Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment

Istudor, Nicolae et al. Article Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment Amfiteatru Economic Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Istudor, Nicolae et al. (2023) : Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment, Amfiteatru Economic, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 25, Iss. 62, pp. 48-62, https://doi.org/10.24818/EA/2023/62/48 This Version is available at: https://hdl.handle.net/10419/281690 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ AE Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment 48 Amfiteatru Economic INTEGRATION OF CIRCULAR ECONOMY PRINCIPLES IN CONSUMER BEHAVIOUR FOR ELECTRICAL AND ELECTRONIC EQUIPMENT Nicolae Istudor1, Ionel Dumitru2, Alina Filip3, Alin Stancu4, Mihai Ioan Roșca5 and Andrei Cânda6 1), 2), 3), 4), 5), 6) Bucharest University of Economic Studies, Bucharest, Romania 6) ISense Solutions, Bucharest, Romania Please cite this article as: Istudor, N., Dumitru, I., Filip, A., Stancu, A., Roșca, M.I. and Cânda, A., 2023. Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment. Amfiteatru Economic, 25(62), pp. 48-62. DOI: 10.24818/EA/2023/62/48 Article History Received: 28 September 2022 Revised: 10 November 2022 Accepted: 18 December 2022 Abstract The electrical and electronic equipment market (EEE) is a growing one due to technological developments and innovation. The present paper captures the consumer behaviour regarding the purchase, use, and disposal of these types of equipment in the light of the transition to a circular economy. To illustrate consumer perception and attitudes towards EEE products, we conducted quantitative marketing research on a sample of 1005 urban respondents, representative by gender, age, and size of locality of residence. The research results show a rather rational consumer profile in relation to EEE products, but depending on the category of equipment, their involvement in repair, recycling, or reuse actions is different. There is also a relatively low willingness of Romanian consumers to access second-hand EEE products. The article proves its utility by proposing a set of measures to improve the circularity of EEE products, in which both EEE producers and consumers actively participate. Keywords: Circular economy, marketing research, consumer behaviour, electrical and electronic equipment, repair, reuse, disposal. JEL classification: M30, Q56  Corresponding author Ionel Dumitru – e-mail: io[email protected]se.ro This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2023 The Author(s). Perspectives of the Circular Economy in the Production and Consumption of Electrical and Electronic Equipment AE Vol. 25 • No. 62 • February 2023 49 Introduction The growth in sales of electrical and electronic equipment (EEE) has been rapid in recent years. Consumers have begun to replace these products at ever shorter intervals, often not depending on their condition but due to technological wear or obsolescence (McCollough, 2009). Growth in consumption is increasingly linked to accelerated technological progress, which has enabled innovation cycles to be shortened and EEE with advanced functionality to be launched at prices that are more and more affordable for a wide range of consumers. According to statistics (Reportlinker, 2022), the global EEE market will grow from $3,192.85 billion in 2021 to $3,521.21 billion in 2022, at a compound annual growth rate (CAGR) of 10.3%. In Romania, EEE sales have been on an upward trend during the pandemic period and one of the drivers has been the increase in telework among employees (GFK, 2022). Fierce competition and continuous diversification of supply have transformed EEE into essential products in consumers' everyday lives. Producers play an important role in stimulating EEE consumption, and business development objectives are not always easy to synchronise with the European Union's objectives of stimulating product reuse to ensure sustainable consumption (European Commission, 2015). To ensure the affordability of EEE and increase its uptake, since the 1980s, the characteristics and capabilities of EEE have evolved using cheaper materials but manufactured to higher technological standards (Kang and Schoenung, 2005). At the same time, although EEE manufacturers have been able to adapt to consumer demands for novelty, availability, and ease of purchase in relation to market requirements, the development of supply also has several adverse consequences. In economic terms, the close competition between suppliers and the increase in the number of