Investigating the influencing factors on the formation and development of circular economy businesses: a multiple case study of medical equipment refurbishment companies

Objective: The transition to a circular economy paradigm, where production chains operate in a closed cycle minimizing waste and pollution, necessitates transformative changes in regulatory frameworks, institutional structures, cultural norms, and organizational practices, as well as innovation in products and processes. Consequently, successful implementation of the circular economy relies on supportive government policies and the emergence of circular economy businesses. Effective policymaking in this domain is contingent upon comprehensive research to understand the multifaceted aspects of the issue and to develop policy solutions that facilitate this transition. The present study aims to investigate the factors influencing the formation, growth, and development of businesses in the refurbishment sector, a critical area within the circular economy. In the refurbishment process, with the aim of returning obsolete equipment to the production cycle or increasing the efficiency and lifespan of used equipment, these products are renovated and updated in terms of hardware and software and companies undertaking refurbishment operations typically guarantee the proper functioning of the refurbished equipment for a period of one to three years. Over the past decade, the circular economy has garnered significant attention from researchers, yet the refurbishment sector, a key strategy within the circular economy, has received relatively less attention so there is a pressing need to examine the various dimensions of refurbishment, particularly in developing countries such as Iran.
Method: The present study employs a qualitative methodology, and the strategy used is multiple case study. The case studies were selected from companies that participated in the joint call of the Ministry of Health and the Vice Presidency for Science and Technology to refurbish medical equipment. Data collection involved conducting in-depth, semi-structured interviews with the CEOs of the selected firms, as well as with all relevant managers from the Ministry of Health and the Vice Presidency for Science and Technology who were involved in the refurbishment program from 2019 to 2021. The collected data were subsequently analyzed using qualitative content analysis and data coding.
Results: The establishment and development of medical equipment refurbishment companies are influenced by a complex interplay of various internal and external factors. External factors include government support, conflicts of interest among stakeholders, public procurement policies, the impact of the Covid-19 pandemic, legal and regulatory infrastructure, ownership structure of medical centers, and availability of spare parts. Internal factors consist of communication networks within the company, knowledge and expertise of personnel, leadership and management, project management capabilities, and pricing strategies. The study also identified factors that contributed to the failure of some companies to enter the medical equipment refurbishment market, such as lack of resources during the pandemic, insufficient economic incentives for refurbishment, and ambiguity in business models for refurbishment. Results also show the establishment of these businesses has resulted in numerous economic, social, and environmental benefits and has caused formation of new soft institutions. The economic benefits include preventing currency outflow by reducing medical equipment imports and providing access to refurbished equipment at approximately one-fifth the price of new equipment. The social benefits encompass the accessibility of refurbished medical equipment with high efficiency and reasonable prices for medical centers in less developed cities. Preventing valuable equipment from becoming scrap metal and waste, as well as saving costs related to the re-production of these products, are some of the environmental benefits. The institutional changes carried out at the national level include the formation of new regulations governing the activities of medical equipment refurbishing companies and public procurement policies mandating the use of these services by government medical centers
Conclusion: The findings indicate that the identification and exploitation of opportunities by companies to reintroduce obsolete medical equipment into the usage cycle has fostered circular entrepreneurship. Based on the findings, the process of formation and development of refurbishment companies is presented in the form of a conceptual model, which includes factors effective in identifying the opportunity, internal and external factors influencing the exploitation of the opportunity (formation of related businesses) and The results of the formation of these businesses. The research findings highlight the need for policymakers and industry stakeholders to consider this process and its constituent factors when developing strategies to promote sustainable and effective refurbishment practices. In this regard, policy suggestions for implementing circular economy strategies and helping to form related businesses, especially in medical equipment field, are presented.