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Open AccessArticle

Family Businesses Transitioning to a Circular Economy Model: The Case of “Mercadona”

1
Polytechnic School of Linares, University of Jaén, 23071 Jaén, Spain
2
Faculty of Business and Management, University of Granada, 18010 Granada, Spain
3
Faculty of Business and Management, Universidad Autónoma de Chile, 7500912 Santiago, Chile
*
Author to whom correspondence should be addressed.
Sustainability 2018, 10(2), 538; https://doi.org/10.3390/su10020538
Received: 19 December 2017 / Revised: 13 February 2018 / Accepted: 14 February 2018 / Published: 17 February 2018
(This article belongs to the Special Issue Circular Economy—Sustainable Energy and Waste Policies)

Abstract

Sustainability addresses environmental and social issues affecting this and future generations. When family businesses perceive that the community is disrupted, recognize an environmental problem and respond by implementing new environmental policies or regulations, the family business’s socio-emotional values press to transition to a more sustainable production system, such as the ‘Circular Economy.’ Drawing on the Dubin (1978) methodology—a paradigm for building models through deduction—we design a sustainable model, which shows family businesses’ responses to changes in the environment. It explains the reasons why family firms transition to the Circular Economy, based on the theory of Socio-Emotional Wealth (SEW). We check the model through the case study of the food retail leader in the Spanish market—Mercadona—which applies policies about energy, resources and waste to become a Circular Economy business model. Because of the strong family character of Mercadona, this case can be useful for the decision-making of other family businesses.
Keywords: Circular Economy; sustainability; family business; model; case study; Mercadona Circular Economy; sustainability; family business; model; case study; Mercadona

1. Introduction

Sustainability addresses environmental and socioeconomic issues affecting this and future generations [1,2]. It understands the world as a complex interaction between economic, social, environmental and political systems. Management of the environment has been viewed as a determinant of business success [3,4,5,6,7,8,9]. Family business researchers must take environmental issues into consideration as they are increasingly important, especially since the development of theories such as functionality, ecology and development, which incorporate the lens of sustainability [10].
Although an ethical or normative view of the world urges us to embrace a holistic view of what a good society should be [11,12], global concerns have been raised about environmental issues. While economic sustainability has been defined as maintenance of capital [13], environmental sustainability seeks to improve human welfare and social sustainability by protecting the sources of raw materials used for human needs and limiting dumping of human wastes in order to prevent harm to human beings [14]. The European Commission has adopted an ambitious new Circular Economy (CE) Package to help European businesses and consumers to make the transition to a stronger and more CE where resources are used in a more sustainable way. With this plan to make Europe’s economy cleaner and more competitive, the Commission is delivering ambitious measures to cut resource use, reduce waste and boost sustainable production and consumption. Since adopting the CE Package the Commission has observed an increased uptake by corporations to adopt resource efficiency, eco-innovation and/or CE strategies and practices.
Focusing on family business and sustainability, the literature has increased in recent years [15,16], with family business researchers studying sustainability and environmental issues in depth. Stafford et al. [10] proposed one of the first business models to apply the idea of sustainability to family businesses, grounding the latter’s sustainability in systems theory by analyzing the interactions between business and family as two subsystems. Analysis cannot, however, be limited to internal links between the family and the company. Family business studies have gradually highlighted the importance of analyzing the relationships between companies and their stakeholders, defined by Freeman [17] as groups or individuals who can affect or be affected by achievement of a corporations’ purpose. Since the community is a major stakeholder and one permanently related to the firm, we must analyze the characteristics of this relationship.
Despite these studies, researchers highlight the scarcity of research on sustainability, noting that few studies of sustainability consider factors other than financial performance. One exception is the study by De Geus [18], which included eco-emotional factors such as desire to survive and withstanding changes inherent in the environment.
Among attempts to achieve environmental sustainability, the CE has been promoted by the Ellen MacArthur Foundation (EMF) as a way for companies to respond to contemporary environmental challenges. The foundation was established to champion a notion of CE to oppose the dominant economic paradigm of “Linear Economy.” According to Leader and Rashid [19], CE is “an industrial economy that is restorative or regenerative by intention and design.” Although CE is an important paradigm, little research analyzes the position of family business relative to sustainability and CE. We undertake this study to fill this gap. Our research goal is thus to determine the situation of family businesses relative to environmental sustainability by analyzing how their unique characteristics could affect implementation of CE using the Socio-Emotional wealth approach (SEW). Specifically, our research questions are:
RQ1. What reasons could lead a family business to evolve to the CE model?
RQ2. What factors inherent in the family, aid implementation of the CE model?
RQ3. How is the family business, Mercadona, transitioning to CE in practice?
Our main contribution is to advance traditional sustainable models of family business by studying the behavior of family and business facing the CE. We also aim to identify what factors derived from family character could speed transition to this economic model. This is the first model applied to the family business that introduces the concept of environmental sustainability through CE. We also seek to introduce the new paradigm to family business decision makers. This knowledge will help to build collective awareness of sustainability matters in the family business and thus to promote a new business model based on CE.

