are by nature networked and require
collaboration, communication, and coordination between different actors. These complex
networks can be seen as business ecosystems that need to be beneficial to every actor (Aminoff
and Kettunen, 2016; Antikainen and Valkokari, 2016; Ellen MacArthur Foundation, 2021).
Changes in BMs and value creation become therefore vital for each actor of the ecosystem
(Aminoff and Kettunen, 2016).

Figure 2 is a representation of how different actors in the system work together in a well-
established CE ecosystem. It can be concluded that individual BMs are dependent on different
actors in the ecosystem that needs to be aligned. The illustrated ecosystem shows different
actors in green, but actors may virtually (or in this matter circularly) integrated multiple steps
of resource flows. The ecosystem does not operate individually but is subject to collaboration
with other ecosystems as well as environmental stakeholders such as regulators, investors, and
communities (Aminoff and Kettunen, 2016; Lacy, Long and Spindler, 2020). Spring & Araujo
(2017) argue that from the perspective of the CE, products can be seen in the context of a
distributed network with various entrepreneurial opportunities of transforming materials as

9
well as components to objects and the other way around. On the other side, it is emphasized
that collaborative and interdependent CE networks need to preserve the possibility of
competition between different stakeholders for the best ideas. Processes, therefore, have to be
implemented that align both aspects in order to guarantee a successful transformation from a
business level perspective (Narayan and Tidström, 2020).

Figure 2: CBM presented as an ecosystem (Antikainen and Valkokari, 2016 adapted from Aminoff et al., 2016)

2.1.3 Circular Business Model Innovation

From a traditional perspective, the term BM refers to how a company creates economic value
(Björkdahl, 2009; Osterwalder and Pigneur, 2010). In that regard, economic value is created
by a solution to a problem of a customer whereby the cost of providing the value is less than
the value of solving the problem. BMs generally reflect the value proposition of a company
and the way how value is created, delivered as well as captured (Richardson, 2008; Bocken,
2015; Ranta, Aarikka-Stenroos and Mäkinen, 2018). The main strategy of it is to create the
desired value for customers and capture a greater amount of that value than competitors in the
market (Richardson, 2008).

As said, the traditional “linear” BM is grounded on the principle of generating profits from the
sale of artifacts, which stands in contrast with the CE approach of generating profits from the
flow of materials and products over time (Bocken et al., 2016). Further, it is mainly focused on
the “single bottom line” recognized as economic profit, instead of balancing economic profit
with positive value to society and the environment, which is also known as the triple bottom
line (Bocken, 2015; Aminoff and Kettunen, 2016). Hence, the traditional BM concept faces
continuous pressure for more sustainable sociotechnical systems as it is closely related to the
previously mentioned principle of take-make-use-dispose (Geissdoerfer et al., 2017). To
accomplish this, the CBM concept comes into play, which eventually could make the
traditional linear BM obsolete. CBMs are designed for the purpose of preserving products,
components, and materials in circulation (Oghazi and Mostaghel, 2018). They aim to create a
significant positive impact for the environment and society but require changes in the way
organizations and their value network create, deliver, and capture value (Bocken et al., 2014).
According to Oghazi and Mostaghel (2018), in a CBM the value proposition incorporates the
providing of services or products that lower the impact on the environment while increasing
social and economic impacts. Regarding value creation and delivery, relationships with

10
external stakeholders like suppliers, customers, and partners become of utmost importance in
CBMs and need to be highly integrated. This is also referred to as value co-creation, which
means that value creation in the context of CBMs takes place by collaboration between
different stakeholders rather than by a single organization itself (Aminoff et al., 2017). In terms
of value capturing, new revenue and cost models have to be implemented that are tied to value
circles and allow for a fair distribution of economic revenues and costs among the stakeholders
of the value circles (Aminoff et al., 2017; Oghazi and Mostaghel, 2018). Moving towards a
CBM is not only a necessity for a sustainable future, but also opens new possibilities for
businesses to enter new markets with innovative products and services, and secure long-term
growth (Lacy, Long and Spindler, 2020). It also gives companies the opportunity to rethink the
use of resources for their operations and supply chain which may have a positive effect on the
cost base (Lacy, Long and Spindler, 2020). The Ellen MacArthur Foundation (2013) highlights
that novel BMs play a major role in enabling the transition towards CE. The elaborated
Butterfly diagram, illustrated in chapter 2.1.1, gives four strategies for companies or industries
to pragmatically implement CE. However, these strategies do not provide a detailed BM that
can be utilized.

Since 2015 there is a high increase in academic journals regarding CBM (Geissdoerfer et al.,
2020). This increasing number of articles in journals also give multiple definitions for the
CBM. Regarding the research of Geissdoerfer et al. (2020, p. 7), there can be agreed upon that
CBMs are BMs that are cycling, extending, intensifying, and/or dematerializing material and
energy loops to reduce the resource inputs into and the waste and emission leakage out of an
organizational system. This definition is in line with the elaborated Butterfly diagram. Thus, as
CE and CBM are focused on the resource flow within a system, companies have to refocus
from the product itself towards systems around products by reinventing the way of generating
revenue by creating and maintaining value over time (Bakker et al., 2014; Aminoff and
Kettunen, 2016; Bocken, Schuit and Kraaijenhagen, 2018).

2.1.4 Circular Business Model Framework and its challenges

Due to the fundamental shift for companies towards CBMs, several attempts have been made
to design a CBM framework. CE strategies need to be embedded in this framework, for
example, those from the butterfly diagram. However, in the current literature, there is no
consensus on whether the general BM elements of the CBM framework differ from those of
the LBM (Nußholz, 2017; Ranta, Aarikka-Stenroos and Mäkinen, 2018; Geissdoerfer et al.,
2020). In journals, the most prominent CBM characteristics mentioned are increased
collaboration, pay for performance instead of ownership, and operating reverse logistics
(Nußholz, 2017). Due to the lack of knowledge whether the fundamental value proposition,
value creation, and delivery of the LBM are subject to change, Richardson (2008) and Ranta,
Aarikka-Stenroos and Mäkinen (2018) state that CE strategies need to reflect how all of the
company’s activities should be organized and conducted and are not tight to one specific BM
framework. Thus, the strategies of the Butterfly diagram, Maintain/Prolong,
Reuse/Redistribute, Refurbish/Remanufacture, and Recycle can be used against the existing
BMs of companies for implementing CE strategies. Böckin et al. (2016) researched 13 generic
product offerings and concluded, that depending on the offering, different BM innovations and
CBM strategies are required to enable CE. Thus, a company is not able to embed every CBM
strategy but may focus on the one that has the highest impact on resource efficiency (Böckin
et al., 2016; Nußholz, 2017). As CE requires some sort of interrelationship with different actors
in the ecosystem (see chapter 2.1.2) CBM strategies may go beyond individual companies by
setting strategies for the whole industry (Geissdoerfer et al., 2020). Hence, industry-wide

11
strategies require collaboration within the entire ecosystem. In this collaborative ecosystem,
the value proposition around the product is dynamic and changes throughout the product’s life
cycle. Nußholz (2017) criticizes the established BM framework from Osterwalder and Pigneur
(2010) and other recently designed CBM frameworks as they do not include the perspective of
value management over the product lifecycle. Hence, they do not acknowledge the entirety of
additional value creation and capturing opportunities at different stages of the cycling
resources. For this research, it is not plausible to look through one specific CBM because
Blockchain technology’s nature is not tight to one specific BM or company. It is more related
to the facilitation of a network of different actors in an ecosystem, that may cover different BM
strategies. More on Blockchain technology and its relation to CE can be found in chapter 2.2.
Furthermore, this research will elaborate on general CBM strategies and their associated
challenges in the furniture industry. This because it will limit the analysis and it is still not clear
if the current BM frameworks that focus on value proposition, value creation and delivery, and
value capture are subject to change. As previously mentioned, the CBM decouples economic
growth from resource usage. In the literature review, there is a general understanding how an
industrial value chain in a CE looks like. The general steps are defined as design, sourcing,
manufacturing, logistics, marketing & sales, product use, end-of-use recycling, and reverse
logistics (Aminoff and Kettunen, 2016; Antikainen and Valkokari, 2016; Aminoff et al., 2017;
EFIC, 2020; Lacy, Long and Spindler, 2020). Rasmussen (2007) and Fisken and Rutherford
(2002) state that companies have to integrate their value chain within those of other firms in a
value network, also referred to as the ecosystem.

Based on these general steps of value network in an industry, several frameworks visualize
this. The visualization of the Board of Innovation (2021) is designed based on research of Ellen
MacArthur Foundation and World Economic Forum and illustrated in figure 3, gives a clear
overview of the general steps of the value chain, and includes five CBM examples.

