This study aims to address a significant gap in the International Business (IB) literature by analysing the implications of adopting a Circular Economy (CE) strategy on the competitiveness of the fashion sector in emerging economies, based on an Action Research Project experience in Colombia. This study develops an empirically validated conceptual model tailored to the sector’s high environmental impact potential and the limited availability of CE literature from the perspective of developing countries.
This research used a rigorous Action Research Project spanning two iterative cycles (Exploratory and Improvement), a recognised methodology for generating new academic insights while solving real-world business problems. This study is supported by an extensive literature review and qualitative methods, including focus groups and semi-structured interviews with experts, expanding the scope to include practitioners with extensive experience across Latin American contexts.
This research proposed the Advanced Competitive and Circular ENterprise Development model (ASCEND) to organise competitiveness drivers at the business, structural and systemic levels, framed by six CE fields of action. Seven key drivers were confirmed: environmental management, infrastructure, innovation capacity, economic capacity, technology, organisational performance and operational performance. Human Talent Management emerged as a vital driver, especially in this labour-intensive sector. Innovation was confirmed as essential across all CE fields to empower workers to “think circular”. The model is supported by mapping CE fields to RBV, DC, IO and IB perspectives.
The ASCEND model provides actionable insights by proposing that CE strategic models must serve as an “equaliser,” balancing external systemic factors with the internal capacity to develop and reconfigure capabilities in uncertain, emerging markets. Future research should use the replicable Action Research Project methodology for cross-country comparative studies and the quantitative validation of the ASCEND model to the most effective implementation methodologies.
The findings of this study provide a strategic lens for international policymakers, MNE managers and SME owners of regions where the fashion sector plays a pivotal economic role. This research highlights the contribution of the CE and the need for supportive legislative tools, such as Extended Producer Responsibility (EPR) policies, and coordinated efforts to overcome the four identified barriers: economic, cultural, technical and institutional/legislative.
Implementing the model can provide an opportunity to create sustainable jobs in the current uncertain economic reality, contribute to mitigating the fashion industry’s environmental impact and increase the concern of governments and institutions in strengthening entities that enhance regional competitiveness, such as clusters and trade chambers.
This research advocates for the implementation of the CE in the fashion sector within developing countries, particularly in the Latin American region. This paper is original in its focus on linking the CE as a source of competitive advantage in the global market. Therefore, this study highlights the fashion sector in Latin American emerging economies as a topic that has been confirmed to be insufficiently explored in detail within the academic literature. This study contributes theoretically by positioning the model within core competitive advantage frameworks (RBV/DC) and an IB context, offering crucial guidance for international trade management and sustainable development.