2. Circular Economy and Socio-Emotional Wealth Theory

2.1. Key Concepts of CE

The idea of CE was developed by analyzing the relationships between economic and natural system [20,21,22,23]. We defined CE within our iteratively developed coding framework as an economic system that replaces the ‘end-of-life’ concept with reducing, alternatively reusing, recycling and recovering materials in production/distribution and consumption processes. It operates at the micro level (products, companies, consumers), meso level (eco-industrial parks) and macro level (city, region, nation and beyond), with the aim of accomplishing sustainable development, thus simultaneously creating environmental quality, economic prosperity and social equity, to the benefit of current and future generations. It aims to protect the environment and prevent negative externalities such as pollution, thus facilitating sustainable economic development [24]. Many studies show that the development of CE is important to mitigating environmental impacts at the source and to reducing overall waste and resource consumption per unit of output by saving, reusing and recycling resources [25]. The CE approach fits well with the future management of global resources, as it supports preservation of virgin resources, optimizing their yields through manufacture of more reusable products and lower generation of waste. In fact, the idea is to repair the goods during their lifetime and completely reuse what is available of them at the end of that life in order to close the loop [26] not only technical but also biological [27,28].
According to Stahel [29], “In the past, reuse and service-life extension were often strategies in situations of scarcity or poverty... Today, they are signs of good resource husbandry and smart management.” One element of such management, Product as a Service or PSS, is a specific type of value proposition that a business offers to its customers [30].
Another key aspect of CE is reverse logistics, including reverse supply chain management (SCM). Reverse logistics is the process of planning, implementing and controlling efficient, effective inbound flow, inspection and disposition of returned products and related information for the purpose of recovering value [31]. We focus on reverse logistic because the main factor is concern for the natural environment and environmental regulations [32,33]. In most supply chains, value correlates with profitability. Environmental SCM incorporates other principles, however, such as waste reduction, focus on processes and involvement of people in the management system [34,35].

2.2. Reduction of Environmental Impact and Negative Externalities

As companies have numerous unsustainable practices [15], the aim of CE is to solve these environmental cost problems. Any production system must manage its production inefficiencies to prevent or diminish environmental damage. All such damages are termed “negative externalities”, originating in decisions related to consumption, production, exchange of inputs/productive factors and investment. By reducing negative externalities, family companies will diminish their environmental impact and thus survive—their long-term goal [15].
Previous analyses of family business sustainability models [36] observe that generation of waste and by-products and emission of polluting gases that damage ecosystem and the environment have not been classified as negative externalities and valued less in economic terms. A new advanced model of sustainable family business should measure these externalities and indicators of sustainable practices.
We must thus consider generation of environmental damages derived from design and production of goods and services as a negative externality, generating a series of indirect costs that have not been measured to date in sustainability models. Our model raises the need for decision-makers in the family business to make decisions designed to mitigate these externalities. The transition to CE will help to reduce these negative effects [37].

2.3. SEW Theory

Within the SEW framework developed by [38], family businesses could behave differently from non-family businesses because non-economic factors dominate family firms’ business decisions—and for three reasons. Firstly, emotions are important in family-business relationships. Secondly, the family’s own values, such as collectivism and feelings of responsibility, condition its behavior [39,40,41], commitment [42] and perpetuation [43]. These values align with ideas of SEW. Thirdly, altruism motivates family businesses, which are generally immersed in their community, to protect their image and reputation. The long-term, trans-generational perspective family firms pursue foster a strong desire to guard and protect the corporate reputation. Most family business decisions tend to preserve and enhance the family’s SEW [44]. For instance, family businesses pollute less even when more environmentally friendly practices increase costs [45]. In contrast with non-family firms, family businesses also vary in their behavioral response to an environmental jolt [46]. Since SEW is a key factor distinguishing family firms from other types [45,47], we can expect family businesses to behave differently when facing environmental sustainability.
According to Debicki et al. [47], SEW is composed of three main dimensions: The first is family prominence, or the importance of how the family as business owner is perceived by the community. It includes issues such as concern for corporate reputation, which could drive adoption of more environmentally sustainable practices [48] because the firm seeks a favorable organizational reputation [49]. Since families also pursue nonfinancial goals in order to guarantee transgenerational sustainability, they will invest in proactive environmental practices [45]. Beyond these issues, a family firm could act heterogeneously, as Reay et al. [50] argue. Family firms (lifestyle and traditional) can act to rearrange field-level logic and change the “rules of the game” to ensure their legitimacy and sustainability. A second dimension of SEW is family continuity, which represents the importance of making decisions based on sustainability of family business and desire to maintain family ownership and management Finally, family enrichment indicates the significance of the desire to maintain family harmony through altruistic behavior, a distinctive characteristic of family-owned companies [40,51]. The three dimensions of SEW—prominence, continuity and enrichment—are derived from the family nature of these companies and act as a trigger that speeds up the implementation of CE in the family business.

3. Model of Transition to Circular Economy for Family Business

3.1. Building the Model

We ground the theoretical model in Dubin’s theory-building model, based on the functionalist paradigm, to build the model through deduction. Performing the literature review and operating with selected variables, we build a theory by incremental extension of previous models [52].
Following Dubin’s methodology, we performed a review of literature in databases and journals to understand phenomena and concept development and to identify previous models and key aspects of our study.
The next stage in the process is to find the most significant studies related to the subject under investigation. To obtain them certain engines and search chains are used. The selected search engines have been: ProQuest, Science Direct, Scopus, Web of Science and Google Scholar. However, for the search chain, in the first place, keywords related to the main concepts or variables of the research topic were chosen. After a first search, other keywords were added by analyzing individual documents identified in an initial list. These keywords were Family Businesses, Sustainability, Socio-emotional wealth, Circular Economy. We did not include a specific search period because we wanted to know the background of the topic.
On the other hand, to generate the search strings that were used in the different databases, Boolean operators (AND, OR and AND NOT) were used to generate complex searches, that is, to link “the keywords.” Finally, after an exhaustive review process, 51 articles were selected on the subject, included in indexed journals and which served as the basis for the bibliographic analysis.
We then developed construct analysis and the iterations between these constructs. This procedure established three main constructs: Community, Family and Business. We highlight the interactions between these three constructs, attempting to build our theory according to the five steps established by Dubin [53]: determination of the units of a theory to study the relation between the family business and CE; laws of the interactions between units; boundaries of the theory; system states; and establishment of propositions. Following this method, we developed an initial theory—a set of propositions that aim to explain the position of the family business facing CE.