Figure 3: Circular value chain created by Board of Innovation (2021) adapted from World Economy Forum and
Accenture)

12
These CBMs can be translated to challenges that may occur by the implementation of CE for
any given industry with products. While looking at the CBMs as challenges, there is a strong
correlation with the ones mentioned by Lacy, Long, and Spindler (2020), Forrest et al.’s (2017)
-research on specific challenges for the furniture industry commissioned by European
Environmental Bureau- as well as the barriers identified by Schoonover, Mont, and Lehner
(2021). The only prominent missing challenges are the over-arching policies/regulations and
financial & economic as described by Forrest et al.’s (2017) and Schoonover, Mont, and Lehner
(2021). The challenges of figure 3 and missing challenges are further elaborated table 1.
Besides the correlation between challenges as defined in Table 1, the framework also embeds
the principles of the previously elaborated (Chapter 2.1.1) Butterfly diagram from Ellen
MacArthur Foundation (2015). Whereby the first loops, maintain/prolong, Reuse/Redistribute,
and Refurbish/Remanufacture of the Butterfly diagram are embedded in the use, re-use, share
and repair step of the value chain framework. Whereas the recycling cycle of the butterfly
diagram is the last step of the value chain framework. As the Butterfly diagram mainly gives
strategies for CE, these may apply to the value chain framework as well but are not represented.
The framework of Board of Innovation (2021) is used as inspiration for the developed
framework in chapter 2.5

Challenge Description Reference

(1) Collaboration between different value chain actors within the Lacy, Long, and Spindler
Coordinating complex circular value chain (ecosystem). In addition to the (2020); Forrest et al.
circular value collaboration there is lack of data, information, and (2017); Schoonover et al.
chains infrastructures between the actors in the ecosystem. (2021); Pheifer (2017);
Mont et al. (2017)
(2) Circular Designing products in a way not only focused on end of use, Lacy et al. (2020);
product but the efficient use of products and recovery of materials at Schoonover et al. (2021);
design high quality. Wilts (2017); Pheifer
(2017); Mont et al. (2017)
(3) Use, re- Lack of consumer information/willingness, and availably to Lacy et al. (2020); Forrest
use, share spare parts. et al. (2017); Schoonover
and repair High cost of repair and refurbishment. et al. (2021); Pheifer
Second-hand products’ price different with new products is not (2017); Mont et al. (2017)
significant enough.
(4) Collection The current underinvestment in the collection and logistics for Forrest et al. (2017); Lacy
& reverse products and high transport and labor costs associated with it. et al. (2020); Pheifer
logistics (2017); Mont et al. (2017)
(5) Sorting & Strong depended to the circular product design challenge, the Forrest et al. (2017); Lacy
preprocessing sorting and preprocessing of end-of-use product is et al. (2020); Pheifer
underdeveloped. (2017); Mont et al. (2017)
(6) Over-acting regulations and policies are not designed for Forrest et al. (2017); Lacy
Regulations embracing CE. et al. (2020); Schoonover
& policies et al. (2021); Pheifer
(2017); Mont et al. (2017)
(7) Financial Economy incentive for participating in extending lifetime for Schoonover et al. (2021);
& economic actors in CE which may lead to sales cannibalization of new Forrest et al. (2017); Mont
sold items. Complex revenue models that could lead to et al. (2017)
administrative burden.
Table 1: CE challenges related to the Furniture Industry

13
2.2 Blockchain Technology
The origin of Blockchain technology lies in the year 2008 when the concept of the
cryptocurrency "Bitcoin" was first introduced by a person under the pseudonym Satoshi
Nakamoto. Bitcoin represented a completely novel form of electronic cash that enables direct
online payments between parties without relying on central financial intermediaries
(Morkunas, Paschen and Boon, 2019). This new idea of transferring funds in the context of a
peer-to-peer (P2P) network mainly resulted from the attempt to solve the existing uncertainty
in financial transactions during that time (Komalavalli, Saxena and Laroiya, 2020).

Blockchain constitutes the underlying technological concept of Bitcoin and refers to a specific
way for the organization and storage of information. In the broader sense, Blockchain is a
Distributed Ledger Technology (DLT), the umbrella term used for technological concepts that
are based on distributed data recording and sharing in P2P networks. Within DLTs, data records
are collectively updated and maintained by a network of different computer servers (nodes) in
a decentralized manner whereby all nodes possess a continuously synchronized copy of the
ledger (World Bank, 2017). Characteristically for Blockchain technology is its growing and
append-only data structure. It is an increasing chain of data blocks that are created and verified
by using cryptographic and algorithmic methods (World Bank, 2017). The blocks include
records of multiple transactions that have been completed over a specific time period (Shen,
Zhu and Xu, 2020). Hereby, the most recent executed transactions are always added to a newly
generated block. Consequently, the Blockchain depicts the entire ledger of historical
transactions (Nofer et al., 2017).

Figure 4: Conceptual Blockchain Structure (Prashanth Joshi, Han and Wang, 2018)

As figure 4 shows, the blocks are chronologically ordered and interrelated as each block
contains a timestamp and a hash that refers to the previous block (Shen, Zhu and Xu, 2020).
To add a block to the Blockchain, the network has to agree upon the validity of the encrypted
transactions by using a pre-defined algorithmic method (Nofer et al., 2017). Once
authenticated, information is added to the Blockchain and simultaneously updated on all nodes
(World Bank, 2017). The data becomes then irreversible and cannot be modified by a single
participant of the network. This makes Blockchain a very secure distributed ledger in where
participants have real-time access to correct and entire records (Upadhyay et al., 2021).
However, there are different types of Blockchains based on the permission rights of the
participants to access and add information. Those rights determine the degree of transparency
and centrality of the Blockchain and are essential for the contextual application of the

14
technology (Böckel, Nuzum and Weissbrod, 2021). Shrivas (2019) provides a conceptual
classification of different Blockchain types based on the two criteria of data accessibility and
the need for authorization. Regarding data accessibility, he distinguishes public, private,
consortium and hybrid blockchain types, whereas based on the need for authorization he differs
between permissionless, permission and hybrid Blockchain types. Other authors renounce such
a detailed differentiation regarding the two criteria and classify different Blockchain types on
an overarching, respectively synthesized level. Lin and Liao (2017), Laurence (2019) and
Joshi, Han, and Wang (2018) agree on the general categorization of public, private and
consortium Blockchain types.

• Public Blockchain: Blockchain that is open to every node to submit transactions as

well as participate in the process of validating and attaining consensus (Lin and Liao,
2017; Prashanth Joshi, Han and Wang, 2018).

• Private Blockchain: Blockchain in which only pre-validated nodes can participate and
data access underlies stringent authority management through an organizational entity
(Lin and Liao, 2017; Prashanth Joshi, Han and Wang, 2018). By default, no node of the
network has the right to verify and validate transactions besides the network
administrator (Prashanth Joshi, Han and Wang, 2018).

• Consortium Blockchain: Blockchains in which nodes or a set of nodes have authority

that can be chosen in advance. Within Consortium Blockchain networks, transaction
details can both be private or open-source, which can be chosen in advance by the
respective nodes. This Blockchain type constitutes a combination of public and private
Blockchains (Lin and Liao, 2017; Prashanth Joshi, Han and Wang, 2018).

Public Blockchains tend to have the highest level of transparency and security, but on the other
side are complex and require high computational power to maintain the distributed ledger on
the large scale. Typical examples of public Blockchains are the applications of cryptocurrencies
as for instance Bitcoin. Unlike public Blockchains, private Blockchains provide an enhanced
level of privacy that is essential for sensitive data in specific networks, are more cost-effective,
and better to scale up. At this point, it is to mention that many people do not consider private
Blockchains as true Blockchains (Morkunas, Paschen and Boon, 2019). However, a Blockchain
platform can also consist of different Blockchain types (Shrivas, 2019). Those offer the
advantage of configuring the intended level of security, auditability, scalability, and data
storage for the applications that are built on top (Laurence, 2019).

As indicated before with the cryptocurrencies, it is to emphasize that Blockchain does not only
represent a novel technology of data recording and storage but also a programmable platform
that enables various other applications, all in front the Smart Contracts (Fries and Paas, 2019;
Kouhizadeh, Zhu and Sarkis, 2020; López Vivar, Sandoval Orozco and García Villalba, 2021).
Salmerón-Manzano and Manzano-Agugliaro (2019), define Smart Contracts as “self-executing
digital transactions that use decentralized cryptographic mechanisms”. In other words, they are
program codes that run on the Blockchain and entail contract conditions set by parties. If those
conditions are met under certain if-then relationships, the underlying transactions of those
contracts are executed automatically on a decentralized basis. Those can refer to physical
objects, digital assets, or other forms of data (Fries and Paas, 2019). In that regard, Blockchain
technology facilitates the automatization of transaction processes in a secure, cost-effective,
and transparent way without the need for third parties to establish trust (Nofer et al., 2017).
Even though Blockchain technology is still primarily associated with the applications of

15
cryptocurrencies and the financial sector it implies possibilities for various other business
applications based on its key features of transparency, immutability, decentralization, and
security (Angelis and Ribeiro da Silva, 2019), and the fact that transactions can refer to any
kind of metadata, not only the transfer of money (McBee and Wilcox, 2020). In particular,
Blockchain technology offers valuable implications for processes where multiple parties are
involved (Kaji, Nakatsuma and Fukuhara, 2021). Many see in it a disruptive technology with
the potential to revolutionize various industries, comparable with the introduction of the
internet (Shrivas, 2019).