innovations have led to a shortening of the life cycle of EEE, with some products becoming morally obsolete shortly after being launched on the market (Wilkinson and Williams, 2020). The increasing replacement of equipment by consumers in the absence of environmentally responsible behaviour has allowed EEE to become a major source of waste (The European Parliament and The Council of The European Union, 2012). Recently, the waste stream from electrical and electronic equipment (WEEE) was considered to have the most accelerated evolution globally (Baldé, Wang and Kuehr, 2016), with 40-50 million tonnes produced annually and an annual growth rate of 4-5% (Golev et al., 2016). At the same time, at the EU level, statistics show that of the 12 million tonnes of WEEE disposed of annually, only about 30% is properly collected and recycled (Williams, 2016). In the case of Romania, in 2019, 223 kilotons of electronic waste were generated, which is an average of 4 kilograms per capita (Forti et al., 2020). When these values are analysed, which confirm the existence of significant quantities of EEE waste, justified concerns arise with regard to the impact on environmental pollution and the consumption of natural resources. In this context, the limitations of the traditional linear economy in ensuring future resource security are becoming increasingly apparent. Solutions for the proper management of WEEE are currently offered by the principles of the circular economy, since a large proportion of endof-life EEE ends up in household landfills without allowing for the recovery of component materials or is disposed of by consumers inappropriately in the household waste stream (WRAP Cymru, 2018). Consequently, consumers are important stakeholders in the management of WEEE, and their behavior can either foster or hinder the implementation of circular economy principles. Consumers' decisions and actions have a significant influence on the lifetime of products, AE Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment 50 Amfiteatru Economic and behaviors tend to differ with respect to variables such as purchase of new or second-hand EEE, willingness to repair defective products, receptiveness to industry-wide novelties, and end-of-life disposal of products before the end of their service life (Pérez-Belis et al., 2017). The aim of this paper is to capture the role of the consumer in the transition to a circular economy in electrical and electronic equipment through the lens of how consumer behaviour influences product longevity. This was achieved by conducting a marketing research survey to understand consumer behaviour regarding the purchase, use, and disposal of electrical and electronic equipment. The paper is structured in three sections: the first part reviews the literature on EEE consumer behaviour from a circular economy perspective, then presents the quantitative research methodology carried out among Romanian EEE consumers and the main results obtained, and the third part highlights a series of conclusions and managerial implications for improving the transition to the circular economy. 1. Review of the literature The circular economy is a system that focuses on the preservation of value throughout the product's lifetime. The concept includes all the stages that a product goes through, from a design based on value preservation, to the use stage where losses are minimised, to the endof-life stage where the resulting waste is a useful resource for future production (Geissdoerfer et al., 2017). The circular economy is a viable alternative to the traditional economy, aiming to make optimal use of resources and prevent waste, maximising value in the production and use process. At the same time, through processes of reuse, repair, refurbishment, recovery, or recycling, we can ensure an extension of the life cycle of products in a sustainable manner (Rogers, Deutz and Ramos, 2021). All these processes are also reflected in the European Union's Action Plan for the Circular Economy, which focuses on waste reduction and reuse and also underlines the importance of product repair in achieving sustainability and resource security (European Commission, 2015). In other words, circular economy strategies aim to ensure the longevity of products, both by using sustainable materials in the design and production process and through the promotion of repair, reuse, and recycling opportunities for responsible consumer use. Consumer behaviour is a key determinant in the adoption of circular economy principles at the societal, community level, as the reduction of waste disposal and the recovery of