3.2. Dimensions of the Model: Community, Family and Business

According to Dubin [53], construct analysis aims to establish the main dimensions of the domain. This analysis enables organization of isolated findings in an explanatory network context. The theoretical literature review showed what units must be considered part of the theory. Community, family and business are the three base constructs of our theory. We selected these dimensions from Olson et al. [54] and Stafford et al. [10], where authors argue that the sustainability of family firms is caused by the balance between Family and Business. In the further step in the study of sustainability in the family business, Danes et al. [36] trace the evolution of previous models, adding the community as yet another subset. These authors affirm that sustainability in the context of family business occurs in the community context, where the business interacts with the community through exchange of resources.
Community, defined as a dynamic system that is continuously created and recreated. Community offers resources, institutions, cultural values, attitudes, beliefs and practices that can be tapped to achieve the objectives [55,56,57]. Long-lived family firms gain from ongoing engagement with the local community because these connections enhance their SEW. Community is the affected by the negative externalities of business and the lack of resources and increased level of resource consumption facing society and the manufacturing industry [19].
The family is the owner of the company and wishes to preserve SEW by acting with social responsibility, as this behavior will generate social recognition, improving both economic and non-economic performance derived from adopting more environmentally respectful practices [48].
The business is the productive, economic and financial unit. Family and business interact each with other and, simultaneously, with the community. Family and business respond both in regular patterns and separately to disruptions [57]. The SEW will act as trigger of the change of the family business to CE model. Olson et al. [57] stress that family and business respond both in regular patterns and separately to disruptions. Their responses to CE demands are influenced by SEW that includes the nature of the family, whose goal is to reduce negative environmental outputs, not only to improve relationships with the stakeholder but also to guarantee the firm’s survival.

3.3. Interactions between Dimensions: Community and Family Business

The community enacts different standards and legal regulations on environment, which the family business recognizes (outputs of the model). Ward [58] stresses that long-term sustainability is conditioned by the firm’s ability to respond to change. When a disruption occurs, new patterns are needed to maintain the firm’s market position [57]. Environmental sustainability thus involves facing disruptions and making decisions in response to those previously emitted by the community. Regulatory changes create disruption, affecting family business strategy.

3.4. Family and Business: Influence of SEW on Business Transition to CE

The transformation to CE is thus unavoidable and the only issue is the time line of this change. From a SEW perspective, family firms may be considered as close to their communities, due to the personal ties between family members and other community members [44,45]. SEW of family business mediates that influence on the speed of transition to CE. Based on SEW, this response could be speeded by three features of family business that act as triggers. Firstly, Family prominence will lead the family to answer to disruptions of the community, seeking community recognition, caring for its reputation and preserving social capital [38]. Secondly, Family continuity plays a role because factors of environmental and social responsibility become disruptions when the company and/or family recognize the need to ensure the company’s long-term sustainability, preserving the dynasty in the business [46]. Thirdly, Family enrichment, which includes family enrichment and business enhancement through the entrepreneurial opportunities that the community provides for the company.

3.5. System States/Boundaries

The three system states proposed are: Families with a high degree of SEW. In this state, the model will be highly operative, driving the family’s efficient adoption of CE principles. In the second state, a moderate degree of SEW, family influence is lower than in the previous model and the system operates moderately effectively. Finally, the third system state involves a low degree of SEW. In this case, the values of the units of support provide low effectiveness for the behavior of the whole model.
Boundaries. A theoretical model is bounded when the values limiting the units composing the models are known. The main boundary of the model is generated by the definition of family business. This theory has been developed specifically for family-owned companies. The parameters that establish the model’s boundaries are adopted from the definition of family business by the European Group of Family Companies: firms in which the family controls ownership of the company, with influence in decisions and participation in its management.
In a theoretical model like the one we construct here, a proposition is an assertion about the model in operation [53,59]. Propositions are based on the explanatory and predictive capacity incorporated into the theoretical framework generated during theory development [60]. The indicators must first be converted into empirical data and then transformed into hypotheses. The hypotheses are then tested through research, linking the theory to the real world. Dubin [53] observed that propositions do not imply empirical accuracy but will be accurate if logically derived from the theoretical framework. The Figure 1 shows the model proposed.

4. Application of the Model to the Mercadona Case

Once the model of transition to a CE has been developed, we will proceed to test it by studying the case of the Spanish retail market leader, Mercadona. This study aims to evaluate the model in order to verify if the exposed factors contribute to accelerate the transition towards the production model based on the Circular Economy.