2.3 Blockchain and Circular Economy

Digital technologies related to the concept of Industry 4.0 are named as one of the key enablers
to facilitate the implementation of CE (Ranta, Aarikka-Stenroos and Väisänen, 2021).
Blockchain technology as one of them, can contribute to the transition as it provides the
capabilities to facilitate the management of complex networks by establishing a transparent,
decentralized, simultaneously updated, and irreversible database among the stakeholders of
networks (Upadhyay et al., 2021). It enables direct and secure transactions, whether it is related
to value or information, without the need for an intermediary third party. Hence, the speed of
the data transfer within a network is increased by processing and updating information close to
real-time (Böckel, Nuzum and Weissbrod, 2021).

Regarding CE, these characteristics of Blockchain technology are often related to supply chain
management (Kouhizadeh, Zhu and Sarkis, 2020). Blockchain technology for example allows
assigning cryptographic digital identities to physical products that are immutable and
transparent (Lacy, Long and Spindler, 2020). By that, it can depict the provenance of a product,
in regard to the origin as well as the entirety of undertaken activities (Kouhizadeh, Zhu and
Sarkis, 2020). The complete transparency of transactions enables the stakeholders to gain
enhanced monitoring and control capabilities as all products and materials can be traced back
to the origin. This facilitates especially reverse logistic activities which currently constitutes a
difficulty regarding the availability of data about the products, their location, condition and
quality (Lim et al., 2021). As Blockchain Technology can provide access to information about
the current state of every material and component, it facilitates predictions and a proactive
planning of subsequent activities (Shojaei et al., 2021). This incorporates activities that refer
to the return of products and components for reusing, refurbishing, or recycling (Lim et al.,
2021). Additionally, digital product biographies can contain information about the contributed
value and costs of the different actors, which allows for a fair distribution of the created value
within the CE (Narayan and Tidström, 2020). Another implication of Blockchain technology
mentioned in the context of CE is the financial incentivization based on tokens and
cryptocurrencies. It is stated, that Blockchain technology can include programs that reward
participants for the verification of information, performance improvement and the adaption of
behaviours that are compliant with the principles of CE. By employing established
cryptocurrencies, e. g. Bitcoin, those rewards can be easily traded and cashed among
participants (Kouhizadeh, Zhu and Sarkis, 2020).

16
2.4 Literature Synthesis
After the performed literature review on the main topics of this research, there has been
established a clear understanding of CE and Blockchain technology. The main findings are
elaborated in this chapter as well as the developed theoretical framework.

Based on the literature review it can be concluded that the implementation of a CE is complex
and requires a certain degree of collaboration between various actors of the circular value chain.
Meaning, that to transform the furniture industry towards CE all actors engaged in the circular
value chain, from product design to recycling, have to align their BMs. These complex
networks and collaborations are referred to be an ecosystem, whereby every actor has a certain
dependency on other actors for successfully implementing and coordinating the concept of a
CE. BMs of these companies have to be in conjunction with the other actors and need
overarching strategies for the whole ecosystem. The transformation from LBMs towards
circular CBMs requires a fundamental change in the perspective of value creation, whereby
companies have to refocus from the product itself towards systems around the product.
Revenue generation have to be reinvented through creating and maintaining value over the
product lifecycle. CBMs require significant changes in the three main pillars of the BM theory,
value proposition, value creation & delivery, and value capture. The current linear BM
paradigm is mainly focused on the “single bottom line” that is economic profit, instead of
balancing economic profit with positive value to society and the environment, known as the
triple bottom line. The transformation of the whole ecosystem faces seven main challenges: (1)
Coordinating circular value chains, (2) Circular product design, (3) Use, re-use, share and
repair, (4) Collection & reverse logistics, (5) Sorting & preprocessing, (6) Regulations &
policies, and (7) Financial & economic.

The digital technologies of the concept of Industry 4.0 are named as one of the key enablers
for CE. One of these technologies is Blockchain, which is the focus of this research. Originally
Blockchain technology emerged in a completely different context but is now also subject to
discussions to what extent it may impacts the transformation towards a CE. The literature
mainly elaborates on the fact that Blockchain technology has the capability to facilitate the
management of complex networks by establishing a decentralized, transparent, simultaneously
updated, and irreversible database among the stakeholders of a network. Accordingly, this
enables stakeholders to gain enhanced monitoring and control capabilities as all products and
materials can be traced, which is especially beneficial for reverse logistics. As Blockchain
technology can provide access to information about the current state of every material and
component, it also facilitates predictions and the proactive planning of subsequent activities.

2.5 Theoretical Framework

Based on the literature review on CE and Blockchain Technology, there is chosen to use the
Circular Value Chain framework inspired by the Board of Innovation (2021). The framework
is modified due to the scope of this research and missing challenges. As described in chapter
2.1.4, the Circular Value Chain framework lacks the overall over-acting law & regulations and
financial & economic challenges. These challenges are included in the framework that resulted
in adjusting the framework to figure 5. As mentioned in chapter 2.3, the Industry 4.0 that is
heavily focused on digitalization. The Circular Value Chain framework embeds the data flow
within the value chain/ecosystem. The data is represented as a collective action of different
actors in the ecosystem. This collective data gathering, and utilization provide opportunities

17
for digital technologies to facilitate the value chain’s needs/requirements. For this research, the
Blockchain technology has been challenged against the challenges and data needs/requirements
of the ecosystem. Hence, the combination of the Circular Value Chain framework and Table 1,
that elaborates on the challenges, have been used in the empirical research to verify the
challenges in the Swedish furniture industry and to look to what extend Blockchain Technology
may overcome these challenges. Figure 5, combines the framework and the challenges
elaborated in chapter 2.1.4 and indicates the specific location of the challenges.

Figure 5: Theoretical Framework, inspired by Board of Innovation (2021) and enriched by challenges mentioned by
Lacy, Long, and Spindler (2020); Forrest et al. (2017); Schoonover et al. (2021); Pheifer (2017); Mont et al. (2017)

18
3 Methodology
The first part of the methodology entails the introduction to the philosophical framework by
describing the research paradigm. Based on the research paradigm, there is elaborated on the
research method that is used. After defining the research method there is given an overview of
how the data is collected and analyzed.

3.1 Research Paradigm

In the field of research, there can be made a distinction between two paradigms: positivism and
interpretivism. According to (Collis and Hussey, 2014), positivism assumes that social reality
is singular and objective, whereby interpretivism claims that social reality is subjective and
multiple. These paradigms are both the extremes of a spectrum, whereby combinations and
blended forms may apply.

Based on the subjective nature of this research, the interpretivism side of the spectrum was
applied. As this research focused on the consumer side of the Circular Economy, there can be
stated that multiple realities exist on this phenomenon. Therefore, methods in the form of
qualitative research data have been applied (Collis and Hussey, 2014).

3.2 Research Method

This research used the illustrative case study methodology on the overall furniture industry of
Sweden. In that regard, a single phenomenon is explored in a natural setting using a variety of
methods to obtain in-depth knowledge (Collis and Hussey, 2014). The aim is to illustrate new
and possibly innovative practices adopted by particular companies in relation to the
transformation towards CE. Based on the case study methodology, there is done exploration to
the current and research to future of recycling and reusing of furniture through the CE approach.

For the exploration of the current situation, there is mainly used secondary data that is been
gathered by desk research. Secondary data was used to enrich the researchers’ knowledge of
the subject in scope as well as providing the foundation for the empirical research. This data is
gathered through the previous performed paper by the researchers as well as journals and
publications available on library databanks of KTH Royal Institute of Technology.

Based on the interpretivism paradigm, the best suitable empirical research method is by
examining a small sample with the aim to obtain different perceptions of the phenomenon
(Eisenhardt, 1989; Collis and Hussey, 2014). Collis and Hussey (2014, p. 69) state that the best
way to do a case study is to combine different data collection methods such as archive
searching, interviews, questionnaires, and observation. As explained in the previous paragraph,
this research used archive searching for getting familiar with the topic and is used as the
foundation of this research. In the empirical research, there has been chosen to use interviews
as the primary data collection. Semi-structured interviews are used with experts in different
fields. Participants are voluntarily asked to participate in this research. Semi-structured
interviews have been chosen because of their flexible structure. In this way, interview questions
are used as a guide within the interview and gives the flexibility to the expansion of the
interviewee’s responses (Collis and Hussey, 2014; Mann, 2016).

19
For our research, we divided three different areas where knowledge is gathered. These areas
have a different approach for conducting interview. We assumed that interviewees in the
furniture industry do not have sufficient knowledge to know how the implication of blockchain
technology can benefit the CBM for an individual company and within the industry’s
ecosystem. By dividing the interview approaches into three different areas we were able to ask
specific questions about a certain topic that contribute to the research. As seen in the figure
below, there is an overlap of areas, this means that some interviewees had expertise in
overlapping areas as well. This overlapping expertise is beneficial to link different areas
together.

Circular Economy
Swedish Furniture Blockchain
and Circular
Industry Technology
Business Models

Figure 6: Qualitative semi-structured interview areas

Research approach per area:

• Swedish Furniture Industry: For the industry, we approached the interviews more
from the challenges angle for the implementation of CE within their current BM. The
challenges and framework (Figure 5) defined in the literature is been used as a base for
the interview. In this way, we like to get information about how blockchain
compliments current experienced challenges. Besides the challenges we also tried to
get a hands-on overview of how the furniture industry sees the implications of CE.

• CE & BMs: Experts in this field we interviewed them by specific CE related

implications for the consumer products and their vision on how the furniture industry’s
CE may look like and which challenges it may face, by referring to literature related
challenges (Figure 5).