valuable secondary raw materials depend on the consumption patterns of individuals (The European Parliament and The Council of the European Union, 2012). The study of consumer behaviour in relation to the circular economy is present in the literature, both in the analysis of factors that stimulate or hinder the adoption of such behaviour (Testa, Iovino and Iraldo, 2020; Hina et al., 2022), as well as by exemplifying certain particularities of some countries or regions (Korsunova, Horn and Vainio, 2021; Patwa et al., 2021). Research into EEE consumer behaviour and the circular economy is closely related to the prospect of operationalising circular economy strategies that involve efforts by consumers to adjust their EEE purchase and use patterns, as well as to recycle or separately collect waste once these products are taken out of use. In this regard, it should be noted that in some situations, consumers tend to replace EEE more and more quickly, driven by fashion and technological trends in the industry, resulting in a significant number of endof-life EEE being stored at home but often in good working condition (Babbitt et al., 2009). Perspectives of the Circular Economy in the Production and Consumption of Electrical and Electronic Equipment AE Vol. 25 • No. 62 • February 2023 51 In addition to inconvenience for consumers, stored and unused products do not allow their recovery through recycling or reuse by others, a situation that is particularly common for small equipment (Polák and Drápalová, 2012; Pérez-Belis et al., 2017). At the same time, many recycled EEEs are products with minor defects that can be easily remedied or are products still in working condition (Pérez-Belis et al., 2017). This information confirms the influence of industry innovations on consumers' decisions to purchase new electrical equipment and the premature replacement of much equipment. In order to achieve a high recycling rate of EEE and to ensure the success of waste collection, consumers need to be informed about the obligation not to dispose of WEEE as unsorted municipal waste and to carry out separate collection of WEEE, as well as about the collection schemes (e.g., public collection facilities set up in specialised shops) and their role in the management of WEEE (European Parliament and Council of the European Union, 2012). Another important variable of consumer behaviour regarding the circular economy is their willingness to repair products with malfunctions. The ability to repair goods is essential to extend the life of products (Stahel, 2016) and delay their disposal. However, many consumers lack confidence in their own ability to repair products because they do not have the necessary experience and knowledge (Cole and Gnanapragasam, 2017). In the case of EEE with simple repair mechanisms, which can be carried out by consumers without specific expertise, the replacement of products is postponed for some time (Van Nes and Cramer, 2005). The feasibility of repairs is often influenced by factors beyond the consumer's control, and the main difficulties include the high cost of professional services and limited access to spare parts (King et al., 2006; Diddi and Yan, 2019; Türkeli et al., 2019). Other barriers to consumers' decision to access EEE repair services are insufficient information on specialised services, easy access to new products, lack of confidence in the quality of repair services, and scepticism about the outcome of the repair consisting of the perception that the repaired equipment will only work for a short period of time (Guiltinan, 2009; Bovea, Pérez-Belis and Quemades-Beltrán, 2017). Consumers' intention to repair faulty equipment is largely dependent on the type of products. Thus, product repair is more likely for large equipment than for small equipment, the latter often being taken out of service once problems occur in use (Hennies and Stamminger, 2016). Consumer attitudes towards second-hand EEE are rather unfavourable, the reasons being related to the association with poor quality products, concerns about avoiding aspects of poor hygiene, or being perceived in a socially undesirable way (Fisher et al., 2008; Fortuna and Diyamandoglu, 2017). Consumer behaviour in extending the life of EEE by reusing products is more likely to take the form of donating equipment that is in working condition (Lyndhurst, 2011), as well as reselling them on online platforms (Cole and Gnanapragasam, 2017). Buying second-hand EEE products, although part of product reuse initiatives, is less common (Pérez-Belis et al., 2017). The review of the literature shows that, despite