FINANCIAL VIABILITY OF CIRCULAR BUSINESS MODELS IN TYRE RECYCLING INDUSTRY IN LATVIA

The end-of-life (EOL) tyre recycling industry in Latvia is encountering economic and sustainability challenges, which require solutions by various stakeholders. Improvement of tyre waste management and recycling is important within the context of sustainability and the new streamlining of circular business models. Its importance is also recognized at the European Union level in relation to the further strategic goals and the European Green Deal. In addition, the tyre recycling industry in Latvia demonstrates a relatively unfavourable financial situation, which is one of the most significant factors hindering the introduction of new circular business models. The aim of this research is to clarify the challenges related to the financial viability of tyre recycling companies adopting the new circular business models. The main research methods are literature review, semistructured in-depth interviews, case studies and financial analyses. There are large stocks of EOL tyres and on average just 50 % of them are recycled. The tyre waste management companies are not motivated to supply EOL tyres to recycling companies. On the other hand, due to various reasons, most of the tyre recycling companies are not working with their maximum production capacity. The research results reveal that the tyre recycling companies mostly run traditional and inefficient business models that require large operating costs and ensure comparatively low profitability. In order to enable more efficient and environmentally friendly tyre recycling process, the companies should implement new, investment intensive technologies. Yet, they face critical issues of liquidity and financial returns. Major conclusions are related to the necessity to develop several business models interlinked within one portfolio thus ensuring the manufacturing of various products with higher added value and quality. This may maximise the profits and improve the financial viability of tyre recycling business modelspublishersversionPeer reviewe

End-of-life tyre recycling : Going beyond to new circular business models in Latvia

Funding Information: Many thanks for the opportunity to conduct and publish this research to BA School of Business and Finance (Latvia) with the research project ?Management of Circular Business Models and Projects within Economy of Latvia?, and Liepaja University (Latvia) with the project ?Promotion of research, innovation and international cooperation in science at Liepaja University (No 1.1.1.5/18/1/018)?. Publisher Copyright: © 2020 Latvia University of Life Sciences and Technologies. All rights reserved. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.The end-of-life tyre recycling industry in Latvia faces significant issues on a national level and on a micro business level. The aim of the research is the clarification of opportunities for new circular business models within the tyre recycling industry in Latvia. The main research methods are literature review, semi-structured in-depth interviews, case studies, content analyses, and quantitative statistical analyses, qualitative and descriptive analyses, allowing providing integrative interdisciplinary assessment. In addition, design-thinking methods contributed to conclusions on future opportunities of new tyre recycling business models. The research shows that the system is insufficiently supervised, and it does not facilitate the development of new environmentally friendly technologies and circular business models. A large share of tyres ends up in waste landfills, are incinerated or illegally stored, whereas only a small number of them are recycled. The traditional tyre incineration methods are ineffective and create adverse effects on the environment. Tyre recycling companies in Latvia are not active in adoption of new technologies and business models. This justifies the topicality of the research problem. The research results reveal that globally new opportunities are being actively explored on how to produce higher added value products from materials obtained in the tyre recycling process. In Latvia, it is possible to develop new financially viable circular business models in tyre recycling industry, for instance, by producing tyre-derived aggregates for construction materials or pavement subbases. Besides the need for dynamic innovation capabilities of entrepreneurs, development of new business models in tyre recycling requires collaboration among various stakeholders. In addition, the government has a significant role in implementing the Green Public Procurement for the industries utilizing products gained as a result of tyre recycling.publishersversionPeer reviewe