• Blockchain Technology: Experts in this field were interviewed to get an overall view
of how blockchain technology can affect the CE and their view of how furniture-related
challenges for CE can be tackled by Blockchain Technology.

3.3 Data Collection & Analysis

As mentioned, the primary data for this research was collected by semi-structured interviews.
To guide the semi-structured interviews with experts, a set of questions were developed. These
questions gave the overall structure of the interview but did not limit the interviewee from
sharing valuable information that is of great interest for this research. This type of interview
was favorable because it allows flexibility and opened up for dialogue to, in detail, discuss

20
specific opinions and matters (Collis and Hussey, 2014; Mann, 2016). Prior to the interviews,
desk research was conducted to get an overall knowledge of the subject and information that is
been shared by other researchers in the same field.

For the empirical part of this research, there have been held ten semi-structured interviews.
Table 2 represents anonymously who participated in the research and their expertise. In general,
each interview lasted approximately 60 minutes and was transcript by using the transcription
software Otter.ai. The transcript is used for analyzing data and looking for correlations between
different interviews, elaborated in chapter 4.

Date Reference Subject Background Location

19-04-2021 1 Circular Economy Business Support Circular Economy Digital
implications for the employee at a B2B focused Swedish meeting
furniture industry, furniture company with a turnover of via video
focus on company 300+ million EUR in 2020. conference.
level.
20-04-2021 2 View of Blockchain Researcher at University with expertise Digital
Technologies in on BMs for a circular economy, meeting
Circular Economy. circular entrepreneurship, and via video
blockchain. conference.
22-04-2021 3 Circular Economy Expert of the sustainability division of Digital
implications at the an umbrella organization for the meeting
furniture industry, Swedish furniture industry. via video
focus on industry level. Representing 700 companies in the conference
wood and furniture industry.
23-04-2021 4 Circular economy Researcher at University with expertise Digital
implications at the on product-as-a-service BM at the meeting
furniture industry, furniture industry. via video
focus on industry level. conference
26-04-2021 5 Blockchain Founder of a Swedish blockchain start- In
implications and up in the wood industry. presence,
benefits for ecosystems with
and complex networks. respecting
COVID-19
measures.
27-04-2021 6 Circular economy Researcher at university with expertise Digital
implications at the on sustainable consumption and meeting
furniture industry, circular economy. via video
focus on industry level. conference
30-04-2021 7 View of Blockchain Researcher at university with expertise Digital
Technologies in on Supply Chain and the implications meeting
Circular Economy. of Blockchain in Circular Economy. via video
conference
03-05-2021 8 Blockchain Researcher at university with distinct Digital
implications and focus on Blockchain technology. meeting
benefits for ecosystems via video
and complex networks conference
11-05-2021 9 Blockchain Researcher at university with distinct Digital
implications and focus on Blockchain technology. meeting
benefits for ecosystems via video
and complex networks. conference
17-05-2021 10 Circular Economy Quality and environment employee at a Digital
implications for the B2B focused Swedish furniture meeting
furniture industry, company with a turnover of 100+ via video
focus on company million EUR in 2020. conference
level.
Table 2: Participants in research

21
3.4 Limitations
Due to the time for this research, only a limited number of interviews could be conducted.
Nevertheless, it has been assured that the interviews cover the different areas as defined in
chapter 3.2 and that a saturation point was reached. Despite the low response rate of Swedish
Furniture Industry, it has been managed to interview two big furniture companies as well as
with an umbrella organization that represents 700 Swedish furniture and wood companies.
These three represent the view of the Swedish furniture companies on the challenges the
industry faces by the transition towards CE. In addition, both companies are mainly active in
the business-to-business market, which may lead to the fact that the results of this interview
are more relevant for the business-to-business market rather than the entire market including
business-to-consumer. However, the furniture companies’ view is enriched by researchers that
have published journals on CE in the Furniture Industry. Hence, due to the lack of interviews
with furniture companies, it may not result in a full reflection of the entire Swedish furniture
industry’s view on challenges they face.

3.5 Ethics
For the research, the guidelines from the Swedish Research Council were obeyed. Prior to the
inquiry, all participants have been informed about the intention of the study as well as the usage
of the data. It has been clearly communicated that the interviews serve solely academic research
purposes and will not be used for other purposes besides the thesis. Prior to each interview,
there is asked consent for recording the meeting. Digital interviews used video conference’s
consent pop-up before the record started. This research paper is shared with all participants and
they maintain the right to opt-out on specific information provided. Corresponding recordings
and transcripts are kept in respect to KTH Royal Institute of Technology’s data retention
requirements and policy.

22
4 Results
As mentioned in the introduction, the current furniture industry’s LBM is on the verge to
change drastically based on the necessity of tackling climate change and the subsequent social
pressure. An illustrative case study is conducted to explore how Blockchain technology
facilitates the implementation of CE in the Swedish furniture industry. This research
contributes to the elaboration on how disruptive technologies, in this matter Blockchain
technology, can contribute to the implementation of CE.

After building the foundation of this research there is done empirical research. Within this part
of the research, information is gathered through the execution of semi-structured interviews
with ten participants, as explained in chapter 3.3. The interview questions have been formulated
based on the expertise of the interviewee. Based on the different knowledge of interviewees,
in the field of the furniture industry, circular economy, and Blockchain Technology, the depth
of each interview may differ. During the empirical research, required pivots have been made
to tailor the questions more effectively towards the research question and to elaborate more on
specific relevant topics.

This chapter elaborates on relevant results found during the empirical research aligned with the
scope of this research. The findings are presented by defined numbers for each interviewee as
assigned in chapter 3.3. After carefully analyzing the transcript data of the interviews there is
chosen to structure the findings in conjunction with the research approach. First, the perception
of CE in the furniture industry and BM are elaborated. Thereafter, the challenges the industry
faces for the implementation of CE related to the scope of this research are highlighted with
respect to the developed framework in chapter 2.5. Finally, the possibilities of blockchain
technology related to the found challenges of the industry are highlighted. The analysis of
interconnecting both viewpoints and discussion can be found in chapter 5.

4.1 Swedish Furniture Industry

In the transition towards CE, R2 explains that the economy needs to rebuild itself for CE:

“Building a circular economy, in essence, is really rebuilding the economy. And maybe
not completely from scratch. But we need to make sure that a few things that we've
arranged in the current economy need to be altered in order to make sure that a circular
economy can unfold. […] But I think it all comes down to is going from an economic
system, which is linear in nature and built on the idea of obtaining value from making
products, which are disregarded after a certain amount of time, to an economy that
values products, as well as add values and materials from a perspective or value
preservation.”

The transition towards CE is currently a hot topic within the Swedish furniture industry.
According to R3:

“The furniture industry […] is at the front line in developing, testing, and evaluating
different solutions for improving and increasing its degree of circularity”

23
To date, Europe discards roughly 10 million tons of furniture every year whereof 80-90% of it
is either incinerated or put onto a dump pile, the remaining is either recycled or reused (R3).
According to R1:

“It is a huge risk for companies to stay in the ‘old’ traditional way of delivering
furniture.”

The problem for the furniture industry is to overcome the competitive edge of the linear
economy, which is so efficient (R3). R3 claims:

“It is almost always cheaper to buy something new than to get it repaired.”

The view of R3 is embraced from a broader perspective for reuse, refurbish, repair, and share
by R1, R2, R4 & R6. R1 says:

“It is rather political pressure on the public administration to go for more reuse and
recycled furniture. It’s more of an incentive that we are now doing the transition rather
than kind of a price pressure.”

4.2 Circular Business Model

Regarding fundamental changes in the BM value creation towards CBM, R3 explains that the
three fundamentals of the BM - value proposition, value creation/delivery, and value capturing
- do not change. R3 explained:

“The business model is a question of creating and capture and providing a customer
value, a value that the customer is actually willing to pay money for. But the point is
that when you create that customer value, you must combine a business model and a
sustainable responsibility. If you fail either of those two, you will go into bankruptcy.”

R10 said in conjunction with R3 statement:

“I would say it is a matter of survival, you need to adapt and So, definitely it is
something that we need to get into and need to find a good solution for it especially for
our own products. So, that is why we are trying to incorporate circular economy within
our business model. So that when we design our products, it is more adapted to more
closed loop system. So, it is easier to refurbish or it is to take you take it apart and you
know stuff like that. So, we need to get in the loop as well. That, I would say is
essential.”

R2 explains that BMs in a CE transform from obtaining value towards a BM that adds value to
materials and preservation. Furthermore, R2 explains how the three fundamental pillars of a
BM change:

“So, a value proposition now needs to embody and encapsulate exactly the idea of how
we preserve value, and it should be communicated already from the value proposition
onward, then it affects indeed the idea of value delivery. […] you now need to think
about the route back as well, value delivery now encompasses, because we talk about
value preservation. It is all about how to make sure that goods that have been used, are

24
 returned, can be repaired can be remanufactured can be taken apart for parts or for
materials. So that really fundamentally changes and last but not least, the revenue
model the thing where we talk about value capture. […] How do we distribute amongst
the actors involved? How do we distribute on an equal basis or a fair basis?”