the existence of a formal regulatory framework for the circular economy and strong EEE waste management policies at the EU level, consumer participation in circular economy activities is at an early stage and that the factors influencing behavioural patterns are multiple, both external, industry related, and internal, specific to the consumer profile. The novelty of the article lies in developing an understanding of consumer behaviour towards circular economy practices in the current AE Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment 52 Amfiteatru Economic economic and social context. At the same time, the research carried out presents an overview of all categories of EEE in relation to consumer behaviour. 2. Research methodology To address the complex issue of the consumer's relationship with the circular economy, we conducted quantitative research. Data were collected based on a questionnaire consisting of two parts; the first part of the questionnaire focused on highlighting consumer behaviour towards EEE products consisting of 12 questions, and the second section was dedicated to demographic data. The questionnaire included a filter question related to the respondent's place of residence, with only urban respondents being accepted in the study. The sample consisted of 1005 urban respondents, representative by sex, age, and size of the place of residence. The sampling error was +/- 3.07 at the 95% confidence level. Data collection was conducted online using the ISense Solutions panel and data was collected from 2-6 September 2022. The sample structure is shown in Table 1. Table no. 1. Sample structure No. of respondents % of the sample Gender Men 482 48.00% Women 523 52.00% Age 18-29 years 191 19.00% 30-45 years 382 38.01% 46-65 years 432 42.99% Size of the location Bucharest 179 17.81% >200k 304 30.25% 50-200k 262 26.07% <50K 259 25.77% Household size 1 person 135 13.40% 2 persons 283 28.16% 3 persons 297 29.56% 4 persons 215 21.39% 5 or more people 75 7.48% The main aspects of the research concerned: consumer behaviour in the purchase of EEE, in terms of the number of products purchased and the criteria influencing purchasing decisions; specific actions of circular economy taken by consumers in the field of EEE; consumer behaviour with regard to EEE replacement - situations in which EEE replacement takes place, destinations given to unused products, and reasons for premature product replacement; importance attached by consumers to product repair; disposal behaviour of non-functioning EEE products; consumer reasons for not repairing defective products; frequency of purchase of second-hand EEE products, reasons for buying and not buying second-hand EEE. Data analysis was performed in IBM SPSS Statistics (version 25). Perspectives of the Circular Economy in the Production and Consumption of Electrical and Electronic Equipment AE Vol. 25 • No. 62 • February 2023 53 3. Research results The first objective of the research was to identify consumer behaviour when purchasing EEE, in terms of the number of products purchased and the criteria influencing the purchase decision. The results show a very high consumption of EEE, with 58% of the respondents stating that they have bought between 1 and 3 devices in the last year, 15% between 4 and 6 devices, 5% more than 7 devices and only 23% without devices. On average, at the sample level, respondents purchased 2.26 EEE products over a period of one year, with the intensity of purchases being higher among men, especially in the 18-29 age group. Consumers use different criteria in making their EEE purchase decision, and their importance was assessed using a five-level semantic differential, ranging from 1 - not at all important to 5 - very important. The analysis of the mean scores obtained (Figure no. 1) allows us to understand the order of importance of the factors that lead consumers to decide in the selection and purchase of EEE, namely: durability (mean 4.62), technical performance of the product (mean 4.61), price of the product (4.53), low energy consumption/energy efficiency (4.48), warranty offered (4.34), product innovation (4.03), brand (3.94), design or appearance (3.89), environmental impact of the product (3.83) and country of origin of the product (3.45). Figure no. 1. Criteria that influence the purchasing decision for EEE (1 - not at all important; 5 - very important) As can be seen, consumers attach the greatest importance to durability and performance characteristics, which may suggest a certain readiness to use equipment over a longer period, as confirmed by the high importance attached to