Towards a transformative model of circular economy for SMEs

Abstract

This study develops a transformative conceptual model for small and medium-sized enterprises (SMEs) from emerging markets, using a multilevel perspective (MLP) framework. The transformative model highlights four phases through which circular economy (CE) practices present their transformative characteristics. Our model maps the transition and interactions of the four phases, three systems at three levels of analysis: macro-, meso- and micro-level. The distinctive contribution of our model is that it presents a temporal view of how firms evolve towards a CE and actors’ vital role and agentic resources in implementing transformative change. Following the four stages of transition: emerging, filtering, stabilizing, and transforming, our transformative model of SMEs focuses on the adoption of the CE approach by analyzing macro-, meso- and micro-level influences to achieve sustainable development and offer a solid foundation for future studies. We develop several testable propositions with implications for practice for SMEs and for entrepreneurship theory in delivering sustainable innovation.