In addition to this R2 explains that BMs change from a single BM per company more towards
a general BM for different actors in the CE. This is related to the statement that there are
challenges in how actors along the value chain can be capturing value in an equal and fair basis.
R2 explained:

“What we have learned in our work on business models to the circular economy is that
the traditional way of looking at a business model is that it's very organization centric.
[…] If we go circular, you have an intrinsic need to start connecting your business to
other business businesses in order to make a single business model. work. And it's a
shared business model. It's not just one party that's involved. But it's a shared business
model in which you have multiple actors doing things.”

The CE opens up opportunities for so called ‘gap exploiters’ according to R4 & R6. In this
regard, R4 explained that these gap exploiters are companies that:

“Come in and seem like there is a need for this expertise that companies don't have.
So, they are going to be the one who does that.”

In conjunction R6 said:

“[…] they are not producing, they are coming in and exploiting the gaps that producers
cannot fill.”

As for now reuse, repair and refurbishment of secondhand furniture tends to be not economic
viable (more on this matter in Use, Reuse, Share, and Repair section in the next chapter). As
of to date, R3 said:

“And the cost is its cost to the environment, costs to the working conditions in low-cost
countries, for instance, the local environment, the climate, and so on. There are a
number of costs that are not included in the price. And if you can do that, then the
second hand or the circular products will become more competitive.”

R1, R2, R3, R4, and R6 said that to date in the business-to-business market companies are
experimenting with product-as-a-service offerings. In this way, customers rent furniture for a
fixed time or monthly payment and companies can prolong furniture and shift towards a service
company.

R1: “We are now in a transition to go from a typical traditional producing company to
a combination of a producing and service company. That is the long-term strategy,
which is more or less what we also see the entire business within furniture is going in
this direction.”

R1 adds to this: “I think when you go from delivering a product to the delivering a
service, the expectation of the customer change. So, it is extremely important that the
customer is more attractive to get the service than to buy the product.”

25
 R3: “[…] so there you have the value in the physical product, but if you have the value
in the service instead, so imagine, if you buy the possibility, the serves to keep your food
cool. And if the ownership of the physical product remains with the producer, that here
we get to completely other a different incentive for the producer to develop and produce
a product that will last a very long time.”

4.3 Challenges in the Transition to CE

During the interviews, respondents were questioned on the challenges as illustrated in the
theoretical framework of Figure 5. This chapter follows the same structure as the framework,
whereby the following challenges are elaborated: (1) Coordinating circular value chains, (2)
Circular product design, (3) Use, re-use, share and repair, (4) Collection & reverse logistics,
(5) Sorting & preprocessing, (6) Regulations & policies, and (7) Financial & economic.

4.3.1 Coordinating Circular Value Chains

All CE experts (R1, R2, R3, R4, R6 and R10) agree upon that within a CE the role of actors
within networks become critical. CE requires actors to collaborate and cooperate, whereas the
old linear BM is built based on competition. Hereby R4 clearly emphasizes:

“Pretty much anyone who want to do circular furniture would have to partner with
other actors, whether it is to maybe acquire capabilities that they already have […]”

In conjunction with R4’s opinion, R2 clearly explains the need for collaboration and new actors
in the market:

“Whereas in the new system, as I said, a circular business model demands

collaboration between parties. […] But in the circular economy, the idea is
collaboration. So yes, there will be new players, so they can bring new insights to the
game. And why not? We are not here to only give a chance to you, but also to others.
And if you can't cope with that, then you should not be in the game.”

Furthermore, R2 said:

“If we go circular, you have an intrinsic need to start connecting your business to other
businesses in order to make a single business model work.”

R10 explained that within the current supply chain there is a good collaboration and mutual
trust:

“I would say that this refers to the majority of the suppliers we have worked with for
many years, we often can have a very good dialogue with them and solve different
issues. So, I would not say that, that is the main problem. Many issues we can solve
together. And you can often find, collaborate, and find different solutions with the
supplier. So. there is in most cases a good collaboration”

R10 explained that industrial symbiosis is needed, and that legislation has to change as well,
which is further explained in the Law & regulation section:

26
 “I think it needs to be more collaboration between different actors. […] We need like
industrial symbiosis, we need more of that. companies working together to solve, you
know, the, like the blue economy concept, when others waste is another's energy. So
you need more industrial symbiosis. And we need some more collaboration and projects
between different companies. I think that is the key, and everyone's striving towards the
same goal. But the legislation needs to follow that as well.”

Aligned with the need of collaboration with different actors in the value chain, there is indicated
by R1, R3, R4, R6 and R10 the need for information and data sharing along the circular value
chain. However, R3 also clearly explains that there needs to be a certain incentive for actors to
share information:

“You need to have more information about the product from the original producer. And
of course, the original producer is not willing to share that information unless it's
something for him in it. Because information is very valuable and creating these
products and developing products cost money, it is a question of investments.”

R1 and R10 claim that there is a need for a traceability system to optimize the use of furniture.
In addition to this R1 says that whenever such a system is in place, large size companies can
perform maintain/prolong, reuse, and refurbish themselves. R4 refers more to different actors
that could facilitate the maintain/prolong, reuse, and refurbish by having data:

“Sharing information is important, […] I think for the other actors in the chain in terms
of, manufacturers and the ones doing all these other processes [..]. I think they
definitely need data to be able to do the pieces that they're responsible for.”

In addition, R10 explained that full traceability is also important using recycled materials to
know where they are coming from. This information is currently lacking, which makes it hard
for making furniture from recycled materials and getting environmental certificates. Further
R10 explained that sustainability is highly related to transparency:

“When I talk about sustainability, I think about transparency. So, it is an openness, a

transparency on what the challenges we are facing. So that's what sustainability is, for
me, we need to be more open, we need to work towards the same goal. And therefore,
collaborate between the different businesses.”

R3 elaborates on the fact that getting data along the value chain is challenging:

“It is a real challenge to get the information along the value chain. Every time a piece
of furniture changes the ownership, some information will get lost. That is a problem
because in the end, when you need to do something with that furniture instead of
burning it or put it in a dumb pile, you need some information. As for instance,
regarding the content or used chemicals. How can we ensure that the company taking
care of the waste gets the right information?”

R10 agrees and explained:

“Yeah, like I mentioned, if it is not all, very often crystal clear, with the legislation and
everything. So, you know, making sure that you have the right information. It's that you
have all the information that you need, and everyone can follow that. Like that's going

27
 to be a challenge, you know, to have the right information and to get everyone to follow
it. Since not all products are the same.”

In conjunction with the need for information along the value chain, R3, R4, R6 and R10
mentioned the law regarding the use of chemical substances as well as the EU initiation to
introduce an EU product passport. These two matters are further explained in the Regulations
& policies section but have a strong relationship with the need for data and information along
the value chain.

4.3.2 Circular Product Design

Regarding the opinion of R3, R4, and R6, the design of furniture determines the environmental
impact and the ability to repair, refurbish, and recycle. According to R3:

“80% of the environmental impact from a product is decided when you actually design
a product. So, depending on what materials you are choosing how you put the different
components together […] you will also decide what impact this will have from a
sustainability or an inventor point of view.”

R4 elaborate on the fact that the current furniture is not designed to take apart:

“How can they design products so they can both last longer, but also be kind of
reconfigured and up-cycled and things like that. So yeah, I think design for sure, and
most furniture is not designed to be taken apart.”

R3 and R6 both emphasis that a certain standardization is preferable. R6 gives the example that
in this way for instance a sofa’s frame can be refurbished easily, whereby R3 refers to
introducing an ISO standard on a global level that refers to that furniture is designed in a
circular way.

4.3.3 Use, Reuse, Share, and Repair

All respondents with CE expertise (R1, R2, R3, R4 & R6) agree upon that there are feasible
implications for all cycles of the Ellen MacArthur Butterfly diagram - maintain/prolong, re-
use, refurbish, and share - for the furniture industry. However, R1, R2, R4, R6 & R7 state that
there is a big difference in business-to-business and business-to-consumer markets. R3 said
that:

“People tend to want their own piece of furniture and are not willing to pay that much.
It’s difficult to sell a secondhand bed because who slept in that bed. Upgrading
furniture products is more for the business-to-business markets, where you have more
trends.”

In conjunction R6 explained that the interest in refurbished furniture in business-to-business is

growing:

“They all say that in the past two to five years, the demand for this type of refurbished
furniture has exploded. So, they say and still, I would say 95% is this business to
business, public organizations, hospitals, schools, authorities, who put this request and
actually are looking and are most importantly, willing to pay for refurbished furniture.”

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In that regard, R4 explained that there is a decent amount of focus on reuse, repair,
refurbishment, but still quite small and more established for commercial players than for
consumers.

R3 and R4 further explained that the cost of labor for refurbishment and repair is quite high in
Sweden, whereas new furniture that is mostly produced overseas is quite cheap. In contradict
to this, R1 who is focused on the business-to-business market said the opposite:

“[…] it's quite profitable to take back furniture, it still has some market value. Of
course, you have the transportation, refurbishment, but compared with virgin
production, I would say that the profit gap is quite good.”

4.3.4 Collection & Reverse Logistics

R4 & R6 explained that furniture is bulky and hard to transport product. R4 said the following
thing regarding reverse logistics:

“[…] The logistics kind of reverse logistics, because traditionally, furniture has been
a product that people buy. So, company sells it, it's out the door, and then it's done. But
now trying to figure out how do you get everything back? How do you keep track of it?
And I think especially because furniture is you know, big and heavy. It causes a lot of
challenges for transport and storage and it's quite costly.”