energy efficiency and warranty. Another objective of the research was to find out which specific categories of circular economy actions consumers are involved in (Figure no. 2). Therefore, as EEE users, 37.98% of the respondents reported taking recycling actions, 29.59% used a specialised service to repair defective products to extend their life, 25.11% donated or offered such products to other people for reuse, and 21.39% are followers of the shared economy, in the sense of using certain electrical and electronic products with others. The percentage of people who have tested their skills to repair broken EEE products themselves is lower at 17.5%, while only 3.45 3.83 3.89 3.94 4.03 4.34 4.48 4.53 4.61 4.62 012345 Country of origin of the product Environmental impact of the product Design Brand Product innovation Warranty offered Low energy consumption Product price Technical performance of the product Durability AE Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment 54 Amfiteatru Economic 15.64% of the respondents have bought second-hand EEE products. The least frequent behaviours are borrowing EEE (5.17%) and renting EEE for their own needs (3.65%). The segment of people who do not show any involvement in circular economy actions seems to be rather modest, with only 19.93% of respondents stating that they have not carried out any of the above activities. Figure no. 2. Specific circular economy actions taken by consumers To understand consumer behavior regarding EEE replacement, specific situations that led respondents to exchange these products were first identified (Table no. 2). According to the survey results, 71% of respondents decide to replace an electrical or electronic equipment when it is defective and beyond repair, indicating, at least at the declarative level, a consumer orientation toward the functionality attributes of the products. Fashion and technological innovations do not appear to have a significant influence on the sample surveyed, with only 3% of respondents giving up products when they are out of fashion and 15% when a better performing model arrives. There is also evidence that consumers are concerned about the energy efficiency of EEE, with 17% of all respondents intending to replace their current EEE when more energy efficient models become available, which may demonstrate consumer concern about the challenges of the current energy crisis. Table no. 2. Situations of replacement of electrical or electronic equipment Total Men Women 18-29 years 30-45 years 46-65 years Total 1005 406 599 186 481 338 When it broke down 62% 61% 62% 61% 65% 59% When it is defective and cannot be repaired or replaced 71% 74% 69% 68% 68% 76% When a higher-performance model emerged 15% 14% 16% 12% 16% 17% When a less energy-consuming model came out 17% 18% 17% 16% 16% 19% When the product is out of fashion 3% 4% 1% 3% 3% 3% 19.93% 3.65% 5.17% 15.64% 17.50% 21.39% 25.11% 29.59% 37.98% 0% 10% 20% 30% 40% 50% None of them We rented EEE I borrowed EEE products I bought EEE second-hand I have repaired EEE I share certain EEE with other people I have donated EEE I have repaired at a specialised EEE service I recycled EEE products Perspectives of the Circular Economy in the Production and Consumption of Electrical and Electronic Equipment AE Vol. 25 • No. 62 • February 2023 55 The uses for which consumers put unused but serviceable products differ significantly depending on the type of EEE (Table no. 3). Table no. 3. Destinations for functional but unused products I sell it I give it to another person I recycle it I am throwing it in the trash. I keep it I am donating it to an NGO Large household appliances 20% 35% 50% 4% 11% 12% Small household appliances 15% 37% 40% 8% 19% 14% Computer equipment 21% 36% 33% 4% 30% 13% Consumer electrical appliances 21% 38% 39% 4% 21% 12% Lighting equipment 10% 27% 38% 15% 19% 12% Tools and equipment 16% 32% 26% 8% 25% 8% Toys and sports equipment 15% 36% 19% 7% 16% 17% Medical devices 9% 28% 27% 9% 23% 12% Monitoring and control tools 10% 18% 32% 9% 16% 8% Automatic dispensers 13% 29% 27% 7% 18% 9% In the case of large household appliances (e.g., refrigerator, washing machine), most respondents are moving toward some form of reuse of products, given both the higher cost of these products and the larger surface area for their storage. Therefore, 50% of the respondents have resorted to recycling these appliances in specialised places, 35% have offered them to other people (friends, neighbours) for further use, and 20% have sold them to recover part of the purchase costs. Other destinations with lower frequency of occurrence in