4.1. Methodology

To measure the applicability of the model, we have conducted a report analysis. Thus, following the methodology of Campopiano and De Massis [61], we collected relevant information related to the principles we have developed in the theoretical framework from the company. Regarding the analysis methodology, we have used the grounded theory approach that has allowed us to identify factors that affect the speed of transition of family businesses to the EC. The grounded theory uses an inductive approach to generate theory for unexplored research topics [62,63], the data have been compiled from the available information and have been coded after performing a comparative analysis.
The methodology of content analysis is a method to encode the written text into several groups or categories according to selected criteria. To achieve this, we apply the so-called “third-party approach” where the analysis is carried out by someone who is not the provider or recipient of the report [64]. Content analysis is a widely used means to obtain information not available as it tends to avoid recall biases typical of interviews [65]. Table 1 shows the analyzed documents from the Mercadona family business.
In addition, we also collected relevant information from other secondary sources such as their websites, social media and news [66,67]. With the set of information collected from reporting and corporate website, from which we have been able to understand the business models followed by the company and study the environment of the company and the sector. Afterwards, the content analysis was combined with the financial information obtained from the Sabi database during the period 2012–2016.

4.2. Choice of Case Study: Mercadona, a Family Company Leader in the Spanish Retail Sector

Mercadona is a Spanish supermarket company, with family capital that ended the year 2016 with a turnover of 21,623 million euros (+4%) and a profit of 636 million euros (+4%). Currently, the company owned 1620 supermarkets in Spain and a workforce of 79,000 people. This company was chosen for this case study because of its family nature, its leadership position in the Spanish retail market and finally, the availability of information regarding the Circular Economy. Moreover, it has a particular position facing sustainability and social responsibility [68]. We chose this company, Mercadona, because it is a relevant family company (92.5% of the company is owned by the Roig family) that started reporting about the CE early—in its environmental report of 2012, the company’s commitment to this matter is mentioned. Table 2 briefly shows the main data in its economic and financial structure.

4.3. Finding

4.3.1. Disruptions to and Drivers of the Transition to the Circular Economy in the Mercadona Company

Our model started highlighting that the community emitted disruptions in the form of events that the company has received either internally or externally from the owning family or firm system, which significantly challenged the stock of capital and routine management practices of the family firm [10]. The normative international perspective on the environment, Spanish legislation and the community’s requirement for the producer to manage the business with a more sustainable model, are the main disruptions that affect Mercadona’s decision to transition to the Circular Economy.
Our proposed model established that three factors derived from socio-emotional theory [47] as the drivers of the transition to the CE model. We have individually analyzed each of them to see if they are present in the company being studied.
The first factor is Prominence. This includes as main exponent, the concern of the company for its reputation [44,48]. From the analyzed information from the Mercadona case, we observed that the company strives to improve its reputation before the society. Thus, the firm has received numerous awards for its sustainable attitude. For instance, in the environmental sustainability report of 2015–2016 (p. 42) stated.
“The adhesion of the company to commitments and events such as the European Distribution Fund for sustainability, the Global Compact as well as other associations. Mercadona is recognized as the 1st company in the Generalist Distribution sector in Spain and the 2nd company with the best reputation in Spain in the “General Business Ranking 2017” of the Spanish Corporate Reputation Monitor (MERCO).”
Therefore, we observed the presence of prominence and values related to this dimension not only for reputation but also for its transgenerational sustainability.
The second factor is Continuity [38,47]. The company bet, without doubts, for a policy of continuity, maintaining that the family management of the company was proof of the composition of the social capital. According to the balance sheets for the financial year 2012 to 2016 (Table 3), the company presented a situation of absolute control by the family.
This information allows us to determine the family character of the company. The capital was distributed as follows: 92.7% owned by Juan Roig and family and 7.3% was owned by a minority shareholder, who was a board member of the company. Therefore, we observed a high degree of concentration of capital in the hands of the family. In addition, the company bought owned shares of 2.3% of the capital from one of the partners, with the intention of maintaining the capital of Mercadona within the family.
On the other hand, the company is not listed on the stock market and does not allow the entry of capital other than from the family. This way, the aim is to preserve that family character in the future and ensure transgenerational sustainability [44], as reinforced by Juan Roig, president of the company, who stated in the presentation of 2017th annual financial report:
“I will continue to carry Mercadona. I feel very good. The successor will be one of my four daughters and directors. I have a few in my head. But today I find myself with the strength to continue leading the company.”
Finally, the third factor is enrichment [44,45]. The company bases a good part of its harmony on ethical behavior towards capital. The president argued that under the total quality management model, it is also just the satisfaction of the needs of the last component of the company, the capital i.e., of those people and entities that invested their money in the company by contributing economic resources. This circumstance also makes the company present a clear orientation towards the maximization of results to satisfy the wishes and needs of its shareholders. In this sense, the company’s management model seeks for its shareholders to obtain a series of advantages that are considered valuable, such as profitability, stability, security and maximum risk reduction of their investment. According to the Mercadona annual report of 2016, the shareholders received 10% of the total profits as a dividend. This policy of dividend distribution favors harmony within the family. With regards to its altruistic behavior, the company has established a broad social action plan detailed in the 2016 report.

