Abstract
Small and medium-sized enterprises (SMEs) are increasingly aware of the benefits of closing loops and improving resource efficiency, such as saving material costs, creating competitive advantages, and accessing new markets. At the same time, however, various barriers pose challenges to small businesses in their transition to a circular economy, namely a lack of financial resources and lack of technical skills. The aim of this paper is to increase knowledge and understanding about the barriers and enablers experienced by SMEs when implementing circular economy business models. Looking first at the barriers that prevent SMEs from realising the benefits of the circular economy, an investigation is carried out in the form of a literature review and an analysis of a sample of SME case studies that are featured on the GreenEcoNet EU-funded web platform. Several enabling factors that help SMEs adopt circular economy practices are then identified. The paper concludes that although various policy instruments are available to help SMEs incorporate circular economy principles into their business models, several barriers remain. The authors recommend that European and national policies strengthen their focus on greening consumer preferences, market value chains and company cultures, and support the recognition of SMEs’ green business models. This can be achieved through the creation of dedicated marketplaces and communities of practice, for example.
Highlights
The circular economy is a concept rooted in several different schools of thought and theories that question the prevailing linear economic systems, which assume that resources are infinite [1,2,3]
This paper has analysed the barriers and enabling factors identified by Small and medium-sized enterprises (SMEs) during the implementation of their circular economy business model
The SMEs were selected from the GreenEcoNet platform, using a restrictive set of criteria in order to make the conclusions relevant for “circular economy” initiatives
Summary
The circular economy is a concept rooted in several different schools of thought and theories that question the prevailing linear economic systems, which assume that resources are infinite [1,2,3]. Among the first authors considered to have influenced the development of the circular economy concept is Kenneth Boulding [4], who in 1966 envisaged a “spaceman economy” that would operate by reproducing the initially limited stock of inputs and recycling waste outputs. This concept has since evolved such that today policy-makers, academics, and the business community increasingly recognise the need to move towards a new economic model whereby materials and energy from discarded products or byproducts are reintroduced into the economic system [5,6]. Technological and organisational innovations underpinning a circular economy would allow Europe’s resource productivity to grow by 3% by 2030, equating to €1.8 trillion total benefits in three areas: mobility, food, and the built environment, including savings in primary resource costs and in costs linked to externalities, such as health impacts from air pollution [8]
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