Organisational transformation toward circular economy in SMEs. The effect of internal barriers

Abstract

This study investigates the dynamic process of circular economy (CE) implementation in small and medium enterprises (SMEs). We draw on an integrated theoretical framework that combines environmental literature and strategic orientation to explore the interplay between barriers, organisational transformation, and different stages of CE integration. Through a comprehensive empirical analysis, based on an EU database of 16,365 SMEs, we confirm the presence of feasibility barriers and resource related barriers that affect the CE implementation process. Our findings reveal a twofold pattern: initial feasibility barriers, primarily perceived by senior managers, and subsequent resource-related barriers that SMEs encounter during implementation. Moreover, our findings reveal that successful organisational transformation pivots on the SME's capacity to transform these barriers from deterrents into challenges to be overcome. We highlight the significance of a gradual integration approach, emphasizing the role of diverse environmental activities.