4.3.2. Influence of SEW in Resource and Waste Management Policies of the Company

So, once the family perceived the disruptions omitted by the community, its socio emotional values, prominence, continuity and enrichment [47] prompted its transition to the CE model, improving the resources management and diminishing the negative externalities of the company.
Thus, thanks to the press of SEW dimensions, Mercadona has been promoting the CE strategy for years to optimize the use of natural resources, based on the premise of converting waste into resources. The company has promoted CE between its suppliers, creating a model that included the whole supply chain of management of the company. Thus the 2011 report stated: Waste management offered
“Valuable resources for other processes and, based on the premise of the CE of ‘convert waste in resources,’ some of Mercadona’s integrated suppliers have developed innovative processes to take advantage of waste coming from other processes of the agri-food chain. This allows it to take advantage of some waste from its processes, which it converts into resources to reincorporate them into the productive economy cycle and, thereby, reduce the environmental impact of its activity.”
The Mercadona model required that the facilities of its integrated suppliers have internationally recognized environmental certifications to accredit their good practices in this field. Currently, 90% provided by the facilities of Mercadona’s integrated suppliers have some environmental certification. The rest are facilities corresponding to new factories or locations in the process of gaining ISO certification.
So, the company has been implementing, in collaboration with the internal suppliers, new production systems based on the CE from 2011; “the company works to build a virtuous circle in which waste is treated to recover raw materials that finally, they become new products.”
In this innovator system, Mercadona exerted a nexus position in the SCM that invited collaboration from the 2000 suppliers of the same, so that the waste generated in one activity served as a nutrient for another. Once the products are manufactured, the waste is treated by cleaning, purifying or refining it with the objective that they can be reused as raw material, which may imply an important investment by the integrated supplier that assumes this commitment. Once the waste has been properly treated, raw material suitable to be part of a new production process is obtained. The waste, therefore, again becomes a valuable resource. The CE finishes its cycle when the products made from the raw materials recovered return to the store shelves [19,35]. The company offers examples of these inter change between suppliers. Figure 2 shows examples of the CE in the SCM model of Mercadona to transition to a CE production model, speeded by the SEW values of the company.
The 2016 sustainability report of the company states:
“Waste management is acquiring a growing role as they begin to develop and implement new techniques to convert waste into resources. An efficient waste management strategy should be based on prevention but in addition there are ways of reincorporating waste to the productive economy, as raw material in other processes.”
The company employed several strategies to prevent waste generation, such as eco-design or prevention of food waste. This way, the farmers who supplied products to Mercadona, recovered a large amount of plastic materials that, far from seeing them as unusable waste, are considered resources and serve as raw material for the production of products. Table 4 shows the main data about waste, while Table 5 contains the recycling information, and Table 6 practices related to waste management.

4.3.3. Energy Efficient Policies in Centers

The company divided its consumption of energy into two large sections, firstly, that relating to its physical centers (warehouses, offices and stores) and secondly, that relating to energy for logistics through its transport and distribution network. Thanks to the family nature of the company, Mercadona developed in its early stages the Eco-Efficient Store Project. Since then, all the new openings and renovated stores have more than 20% energy saving, measures to reduce the total consumption of each store by 40%, which means an annual saving of 66.000 kWh per store. In 2016, 50% of the stores in the chain were eco-efficient. Some of the main tips such as:
Signal control. A system of continuous measurement of consumption and leakage of refrigerant gases, with early detection. This allowed a 25% reduction in greenhouse gas leaks. By the end of 2016, this was installed in 347 stores (22% of the total of the chain) and the goal is to complete its implementation by 2019. 40% of the estimated savings could be compared to a conventional store.
Energy management by zones. A centralized control system allowed the adjustments in the energy consumption based on the needs, modulating the lighting and air conditioning depending on the time of day or the tasks performed by the staff.
Improvement of the insulation. The thermal and acoustic insulation of the enclosure was improved to adapt to the climatic zone in which the store was located. This measure allowed better air conditioning and reduced energy consumption.
Closed frozen furniture. The design of frozen furniture with doors, together with other existing measures, such as floating condensation systems, reduced cold losses and saved energy. The floating condensation was also incorporated into refrigerated furniture, thereby improving the efficiency of the entire system. Table 7 shows general information about the energy in Mercadona and Table 8 contains information about energy in the centers of the company.

4.3.4. Influence of SEW on Logistic and Supply Chain Management (SCM)

The second energy consumption area is the logistics network and the reverse supply chain. Thus, Mercadona undergoes continuous innovation, while looking for improved sustainability and efficiency of its logistic. One example of this is the “Strategy of the eight” for the reverse logistics and purchases on quay, by which it collects the merchandise in the facilities of its integrated suppliers. Mercadona optimizes its logistics. The company has managed to raise the occupancy rate of its trucks to 81% of its capacity. This is achieved, on the one hand, by means of a good eco-design of the product that allowed the reduction of the “air” transport, and, on the other hand, careful planning of each route so that no vehicle travelled empty. At this point comes the reverse logistics, in which the fleet collects the products from the supplier’s facilities and deposits clean containers. The company stated, in its sustainability memo of 2016, that, “The fleet of trucks, owned by the integrated supplier Acotral, which works for Mercadona, is composed almost entirely of Euro 5 and Euro 6 engines, which meet the most stringent European emissions standards.”
Additionally, the operators of the logistics and transport sector of the company have already incorporated into their fleet several units of the so-called “mega trucks”—vehicles of 25.25 meters in length, capable of moving almost 60 tons of goods through the roads. These trucks of large dimensions will prevent CO2 emissions.
Subsequently, in the logistic block, shipments to stores are organized, reusable containers are cleaned and packaging material is prepared for recycling. Later, the stores receive the goods and return the used reusable packaging and recyclable materials to the logistics block. The change to the logistics process is called “Purchases on the dock” by the company. The company’s truck goes to the supplier’s facilities to collect the products and take them to their logistics centers, also taking advantage of the reverse logistics to carry reusable containers.
In addition, because the company has been betting on the fresh local product in recent years, this has led to an increase in local suppliers and, at the same time, shorter journeys. The company’s fleet assumes the journeys previously travelled by the supplier, thereby achieving greater efficiency. The Table 9 shows practices related to SCM.

4.4. How the Transition to CE Is Affecting to the Emissions

Table 10 shows information concerning the carbon footprint of the company, obtained mainly from the energy consumption in the shop and center, the use of gases and logistic activities. During the last period, the company has improved the ratio intensity of CO2, which link emissions and incomes.

