Mind the gap: Towards a systematic circular economy encouragement of small and medium-sized companies

Abstract

Despite a growing number of circular economy (CE) strategies, reports, methods and tools, researchers have provided little empirical evidence on the corporate practices in small and medium-sized enterprises (SMEs) that are crucial to affect the transition towards a CE. Although there is an increase of studies on barriers for and driver to CE, there is little knowledge about what represents CE for SMEs and which topical areas are of central interest especially for SMEs. Based on CE related literature, we identified sustainability, resource efficiency, differentiation, cooperation with stakeholders, independence from resource supply and life cycle knowledge as such topical areas. Drawing on empirical survey data gathered from a cross-sectional sample of N = 183 SMEs in Austria, we first applied an Importance-Performance Analysis (IPA) to identify gaps between the perceived performance and importance ratings, reported by SME representatives, in those topical areas. The identified gaps give a direction which topical areas offer opportunities for further improving a company’s performance. The findings reveal that the efficient use of resources as well as the procurement of resources plays a major role for Austrian SMEs. Cooperation with stakeholders, however, seems to be an underestimated topical area in the present sample. Based on the results of this IPA, we carried out a cluster analysis to identify groups of SMEs that vary according their overall perceived performance in and importance of the topical areas of CE. The result reveals four strategic groups of SMEs, namely CE frontrunners, fast followers, a late majority and laggards, which provide a basis for policy makers, intermediaries or cluster representatives to effectively address diverse SMEs as specific target groups by addressing topical areas of CE in order to facilitate a shift towards CE.