the sample surveyed were donating to an NGO or a cause (12% of respondents), keeping them at home (11% of respondents), throwing them in the bin or the garbage can (4% of respondents). For small household appliances (e.g., vacuum cleaner, toaster), there is also a high share of recycling behaviour in specialised places (40%) or giving to another person for reuse (37%), but a lower percentage of individuals reselling the products (15%) and a higher percentage of those choosing to keep them at home (19%). However, this information is expected, given the lower costs of buying small appliances and the ease of finding a storage place for them in the household. In the case of computer equipment (e.g., laptop, smartphone), most consumers choose to give the product to another person (36%), recycle it (33%) or keep it in the house (30%) to have a backup for products currently in use, with resale being an option for 21% of respondents. A similar trend is visible for consumer electrical appliances (e.g., TV, radio, video cameras), for which 39% of respondents choose to recycle, 38% give them to other people, 21% keep them at home, and 21% resell them. Regarding unused toys, they are generally given away to other people (36% of respondents), with the same behavior prevalent for medical devices (28% of respondents) or vending machines (29% of respondents). AE Integration of Circular Economy Principles in Consumer Behaviour for Electrical and Electronic Equipment 62 Amfiteatru Economic Patwa, N., Sivarajah, U., Seetharaman, A., Sarkar, S., Maiti, K. and Hingorani, K., 2021. Towards a circular economy: An emerging economies context. Journal of Business Research, [online] 122, pp.725-735. https://doi.org/10.1016/j.jbusres.2020.05.015. Pérez-Belis, V., Braulio-Gonzalo, M., Juan, P. and Bovea, M.D., 2017. Consumer attitude towards the repair and the second-hand purchase of small household electrical and electronic equipment. A Spanish case study. Journal of Cleaner Production, [online] 158, pp.261-275. https://doi.org/10.1016/j.jclepro.2017.04.143. Polák, M. and Drápalová, L., 2012. Estimation of end of life mobile phones generation: The case study of the Czech Republic. Waste Management, [online] 32(8), pp.1583-1591. https://doi.org/10.1016/j.wasman.2012.03.028. Reportlinker, 2022. Electrical And Electronics Global Market Report 2022. [online] Available at: <https://www.globenewswire.com/news-release/2022/03/23/2408268/0/en/ Electrical-And-Electronics-Global-Market-Report-2022.html> [Accessed 3 September 2022]. Rogers, H.A., Deutz, P. and Ramos, T.B., 2021. Repairing the circular economy: Public perception and participant profile of the repair economy in Hull, UK. Resources, Conservation and Recycling, [online] 168, no.105447. https://doi.org/10.1016/ j.resconrec.2021.105447. Stahel, W., 2016. Durability, function and performance. In: Longer Lasting Products. Routledge. pp.183-204. Testa, F., Iovino, R. and Iraldo, F., 2020. The circular economy and consumer behaviour: The mediating role of information seeking in buying circular packaging. Business Strategy and the Environment, [online] 29(8), pp.3435-3448. https://doi.org/ 10.1002/bse.2587. The European Parliament and The Council of The European Union, 2012. Directive 2012/19/EU of The European Parliament and of The Council of 4 July 2012 on waste electrical and electronic equipment (WEEE). Available at: <http://data.europa.eu/eli/ dir/2012/19/oj/ron> [Accessed 13 September 2022]. Türkeli, S., Huang, B., Stasik, A. and Kemp, R., 2019. Circular Economy as a Glocal Business Activity: Mobile Phone Repair in the Netherlands, Poland and China. Energies, [online] 12(3), p.498. https://doi.org/10.3390/en12030498. van Nes, N. and Cramer, J., 2005. Influencing product lifetime through product design. Business Strategy and the Environment, [online] 14(5), pp.286-299. https://doi.org/10.1002/bse.491. Wilkinson, A. and Williams, I., 2020. Why do (W)EEE hoard? The effect of consumer behaviour on the release of home entertainment products into the circular economy. Detritus, [online] (12), pp.18-33. https://doi.org/10.31025/2611-4135/2020.14004. Williams, I.D., 2016. Global Metal Reuse, and Formal and Informal Recycling from Electronic and Other High ‐ Tech Wastes - Metal Sustainability - Wiley Online Library. [online] Available at: <https://onlinelibrary.wiley.com/doi/abs/10.1002/ 9781119009115.ch2> [Accessed 13 September 2022]. WRAP Cymru, 2018. WRAP Cymru report reveals re-use riches. [online] WRAP. Available at: <https://wrapcymru.org.uk/media-centre/press-releases/wrap-cymru-report-revealsre-use-riches> [Accessed 13 September 2022].