5. Discussion

The family business literature has been associating the term sustainability with viability. In recent years, it has become clear that sustainability has several dimensions and that achieving sustainability, understood as long-term survival of the company, must take into account the elements that make up the system in which these elements operate. The community is an especially relevant stakeholder in the family business because it receives the business’s sales and provides the income necessary for the company’s survival. Thus, when family businesses seek to preserve their SEW, they pay special attention to the community.
The SEW framework highlights that one of the main objectives of family businesses is the search for continuity over time; the family will take the decisions required to achieve continuity. Business success and family balance are equally important to sustainability of the company. The family is conscious of the problem of resources exhaustion, from which the current linear model of production suffers, because it receives the disruptions produced by the community. The family will thus take the necessary steps to transition to a more environmentally sustainable model, such as CE, seeking preservation of the family’s SEW. This is the response to our first research question.
The family organizes and manages resources, responding to disruptions emitted by the community and decides the paths through which these resources will be transferred to the environment, making the decisions necessary to preserve the environment and essential resources for life. In our theory, these disruptions act as input for the family. Subsequently, SEW acts an accelerator, pressing the business to transition to a new production model, according to the model shows in Figure 3. So, we can answer our research question, the family values considered through SEW act as trigger to implement CE. On the other hand, the business perceives two inputs—the disruption produced by the community, including regulations and legal imperatives, business opportunities and financing; on the other, the family’s pressure to make decisions in order to modify the production system by adding more environmentally sustainable features, such as reduction of negative externalities. Through preservation and care of natural resources, CE introduces the idea of resource-conservative manufacturing, leading to sustainable production [35]. Resources are objects, personal characteristics, conditions, or energy that are valuable in themselves because they contribute to achievement of worthy goals [69,70]. Resources are scarce. In the analyses of sustainability, resource exchange should not be limited to family and company but must include exchanges with the community. In this context, dynamic interaction occurs between the business model, product design, production chain management and customers, treating each as an integral part of the manufacturer [19]. The case of study of Mercadona exemplify this matter, designing a system of relationships between suppliers and company that facilities the CE to each member of SCM. Company structures and their interactions currently condition the business model, whereas the interactions between energy flows, stocks and resources are noteworthy elements in CE processes [30].
The family’s desire to preserve SEW, aims to shape the business to fit the needs of the family [44]. The family will thus push the business along three possible paths: The first follows the influence generated by the family’s prominence, seeking socio-emotional or socio-ecological goals such as recognition and maintenance of reputation. Mercadona is positioned as leader in reputation in several ranks. Secondly, according to the long-term orientation of family business and the desire for transgenerational continuity, the family will press the business to change to this new scenario, which is positive for both the community and the family business. Thus, Mercadona director stated the transgenerational intention to be a family company. Thirdly, family enrichment, seeking happiness and harmony inside the family, will push the business to increase the speed of transition to a new production model such as CE. Since these three paths of influence are specifically derived from the family nature of the company, we can answer our own research question by saying that the family business will lead the transition to a new business model aligned with the CE and that this behavior will be different from that of non-family companies due to the uniqueness of the SEW of this kind of company.
Further, as to the process that occurs in the theory, we observe interactions between business and community. First, community publishes disruptions—whether normative or non-normative—that affect the business, acting as a trigger of change. The response of the business will be a gradual transition to a more environmentally sustainable model, such as CE. Thus, the company will establish a new framework of relationships with the community that will be beneficial for both subsystems. The community also provides entrepreneurial opportunities and financial support, seeking to develop and drive the CE production model.
Thanks to this transition, the company will be more sustainable in the long term, guaranteeing transgenerational continuity. Furthermore, family businesses will manufacture new products for the community, following Cradle to Cradle principles. They will help to preserve resources by employing technological nutrients. The model of Mercadona pays special attention to maintain the useful life of the resources. Ultimately, the negative externalities created by the company will diminish. The transition to the new model will gradually be completed when the business’s production follows CE principles. The Figure 3 shows all these aspect in an integrative view.
The case of study of Mercadona allows us to test the proposed model establishing several contributions, firstly the environmental sustainability as a key to continuity of the family, providing a model of production that guarantees this continuity based on the CE. Further innovative aspects of our model include analysis of the interactions among the three basic units formulated by the theory: family, business and community. The case of Mercadona explains the processes that occur within the model, which begin when the community manages the norms and regulations designed to preserve the environment, acting as a disruptor to change the business model and analyze the responses of the family and the business separately.
Our model contributes a second advance over previous studies of the sustainability of family business by adding relevance of the transition to the CE. The model analyzes not only the three subsystems but also the interactions, influences and effects between them, supported by the Mercadona case of study, answering to the third research question of this work. In addition to being useful for practitioners, explaining realities and proposing ideas for real-world practice, the final theory is novel and relevant to the study of family businesses. The case of Mercadona illustrates sustainable practices regarding the Circular Economy, which are applicable to many similar family businesses.
Our third contribution involves the practical application of SEW theory to the CE model. In recent years, the SEW approach has been applied intensely to study the family company. In fact, this theoretical framework justifies the specific behavior of the family business in its relations with the community and the environment. Such analyses have rarely used sustainability of the family business, although its characteristics give it a large explanatory capacity for sustainability. Through the SEW approach, our theory explains how the family acts in the face of disruptions produced by the community. The three dimensions of the SEW approach accurately reflect family behavior in pursuit of sustainability. Therefore, our study is one of the first to apply the scale provided by Debicki et al. [47], which includes family prominence, family continuity and family enrichment that are the three main factors that cause transition to CE model, a unique feature derived from the family character of these companies. These three dimensions, as we have showed, were present in the case of Mercadona.

