Barriers to the deployment of PSS for a circular economy in housing: an institutional theory perspective

Purpose There is an urgent call for transitioning towards a circular economy (CE) in housing. Pivotal to this transition is implementing business models aligned with CE principles, such as the ones informed by the product-service system (PSS). However, incorporating the PSS into housing to realize a CE faces significant challenges within an industry characterized by systemic rigidity and institutional inertia. This study investigates the barriers faced in deploying the PSS and its CE potential in housing. Design/methodology/approach The authors conducted 15 semi-structured interviews with stakeholders experienced in the deployment of PSS and CE in housing projects. Analysis used deductive coding, guided by institutional theory’s regulative, normative and cultural-cognitive pillars, followed by inductive coding development. Findings Twelve key barriers emerged across three pillars, underlying the significance of not only regulative but also normative and cultural-cognitive barriers. The findings indicate that the current institutional environment impedes the establishment of legitimacy for the deployment of PSS and its CE potential in housing. Practical implications Following the findings, a diversified institutional support system enabled by the collaborative effort of the government, managing and financing actors and industry associations is required to overcome deployment barriers. Originality/value This study advances knowledge at the intersection of housing and circular business model innovation. It connects theory to practice by applying institutional theory to real-world barriers in deploying the PSS for a CE in housing and lays the groundwork for practical changes.