In addition to the bulky and hard to transport furniture, R3 explained that reverse logistics is a
true challenge:

“That is for sure to challenge and especially if you look at the Swedish furniture
industry, 60% of the production in Sweden goes on export. Which means that if you run
a small furniture producing company, […], and you're exporting to Italy, Portugal,
Germany, and to Norway, then of course it's a challenge. And I am not sure whether it
is really reasonable from a sustainable point of view to transport everything back to
the company.”

In addition, R3 said that because of the wide exportation of furniture it is important to design
the product in a smart way, preferably using standardization. For findings regarding design,
see the Circular Product Design section in this chapter.

4.3.5 Sorting & Preprocessing

Regarding the sorting & preprocessing challenge, there were not many opinions on the
feasibility of recycling. As already stated in the Circular Product Design section, 80% of the
environmental impact from a product is decided when you design a product (R3). Closely
related to the design of products R6 states that regarding recycling materials there is a challenge
in how recycled materials in furniture look. R6 says that recycled product could look different
than customers are used to:

“Companies struggling also because they want to introduce these recycled materials
into their products. But then how does it look, I know they cannot get white transparent
lamp from the recycled products because they are grayish and not so transparent. So
again, then it's been on the problem that customer acceptance of this kind of products.”

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However, R1 explains that huge challenge in recycling is poor performing flows and
contamination of materials:

“The problem when it comes to recycling today is that we have poor performing flows.
You mix up the materials, contaminated the materials in a way so that they are not
useful for the high-level purpose. So, I think that's a huge challenge. And that's also
reason why if we could reuse the material in our own production based on taking it
from our own products, we could be 100% sure of what the content of the material is.”

In conjunction with the contamination of materials, R6 explained, from experience a long time
ago, that recycling is mostly done by incinerating furniture and pull-out metal using a magnet.
Because according to R6:

“It is impossible to put somebody who would unscrew all the small metal pieces, so I
think they burn products first and then extracted the leftover metal.”

4.3.6 Regulations & Policies

Challenges in the regulation and policy start with the fact that the current legislation is adapted
for a linear economy and not prepared for the circular economy (R3 & R4). In Sweden, there
is a current law that prohibits the reuse of furniture (R4) when there is a lack of information
about what chemicals it contains. Moreover, R3 mentioned the legislation regarding chemicals
and product safety. Regarding this, R4 explained that:

“You can be liable if someone get hurt by using the product. This is also very difficult
if you put out somebody else's product on the market if it is secondhand.”

R3 adds to this statement:

“And if you're not able to inform the customer and tell the customer what chemicals
you have in the product, you're actually not allowed to put it on the market. And this
means that if you as a commercial actor, take someone else's furniture, and you bring
them in to you, you make sure that they look right, and then you put out an on market
again, you're not allowed to do that, unless you can inform the customer what they
contain. And this is the law. And it's the law of within the whole Europe and the
politicians, they have not yet solved this.”

Refurbishment companies have no idea what chemicals furniture contains and if the type of
chemicals is still allowed to use under the current regulation (R4 & R6).

On the EU regulatory level there is ongoing discussion on the introduction of an EU-level

product passport for products (R3, R4 & R6). This passport could lead to the extension of
producer responsibility to take back their products and deal with the waste (R4). R10 said that
the EU Product Passport can help with establishing transparency, uniform way of working as
well as traceability. This passport is being researched currently and according to R4:

“Help to incentivize recycling, ideally, also incentivize reuse, and then better design,
because if the producer is responsible for the product, at the end of the day, they're
hopefully going to design in a way that will last longer or be easier to repair and things
like that.”

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The product passport can be seen as a “Digital Twin” according to R6, whereby information is
stored on what kind of materials and chemicals are been used by the production of furniture.
R3 & R6 explained that the EU is doing research on how furniture should look like and
designed to be recognized as circular. R10 adds to this that it can help by making the transition
between different companies more uniform:

“There is no uniform way of doing things. Everyone's like, doing their own thing. And
then you need to have something that like, connects it. Because now everyone is trying
different things. And it's not very uniform, it's quite spread, but everyone's doing
however.”

4.3.7 Financial & Economic

Besides the challenge of high labor cost for refurbishment and repair - elaborated in the Use,
Reuse, Share, and Repair section -, no findings are found that directly contribute to this
research. Hence, this challenge is not further elaborated in the discussion part.

4.4 Blockchain Technology for CE

The fundamental benefits and implications of Blockchain technology, stated in the literature
review, are recognized by all respondents. This refers in particular to the initial intention
addressed with the introduction of Bitcoin, the creation of trust in a system that lacks it. R9
highlights the entire advantages of Blockchain by stating:

“First and foremost, of course, trust. […] Then you have efficiency, reliability,
immutability, transparency, traceability, information security and automation.”

R9 continues by emphasizing the nascent development stage of Blockchain technology:

“Blockchain is like Internet 1995. We are just starting to dream and imagine what can
be possible. […] It's democratizing actually a lot of legacy systems. So, what we see in
the crypto world is nothing else than a revolution of the financial industry. And that's
just the first application of Blockchain. It's still in the beginning.”

However, R5, R7 & R8 also agree that Blockchain has created a strong hype and become a
buzzword, leading to it being seen as the one revolutionizing technology for any application or
industry. According to R5, and R7 it is to critically evaluate, prior to thinking about the
implementation of a Blockchain solution, what are the underlying value drivers of Blockchain
technology and in which context they imply benefits for individual use cases. R7 states:

“You can use Blockchain for transactional cost advantages. […] Or you have it to add
value through automated smart contracts. These are very different value propositions.”

R5 further outlines:

“It is very important to actually think about the exact value that it brings. I think it can
be a super powerful tool, but this just does not apply to every solution. The main benefit
it brings, is this kind of trust establishment between parties.”

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R5, R7, and R8 are consent in the opinion that in systems or networks where trust is already
established, respectively constitutes not a major issue, Blockchain technology does not
contribute any significant value in comparison to traditional, centralized data infrastructure
solutions. R5 critically remarks:

“If all the stakeholders trust each other then you don't need a Blockchain.”

R8 explicitly highlights that the mere functional aspect of data sharing in networks or supply
chains is also possible without the need for Blockchain technology:

“If Blockchain was not there, I would say anyone can sit down and design a central
system, like a database with an application, in which we will have the different roles
that are part of this chain or network. […] The different roles will have some specific
processes that they are responsible for, with a database in which we keep information,
and we give access to everyone, and everyone puts information in.”

R8 adds:

“In terms of the mere functionality, Blockchain will not really add any wild or magical
ingredient compared to what can be achieved already by other computer systems or
normal database applications.”

R8 continues and even points out that Blockchain technology creates additional burden:

“To maintain a safe Blockchain system, all the participating nodes are expected to keep
a copy of the whole database […]. So, it creates additional burden on all the
participating holders because they all need to follow up and be actively participating
in the maintenance and in the end in the creation of the log itself.”

However, all respondents (R5, R7, R8, and R9) acknowledge that in applications where trust
and data manipulations constitute threats, Blockchain technology provides significant value
gains due to its decentralized nature, highlighted in the expression of R7:

“You only need it if manipulation of data becomes an issue, where it would be costly
or risky.”

Considering the different types of Blockchains, all the respondents (R5, R7, R8 and R9) had a
critical view on private and consortium Blockchain types. Accordingly, it is to think about if
those types of Blockchains provide the initial features associated with Blockchain technology.
In that regard R8 states:

“If you ask me personally, that's not a decentralized solution. And I'm even a little bit
like more orthodox in that sense. […] It's a Blockchain as a data structure, in terms of
the way you structure the data it contains, but if Blockchain is the real philosophy
behind it, which is this decentralized nature, this nature of allowing everyone to have
access and minimize the chances of central authorities […], then that's completely the
opposite.”

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System Responsibility & Ownership

The experts R5, R7 and R8 agree that one issue of shared database systems is the question of
responsibility, in particular with reference to the aspects of investment and maintenance.
Hereby, R5 states:

“If you do have a central database, you need someone to manage this central
database.”

R8 further states:

“In a Circular Economy in which we have different stakeholders, one of the first
challenges is that none of them maybe would like to take this responsibility. […] It
could be that […] all of them would like to benefit from something like this, but none of
them wants to invest extra resources, money, human power whatsoever to went in such
a system.”

The experts R5 and R8 also remark that this question can be independent of trust as highlighted
by the statement of R8:

“Sometimes even the stakeholders trust each other but […] none of them has interest
into investing resources in maintaining an application or a central provision point for
it. Or they cannot reach an agreement […] whom they vote for to act as the trusted
third party.”

R7 further notes that in a CE there might be by default no actual owner of the ecosystem, which
further underlines the unclear question of responsibility. Accordingly, this brings Blockchain
technology into play through its decentralized nature that is also reflected in responsibility. R7
states:

“You only need a Blockchain if there's no natural owner of the supply chain or
ecosystem. This this is important in […] Circular Economy, as there is often not an
actual owner post sale. […] So, the supply chain moves into an ecosystem, with a lot of
different actors. […] And that's why Blockchain could be useful, because there's no
natural owner of the things.”