Practical Implications

From a practical point of view, Mercadona is a good example for others family companies that are worried about the sustainability. Our study contributes by proposing a new model of production that is more environmentally sustainable, taking into consideration constraints such as new legislation and new technical processes in the environment of circularity by managing resources in a conservative way [65]. The goal of the company’s production department will be to reduce negative externalities. Previously, traditional business models were designed to operate within systems of Linear Economy. This new system includes dynamic interactions between business models, product design, management and supply chain customers. Care of resources includes the idea of multiple lifecycles of products and energy conservation [69,70]. The model adds value for waste prevention and environmental protection, considering these aspects as integral elements of company strategy. We thus find a dynamic system that involves a process of sharing resources with the community, viewing resources not as waste but as technological nutrients for the community. This process will ensure environmental sustainability of the family business. The case of Mercadona promotes especially the cooperation between suppliers as a key factor to perform CE being a model that need to be taken into consideration by other family business.
Secondly, the model proposes new design of industrial processes, in which resource transactions assume a new dimension, production shifts from linear to circular and business goals incorporate environmental issues. Some of these elements are related to the family, others to the company and still others to both. Environmental sustainability is achieved through the interaction of these subsystems and the new processes. Besides, the design and incorporation of reverse logistics into SCM will allow the family company to close the cycle of resources, improving its environmental sustainability.

6. Conclusions

Family businesses must consider this new scenario, in which the principles of CE are of prime importance, potentially as both threats and opportunities. The very nature of the family company positions it well to face the challenges that the new environmental scenario poses. Long-term orientation and desire to preserve the company and pass it on to subsequent generations makes analysis of sustainability issues especially important and our CE model advances this effort. Conservation of resources, use of sustainable energy [68] and reuse of components will be the key factors in this new form of competition. Moreover, Mercadona exemplify the behavior of the family business’s sustainable entrepreneurial spirit will encourage these organizations to take on the challenges of the shift to CE as real business opportunities. The family firm Mercadona perform CE since 2011 the CE. So, New, competing scenarios will emerge to help the company to survive, creating a lasting intergenerational legacy.

Acknowledgments

Research Group SEJ 232 Direction and Organization for Competitiveness. Jaen University. Research Group SEJ 478 Advanced Research in Business Addressing. Granada University.

Author Contributions

This study is a joint work of the four authors. Pedro Núñez-Cacho (First Author) contributed to the ideas of family business companies and designed the model, while Valentín Molina and Francisco A. Corpas performed the Circular economy analysis. Finally, Francisco Cortés (fourth author) worked with data. The four authors interpreted the results and develop discussion and conclusion sections.

Conflicts of Interest

The authors declare no conflict of interest.

