The circular economy (CE) activities have positive effects on the production processes, on the environment and on society. However, the manner in which it affects a firm’s economic performance. has been overlooked by previous researches. To this end, using data from European SMEs, we empirically investigate, under the self-determination theory, to what extent the number of CE activities affects a firm’s economic performance. Our results show that the number of CE activities affect a firm’s economic performance in a dual manner, both positive and negative, showing an inverted U-shaped relationship. In particular, while increasing the number of CE activities positively affect a firm’s economic performance, a broader implementation may negatively impact operations and consequently the economic performance. This research advances the scientific understanding of the CE and provides managers with suggestions on how to maximize the benefits brought by the CE in terms of economic performance by implementing the right amount of CE activities.