Traceability & Truth of Information

In regard to traceability, all the experts (R5, R7, R8 and R9) agree that Blockchain technology
implies the unique advantage that the entire data history is retained and cannot be
retrospectively tampered with, highlighted by the following statements of R5, R7, and R8:

R5: “In the end you just stack up new versions of information, but you can never
actually remove it. You could always go back to the previous version.”

R7: “Everyone can see the changes you made. So it's not like they can mess up the
data.”

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 R8: “Once a piece of information had been recorded in the log, it's quite difficult,
almost considered impossible given current technologies and processing powers to go
and change information that had been recorded in a Blockchain.”

On the other side, the experts (R5, R7, R8, R9) emphasize that with the mere usage of
Blockchain there is by default no concomitant assurance for the actual truthfulness of the data
itself. Accordingly, in most applications of Blockchain, it remains the need for an external
interface of data entry, that is subject to manipulation or human mistakes. Hereby, R9
emphasizes:

“The garbage in, garbage out problem, which is inherent to any data related system is
of course also a problem for Blockchain. […] In any system where humans operate,
any forgery or negligence of data can occur.”

According to some statements, this would lead indirectly again to the dependency on third
parties for authentication as the Blockchain itself can not verify the validity of externally
entered data, expressed by the following statement of R8.

“We still have this issue of authenticating. […] We need some authority, or some
technology that will enable to have a certificate. […] If I don't have these mechanisms,
then regardless of whether I use a Blockchain […] or a traditional system, then we only
rely on trusting blindly the declaration of the different stakeholders.”

R9 states:

“Blockchain always is just part of the solution. So, just as any database solution it is
made for ensuring that information is kept in the right way, and perhaps also in a
standardized way, but of course, the behavior and the data that gets recorded on the
Blockchain still needs to be somehow monitored.”

Referring to the indicated role of complementary technologies, R8 added:

“It's just a log. So, if it is to be trusted, from the veracity of information, then it needs
to be combined with other technologies, […] sensors, for example. […] And you can
equip this device with the possibility to sign information that it had sensed.”

R9 also agrees on that and draws a visual comparison:

“Blockchain creates the data infrastructure. But it's not the only technology, we need
to look at. […] You can think of it as your human body. So blockchain is kind of your
backbone. [...] IoT is like your skin or your senses where you can sense and kind of
process information in the real world.”

Nevertheless, all the experts (R5, R7, and R8) admit that the before mentioned aspect of data
irreversibility might inherently decrease the intentions to enter wrong data as it can be traced
along with the data history. In that regard, R8 emphasizes:

“So then, very easily everyone in this whole kind of system or schema, we'll be able to
detect that I have acted maliciously and reported something that hadn't been true.”

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R8 Continues with the following statement:

“That could be deterring in the first place to make false claims, because I will know
that somewhere down the chain, this will end up with other stakeholders that may reveal
my malicious claim.”

R7 agrees on that and states:

“By having transparency, you almost create objectivity over time, right?”

Interoperability

R5 & R8 emphasize that another advantage that comes with Blockchain technology is the
feature of interoperability. Referring to the integration of different networks and clusters, R8
states:

“If we think about the traditional systems, where then all stakeholders in Sweden, for
example, are having their own system, and the ones in Singapore their own, then you
need some integration points in between them so that they can talk to each other. […]
With traditional systems, technically speaking, this is quite challenging.”

R8 further states that as long as the parties agree upon the abstract level of rules and conditions,
for example how to log and encode information, there is no technical challenge related to the
integration with Blockchains.

Value Capturing & Distribution

It is commonly agreed upon by R5, R7, R8 and R9 that the application of Blockchain has the
potential to impact value capturing and distribution among the stakeholders of the CE-
ecosystem. Hereby, R9 emphasizes:

“You would have to reassess, who's actually contributing which value. So typically,
Blockchain has also brought this intermediation and cutting out the middleman effect.
And typically, they don't actually do anything, but just live off information asymmetry,
and controlling the market by bargaining power because of size. But in terms of value,
for the singular product, they don't do anything, because they're kind of put in the
middle.”

R8 further acknowledges the range of possibilities in regard to Smart Contracts:

“Yes, definitely, as I said, a Smart Contract is a small program that runs on the
Blockchain, and it provides [..] infinite possibilities. […] [For example] registers of
furniture pieces that are provided from company A, so you put rules in there, […] and
you can allow the further selling of that piece, for example […] and can give back a
specific piece of monetary value to x or y or z.”

On the other side, the initial value proposition of Smart Contracts, the efficiency gains, have to
be seen in the context of the number and sort of transactions that take place in the life cycle of
the furniture. Hereby, R7 assumed in regard to the Furniture Industry:

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 “I think for Smart Contracts there are too few transactions to make a difference. It's
not repetitive enough.”

But in the opinion of R7, Blockchain technology might help to establish fair market
mechanisms by establishing transparency about the provenance and worth of used products.
This mainly for strengthening small businesses and consumers instead of large furniture
manufacturers. R7 states:

“It would increase transparency for an aftermarket where actors don't really care
enough about the product to be specialized on it. […] “This could help a lot of small
players to know what the furniture is and the condition and therefore create a fair
market mechanism.”

R7 specifically highlights the importance of a fair market mechanism for small business
engaged in the CE:

“Maybe from their perspective, you need a Blockchain because they all have so much
to win or lose, depending on the price.”

Furniture Product Passport

In relation to the discussion on the before mentioned European furniture passport, which could
contain information about the materials used, especially chemicals based on required
regulations of tracking and further relevant information, Blockchain experts see an illustrative
use case that could benefit from the implementation of Blockchain technology. R7 relates this
topic again to the fundamental question of the underlying value drivers of Blockchain,
especially trust, by stating:

“You could argue hazardous materials is a critical issue, if you don't do it the right
way. I think there's a natural need for it. […] For refurbishment, maybe it's important
to track what's happened to it, for example that no one starts pretending they don't have
used bad chemicals. […] This will help you to even be able to refurbish it.”

R8 additionally refers to the aspect of decentralized system responsibility and that products
might pass through different geographical clusters along the CE value chain. This is highlighted
by the following statement of R8:

“No single country would have the sole responsibility of maintaining its own system. It's
a common system in that we would all collaborate and maintain. In that specific scenario
[…] I can see an advantage towards using Blockchain technology. […] In fact, it also
makes it easier for users who would like to verify these passports or just check if a passport
exists for a specific piece of furniture or not.”

36
5 Discussion
This section gives the answer to the main question of this research by discussing the empirical
findings with reference to the literature review. It elaborates on the most prominent findings,
despite some further ideas as well as the degree of contradiction in the individual perspectives
that have been found.

The literature review has indicated that data management, shared information, and traceability
across the circular value chain become highly relevant for the transition course to a CE
(Kouhizadeh, Zhu and Sarkis, 2020). This also applies to the Swedish Furniture Industry which
acknowledges that the role of data constitutes an essential lever for the effective
implementation of CBMs and the CE-ecosystem. The empirical findings have shown that the
challenge of coordinating circular value chains in the context of CE refers in particular to the
need for traceability, mostly to physical traceability. This becomes especially relevant for
organizations that switch from mere producers to providers of PSS or strive for extended
control and liability over their products after the point of sale. An overview about the condition
and location of products hereby would benefit actors to plan subsequent activities to increase
the circularity level of their products. Regarding shared information, the Swedish Furniture
Industry highlights the need for information on spare parts to extend the overall lifetime of
furniture products. Also, publicly available information about the ingredients of products and
information on repairability would facilitate activities for independent actors and stimulate the
degree of circularity in the entire Swedish Furniture Industry.

Referring to Blockchain technology, the literature review has shown that it is perceived as a
disruptive technology that has the potential to transform various industries and applications
including the implementation of a CE (Kouhizadeh, Zhu and Sarkis, 2020; Lacy, Long and
Spindler, 2020). However, this view is challenged by the fact that the majority of interviewed
experts in this field have a neutral or even a slightly negative view on Blockchain technology
for particular applications. Accordingly, Blockchain technology does imply significant
benefits, but it has also created a strong hype which leads to the phenomenon that it is seen as
a catalysator for everything. It is therefore essential to be aware of the actual value propositions
of Blockchain technology and to evaluate these for their relevance in the respective
applications. The empirical findings highlighted that the main value proposition of Blockchain
technology constitutes the establishment of trust in regard to data and transactions between
different parties. This through its inherent features of decentralization and irreversibility. The
question of whether missing trust states a significant problem within the context of CE in the
Swedish Furniture Industry cannot be assessed in general and might has to be considered from
various angles and at different levels. However, it is to question here, which data is subject to
manipulation in regard to CE for furniture and which parties would have a reason to act
fraudfully. Those questions couldn’t be answered within this research and should be subject to
further research.