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Figure 1. Transition of Family Business to CE. Source: Developed by the authors.
Figure 1. Transition of Family Business to CE. Source: Developed by the authors.
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Figure 2. CE intra suppliers of Mercadona. Source: Developed by the authors.
Figure 2. CE intra suppliers of Mercadona. Source: Developed by the authors.
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Figure 3. Transition to CE model of Mercadona. Source: Author’s elaboration.
Figure 3. Transition to CE model of Mercadona. Source: Author’s elaboration.
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Table 1. Material analyzed for the case study.
Table 1. Material analyzed for the case study.
Environmental report of the company 2015–2016
Environmental report of the company 2013–2014
Environmental report of the company 2011–2012
Environmental report of the company 2010
Annual report of the company 2011–2016
Progress reports sent to the World Pact 2010–2016
Balances and annual accounts Period 2011–2016
Table 2. Economic-financial profile of the Mercadona Company.
Table 2. Economic-financial profile of the Mercadona Company.
Concept20162015201420132012
Operating income 119,823,51519,077,48118,458,96718,062,45017,552,041
Result ordinary before Tax 1802,912810,265737,915717,595710,215
Result 1636,260611,345543,259515,324508,441
Total Active 18,194,6377,660,1147,060,3866,517,3336,281,938
Own funds 14,911,8434,392,2633,884,2063,438,1103,019,232
Economic profitability (%)9.8010.5810.4511.0111.31
Financial profit (%)16.3518.4519.0020.8723.52
General liquidity1.331.291.191.131.09
Indebtedness (%)40.0642.6644.9947.2551.94
Number of employees79,56375,38174,22874,08271,333
1 Thousands of Euros. Source: Author’s elaboration from Annual sustainability reports 2012–2016.
Table 3. Company property profile.
Table 3. Company property profile.
20162015201420132012
Own funds 1 4,911,8434,392,2633,884,2063,438,1103,019,232
Fixed liability 91,743106,888135,498185,801223,051
Liquid liabilities 3,191,0513,160,9633,040,6822,893,4223,039,655
External Funds 5,003,5864,499,1514,019,7043,623,9113,242,283
Total funds 9,915,4298,891,4147,903,9107,062,0216,261,515
Own/Total Ratio50%49%49%49%48%
Ratio Family property92.7%
1 Thousands of Euros. Source: Author’s elaboration.
Table 4. Waste generation.
Table 4. Waste generation.
Year% Waste/kg SoldWaste of Maintenance (g/m3)Cardboard (kg/m3)Plastic (kg/m3)Poliexpan (kg/m3)Wood (kg/m3)
20160.75225.460.370.040.05
20150.67245.320.370.050.08
20140.8105.280.360.070.05
20130.72105.170.340.050.06
20120.71165.080.310.040.09
Source: Author’s elaboration from Annual sustainability reports 2012–2016.
Table 5. Recycling of waste (tons of recovered products).
Table 5. Recycling of waste (tons of recovered products).
YearCard Board (Tons)Plastic & Poliexpan. (Tons)Woodkg/m3 Served to ShopBag/PurchaseBattery Collected (Tons)% RecycleRecycled Materials (Tons)
2016181,00013,40016915.920.1616474%196,000
2015170,00013,30016795.820.1715073%185,000
2014159,30012,86016505.760.17152 174,000
2013150,70011,21018705.610.18160 164,000
2012145,5009,99025705.210.21152
Source: Author’s elaboration from Annual sustainability reports 2012–2016.
Table 6. Practices of CE applied by Mercadona to Waste management.
Table 6. Practices of CE applied by Mercadona to Waste management.
TopicPractices
Reuse
Use of surplus fruit for the production of juices, nectars and concentrates.
100% use of pruning waste as fertilizer.
Pool of reusable containers (Logifruit). It is a closed cycle in which the transport and storage of the merchandise takes place in reusable boxes that are washed and recovered over many cycles of use. The broken boxes are reused to make more boxes and plastic pallets, closing the cycle. Reuse: Pool of reusable containers (Logifruit). It is a closed cycle in which the transport and storage of the merchandise takes place in reusable boxes that are washed and recovered over many cycles of use. The broken boxes are reused to make more boxes and plastic pallets, closing the cycle.
Reduce
The SPB cleaning products supplier has made an ambitious commitment to eco-design by changing HDPE bottles to PET and reducing their weight. That’s how he got reduce 32 tons of plastic, to which is added the saving of more than 2000 m3 of water, thanks to the reuse of its process waters.
Recycling
Use of recycled packaging material in the preparation of new packaging and of complete product lines (such as the Greenwood cleaning household line).
Waste
Recovery of plastic (Sp-Berner). In 2011 Mercadona reached the line of the new range of household cleaning manufactured from plastic waste generated at Mercadona and other integrated suppliers. The process has been developed by Sp-Berner. Waste: Utilization of 100% of land from the washing of fruits and vegetables to recover agricultural parcels. Waste: Recovery of flours for feed. Grupo Siro, an integrated supplier of Mercadona, values the by-products of its plants, where Hacendado products are manufactured and converted into raw materials for animal feed, saving resources and reducing waste in the agri-food chain.
Utilization of 100% of land from the washing of fruits and vegetables to recover agricultural parcels.
Recovery of flours for feed. Grupo Siro, an integrated supplier of Mercadona, values the by-products of its plants, where Hacendado products are manufactured and converts them into raw materials for animal feed, saving resources and reducing waste in the agri-food chain.
Residues
Use of by-products for animal feed, either directly or for the production of feed.
Residues: The vegetable supplier has implemented measures of CE that allow products not suitable for processing, such as courgettes and cucumbers, to be used by Dafsa, another integrated supplier that produces juice for Mercadona.
Source: Authors elaboration.
Table 7. General information on company energy.
Table 7. General information on company energy.
YearIncomes (mill. €)Environmental InvestmentReduction KwH (mill.)Reduction CO2 (Tons Saved)Energy Intensity Index
201619,823.127,000,00020,000,000nd37,536.22
201519,077.825,000,00010,000,00012,000,00037,829.94
201418,458.625,000,00034,000,00023,400,00035,852.49
201318,062.524,100,00024,000,00019,000,00035,532.27
201217,552.04N.a.135,000,000114,000,000N.a.
Source: Author’s elaboration from Annual sustainability reports 2012–2016.
Table 8. Practices of CE applied on company energy management.
Table 8. Practices of CE applied on company energy management.
TopicPractices
Energy efficient
Caladero, a fish supplier, has introduced reusable industrial packaging to its process and has improved the eco-design of 14 references, which has saved 28 tons of packaging material. In addition, its different energy efficiency measures have allowed annual savings of more than 600,000 kWh.
The interprovider of fruits directs the 1100 Tons/year of the sub product that it generates in the preparation of the natural peeled pineapple to animal feeding. In addition, it has saved 33,000 kWh with energy efficiency measures such as the installation of LEDs and improvements in insulation [68].
Source: Author’s elaboration.
Table 9. Practices of CE applied on SCM.
Table 9. Practices of CE applied on SCM.
TopicPractices
Logistic
Saplex, which manufactures (among other products) the garbage bags Bosque Verde, has reduced the thickness of many of its products and has improved stacking to increase the number of units per box. This has allowed to save 160 tons of polyethylene/year and to transport the same amount of product using less pallets.
Seprolesa, integrated supplier of packaged legumes, has lightened 25 gr. glass containers (9%), achieving savings of more than 1300 tons. Besides, it has implemented process improvements that have saved 117 Tons of cardboard and more than 100,000 m3 of water/year.
Source: Author’s elaboration.
Table 10. Emissions of Mercadona company.
Table 10. Emissions of Mercadona company.
YearIncomes (mill. €)CO2 Total (Tons)CO2/m3 CommodityRefrigerant Gases (g/m3)Intensity CO2 (CO2/Incomes)
201619,824156747.29Na0.079047
201519,077151547.78Na0.079413
201418,459 5.8
201318,062 9.1
201217,553 8.1
Source: Author’s elaboration from Annual sustainability reports 2012–2016.
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