Money matters: The role of money as a regional and corporate financial resource for circular economy transition at firm-level

Abstract

This study addresses the role of different financial resources in driving circular economy activities at the firm level, which are a particular form of innovation. While the impact of financial resources on innovation activities has been widely researched, their relationship with the circular economy has not been adequately studied. Previous studies have focused primarily on corporate financial resources and investments by banks and investors. By using unique survey data from Swiss firms, we break new ground by examining the importance of regional financial resources, including regional household income and public procurement volumes. In doing so, we make a valuable contribution to the fields of (eco-)innovation and economic geography. We also examine the timing of financial resource deployment, looking at both early adopters and pioneers of the circular economy. Our results, derived from a comprehensive multivariate regression analysis that includes a representative sample of over 1000 observations, confirm that regional household income and public procurement volumes play a central role in the successful implementation of the circular economy – that is, money matters. Additionally, our research reveals distinct and independent impacts of corporate and regional financial resources, advocating for their combined influence. Importantly, we find that financial resources are crucial for both beginners and leaders in the circular economy, emphasizing the profound policy implications and central role in driving and supporting the circular economy.