The Nature of the Circular Firm: A Professional Paper in Economic Theory and Circular Economy

Hyde takes Coase's foundational question — why do firms exist? — and asks it again for the circular economy: when does it make sense for a firm to internalise waste streams rather than externalise them? The paper reframes sustainability not as moral imperative but as organisational design problem, treating waste as property and asking when transaction costs favour building reverse supply chains internally versus buying them from markets. For product directors this connects environmental constraints to firm boundary decisions: every sustainability initiative is really a make-or-buy decision about waste streams, and the circular firm emerges when coordinating those streams internally becomes cheaper than contracting them out. The temporal adoption path — entry, hybrid, maturity — provides a practical framework for thinking about sustainability transitions as evolutionary rather than revolutionary organisational change.