Exploring value creation and appropriation in the reverse clothing supply chain

Purpose of this paper: The purpose of this paper is to explore the two processes of value creation and appropriation among companies in a retail reverse logistics system. The value concept has in recent years got increased attention in research on reverse logistics (Jayaraman and Luo, 2007). However, there is still a lack of more detailed understanding of the values created. There is also a need to not only consider the value creation, but also how the value is appropriated among supply chain members. Whereas the value creation process is concerned with the total amount of value created among supply chain members, the value appropriation process decides the involved companies' ability to extract money from the value created (Wagner et al., 2010). Design/methodology/approach: Grounded in the two fundamental processes of creating and appropriating value (Mizik and Jacobsen, 2003), this paper applies the value concept on retail reverse logistics practices. The paper is based on a case study of the take-back scheme for used clothes in the textile fashion industry. The case study includes collectors (clothing retailers) as well as specialised sorting companies responsible for sorting and further distribution of the used clothes. Findings: The retail reverse logistics system in the case study consists of multiple stakeholders in a complex network. Different types of values created are identified, and strategies for value appropriation among the different companies are discussed. A strong power position based on knowledge and/or financial strengths is here identified as a major factor in the value appropriation process. Value: The value concept has so far been discussed at a superficial level in research on retail reverse logistics. This research demonstrates that the value concept, including value creation as well as appropriation, helps to understand the rationale behind a certain supply chain structure in terms of participating supply chain members, types of activities conducted, and division of responsibility. Practical implications (if applicable): As a company's resources are limited, companies need to manage the trade-off between the value creation and appropriation processes, and strategically find a suitable mix between them. References: Jayaraman, V. and Luo, Y. (2007). Creating Competitive Advantages Through New Value Creation: A Reverse Logistics Perspective.' Academy of Management Perspectives, Vol. 21 No. 2, pp. 56-73. Mizik, N. and Jacobson, R. (2003). Trading off between value creation and value appropriation: The financial implications of shifts in strategic emphasis, Journal of Marketing, Vol. 67 No 1, pp. 63-76. Wagner, S., Eggert, A. and Lindemann, E. (2010). Creating and appropriating value in collaborative relationships, Journal of Business Research, Vol. 63 No 8, pp. 840-848.