WP2: Developing a Regional Circular Economy Governance Model – Defining Circular Regional Clusters
20/04/2022

Authors: Adamus Jagoda, Chądzyński Jacek, Justyna Trippner-Hrabi & Przygodzki Zbigniew

An important task in WP2 and the whole FRONTSH1P project is the definition of an effective policy framework and governance model for the regional circular cluster to be established. The first logical step in this endeavour was to define what Circular Regional Clusters (CRC) are.

A circular regional cluster is not the same as an industry cluster. One might think that the task of defining an effective governance model is about applying the concept of an industrial cluster to an industry sector that is directly linked to environmental protection and whose goals thus take into account the Sustainable Development Goals (SDGs). However, this is a false assumption. The answer and correct definition of a circular regional cluster must be sought between two concepts: the theory of industrial clusters and the theory of industrial symbiosis. A CRC is neither an ordinary industrial cluster, as it does not consist of companies from the same or related sectors, which fundamentally differentiates the two concepts. Nor is a CRC just an industrial symbiosis, as the primary goals of the economic network are not limited to the SDGs and the management of the closed loop of natural resources. What then are the main characteristics of CRCs?

Circular regional clusters are a kind of locally embedded economic network. The embedding is in this case closely linked to the existence of short supply chains for raw materials and goods. In this network, citizens (society) play an important economic role in addition to the classic actors for helix models (triple, quadruple, quintuple). Society is here seen as a co-producer. It is an active, economic market participant. The CRC is a multi-sector network due to the thematic breadth of the circular economy. An important area of interest for the CRC is waste, which is perceived as a raw material – moreover, as a multi-component raw material. Therefore, partners from different economic sectors are involved, especially in its application and development. A CRC is built on value chains that develop between companies from different sectors. This type of relationship is based on both individual and collective benefits. However, the functioning of this type of cluster requires an appropriate environment – an entrepreneurial social ecosystem. It is a combination of the characteristics of an innovation milieu (industrial cluster) with the characteristics of ecological systems by including the inhabitants as producers of goods and raw materials.

Circular regional clusters use an open innovation model. The processes of knowledge diffusion and mutual learning are in the nature of collective intelligence decisions. Therefore, collective decision-making capacity is more important than a potentially better individual solution in a given community. This method of optimising decisions arises from the limitations in the perception of the circular economy market, which mainly concern legal and formal barriers as well as market failures, and secondly the absence of incentives and the differential effectiveness of incentive communication models. A CRC can be regarded as a business organisation because profit is the strongest motivator for the engagement of partners, including society in the circular economy. Therefore, relations between circular economy market participants have a competitive dimension in addition to cooperation. The business model for organising the local circular economy market in the CRC formula can take many forms, but its most important feature is the dominant character of regulations, enhanced by Circular Systemic Solutions. CSS in turn are technological and business solutions for circular regional clusters that are developed in a public-private partnership and whose aim is territorial regeneration based on a multi-stakeholder approach that puts the needs of citizens at the centre of development.

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