Taking into consideration collaborative business relationships, which are emphasized in the
course of the transformation to a CE (Antikainen and Valkokari, 2016; Narayan and Tidström,
2020), the necessity of trust establishment between key business partners is to call into
question. The reason is that collaborative relationships are usually built upon mutual trust.
Based on the empirical findings it can be concluded that today’s actors in the Swedish Furniture
Industry act and collaborate in the matter of trust. It is most likely that this will continue in an
even more collaborative way with new actors that correspond to the requirements of the CE.
Furthermore, for organizations that outline a high degree of integration in regard to the circular

37
value chain, meaning that they embrace several processes, for example, manufacturing,
refurbishment, and reselling, trust may play a minor role. One trend that supports this is the
transition to PSS which is currently perceive in the Swedish furniture industry, predominantly
in the B2B market. PSS inherently implies a high degree of centralization and integration
potential due to the continuous product ownership and responsibility of the organizations. Even
though the central company might not cover all processes by themselves, it is to assume that
these conditions favor the establishment of close collaborations with key partners by which
trust becomes less an issue. This indicates that Blockchain technology in integrated supply
chains or networks of business partners attached to one central organization may not contribute
any additional value above traditional, centralized database systems in case the actors trust each
other. However, in overarching eco-systems where there is no responsible entity by nature, or
where parties have anonymous and loose relationships, the capabilities of Blockchain might be
very useful if certain data should be shared in a trustful and transparent way.

In regard to Smart Contracts, the impact would depend on which type of transactions take place
in regard to CE, in what frequency, with which complexity and to what extent they could be
automatized. The possibilities of Smart Contracts are manifold and their exploration is in a
rather nascent stage. Nevertheless, lacking transaction efficiency has not perceived as a major
challenge to the CE transformation in the Swedish Furniture Industry. From that point of view,
it is legit to state that Smart Contracts have the potential to strengthen the overall efficiency of
business- and supply chain operations but may not be seen as a driving force in regard to the
CE transformation of the Swedish Furniture Industry. However, it has been argued that with
the transparency provided by Blockchain, the inherent value of furniture products could be
publicly apparent and allow for a fair distribution of the captured value among the stakeholders.
That transparency would especially benefit consumers and actors of the circular value chain
with less market power, subsequently stimulating gap exploiters and the overall ecosystem.
Nevertheless, it is to be aware that for such a scenario everyone would have to take part. This
seems unrealistic that every organization would share price details and transaction histories
voluntarily if there is no incentive to do so.

With reference to traceability, it has been highlighted in the empirical findings that Blockchain
refers to a technological concept for storing and managing data. Without complementary
technologies such as sensors or human support, no conclusions can be drawn about the location
and status of products. From that point of view, Blockchain does not provide any value in terms
of physical traceability as it is just a ledger that includes data that is entered. The aspect of
traceability, Blockchain technology is mostly referred to, stems rather from the fact that it is an
irreversible ledger depicting the entire history of the entered information. This irreversibility
in turn allows tracing the entered information back. In the end, this is also the aspect that
ensures trust. Because also with Blockchain there remains an external interface for data input,
which does not allow for the actual truth of the data. But due to the fact that it can be traced
back, it lowers the intentions for actors to make false statements.

However, as indicated before there may remain an unwillingness for actors to publicly share
information about their business operations or products when there is not any direct benefit or
some kind of incentive. As companies see information as a valuable asset, they tend to share
the required information only with a trusted business partner or when required by law and
regulation. Sharing product information throughout the circular value chain could put a
company’s business in danger as other companies see opportunities to use the information to
their benefit. The empirical research showed that the challenge of regulations & policies is
acting as a barrier for more exploration of CE. To date, it is required to share information about

38
what chemicals the furniture items include. Under the current regulations, this does not allow,
respectively discourages so-called gap exploiters in the resell, reuse, refurbishment, and repair
phase to resell furniture as the liability of used chemicals by manufacture withdraws when
resold and shifts to the reseller. To extend the lifetime of furniture there needs to be a change
in the current regulation, whereby the liability stays at the actors that add the chemical to the
furniture even after other parts are repaired or refurbished.

Besides the need for information from the chemical regulation perspective, participants
mentioned the current discussion about the implementation of an EU Product Passport. This
passport could be the gateway to required information about certain materials and chemicals
that have been used by the production as well as by refurbishing and repairing furniture. In this
way, every actor that tries to prolong the lifetime of the product or preserves the materials by
recycling can have access to valuable data and can make discission upon this. As a product
passport becomes required, this will lead to the incentive to share information as it is required
by law. The product passport equally levels the playfield of all companies in the industry with
a standardized set of information that is publicly available. In particular, it has been highlighted
that publicly available data about the materials and chemicals enables various activities of the
circular value chain, e. g. repair, refurbishment, or recycling. However, it is also important to
question which kind of publicly shared data benefits the overall CE implementation in the
Swedish furniture industry.

Regarding the EU Product Passport, Blockchain technology could play a significant role. While
looking at the fundamentals of Blockchain technology, it enables trust, transparency, and
irreversibility which is essential for the EU Product Passport to be implemented efficiently.
The decentralized nature benefits that not one party or country is responsible for maintaining
the system. These passports can, via Blockchain technology, being verified and audited by
certain governmental bodies or independent auditors. The technology gives companies the
freedom to access information about a particular piece of furniture as well as the ability to
change it based on verification of other actors.

39
6 Conclusion
This section summarizes the results that answer the research question of this research.
Thereafter, due to the scope of the research, there is elaborated on limitations and future
research. As mentioned in the introduction part, this research gives an answer to:

What could be the potential role of Blockchain technology in the transformation towards a
Circular Economy in the Swedish furniture industry based on the perceived challenges?

After executing this research, there can be concluded that the role of Blockchain technology in
the transformation towards CE in the Swedish Furniture Industry is less significant than first
anticipated. Based on the empirical findings, there can be concluded that the key driver of
Blockchain technology is an environment where there is a systemic lack of trust related to
transactions and data between different parties. In such circumstances, Blockchain technology
does imply significantly added value due to its inherent features of decentralization,
irreversibility, and transparency without the need for intermediary third parties.

Based on the defined challenges towards CE for the Swedish Furniture Industry, there can be
concluded that the main challenges, related to the research topic, can be narrowed down to the
overall importance of data, traceability, and sharing of certain information across the circular
value chain, that is part of the coordinating circular value chains challenge of the theoretical
framework. However, referring to the question of what the potential role of Blockchain
technology has to these challenges, resulted in a rather neutral view. The reasons, therefore,
are manifold. One reason is tight collaborative business relationships in the form of a supply
chain. Those are usually built upon the prerequisite of mutual trust. This is supported by the
Swedish market conditions, in which suspected trust issues between the actors are currently
not perceived as a major challenge regarding the transition to a CE. A further reason is the
emergence of product-service systems in the Furniture Industry, by which the level of control
is increased and with it the possibilities of value chain integration and centralization. From that
point of view, Blockchain technology does not deliver any significant value, that cannot be
reached with centralized, less complex data infrastructures.

However, Blockchain technology lends itself to play a significant role in sharing data along the
value chain regarding the chemical regulations as well as the currently discussed EU Product
Passport, that are part of the regulations & policies challenge of the theoretical framework.
First of all, empirical research showed that organizations in the Swedish Furniture Industry are
required to be able to provide information about the chemical ingredients of furniture items.
Under the current regulations, it is not allowed for third parties to resell and refurbish used
furniture unless you can inform the customer about what chemicals it contains. Hand in hand
with the lack of data about the chemical usage along the value chain, there is found that the EU
is looking to introduce a Product Passport, that requires manufacturers to share certain
information about the products they produce. This passport can help with the chemical
regulation challenge the furniture industry currently faces as well as sharing information about
what materials have been used. This information is valuable for actors in the circular value
chain to know how to repair, refurbish or recycle furniture and needs to be updated every time
physical parts of furniture are changed to benefit the whole value chain. As a value chain can
be seen as a complex ecosystem with a lot of different actors, Blockchain technology can play
a prominent role in data sharing. The nature of an ecosystem is that no one owns it or is
responsible for managing and maintaining data. Due to the collaborative complexity between
a lot of different actors, there could potentially develop a lack of trust about the data itself or

40
sharing it in contrary to tight collaborative business relationships in the form of a supply chain.
Blockchain technology solves this problem by providing a decentralized data sharing and
verification network, whereby different contributors have to verify transactions, in this matter
data transactions. Approved transactions are irreversible which built trust and transparency
about actions each actor executes. Due to the potentially growing complexity and actors in an
ecosystem as the Swedish Furniture Industry, Blockchain enables every incumbent to directly
participate and benefit from the data. However, Blockchain links a physical product with a
digital twin, Blockchain cannot ensure that the data by actors in the ecosystem is trustworthy.
But the ability to track every transaction back to the origin makes it easy to see where
misleading data entered the chain.

7 Future Research and Limitations

This research has done an illustrative case study, whereby the implications of Blockchain
technology on the CE transformation in the Swedish Furniture Industry have been elaborated
on a non-technical perspective. The conclusion is developed on literature and empirical
research, based on a one-way data gathering principle. Hence, the conclusion is not fed back
to participants due to the limited time for this research. Meaning that the concluded Blockchain
technology implications may need to be verified in future research. As this research outlined a
potential use-case of Blockchain technology in regard to the EU Product Passport in
combination with the chemical regulation, further elaboration is required to practically test if
this is feasible. It needs to be determined if the foreseen possibility is embraced by stakeholders
such as the EU, actors in the Furniture Industry, and local law and regulations according to
chemicals. All stakeholders must agree upon this to gain efficiency and a universal implication.

41
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