Achieving Circularity is a Distant Dream: Entrepreneurial Barriers to Circular Business Models in SMEs of Emerging Economies

Purpose: Circularity has acted as an essential phenomenon for Small and Medium Enterprises (SMEs) in emerging economies, pressuring entrepreneurs to its adoption in their businesses. During the adoption and implementation of circularity, entrepreneurs or circular entrepreneurs (to be precise) are facing various challenges to its effective functioning. However, the scholarly literature has offered limited research into this phenomenon. Thus, the purpose of this research is to identify the various barriers and sub-barriers for circular entrepreneurs to adopt circularity in SMEs of emerging economies.

Design/methodology/approach: A combined qualitative and quantitative approach was employed to achieve the objectives of the study. In the first stage, through an extensive literature review, a list of barriers was identified and in the second stage, a deductive approach was employed to finalize the barriers. Finally, Best-Worst Method (BWM), a multi-criteria decision-making (MCDM) method, was used to analyze the significant importance of the barriers.

Findings: The findings of the study suggested the ‘financial barrier’ as the first-ranked barrier in the adoption of Circular Business Models (CBMs), followed by the ‘regulatory and operational barriers’ as the top second and third barriers. In terms of sub-barriers, ‘lack of access to funding and capital’ has been identified as the top sub-barrier in the adoption of CBM, followed by ‘excessive regulations and red tape’ and ‘challenges due to ambiguity of the concept’.

Practical implications: To transition from a circular to a linear business approach considerably quicker and smoother, entrepreneurs may utilize the findings of this study as a blueprint for the steps to overcome the barriers in a linear to a circular transition.

Originality: This research differentiates from other studies due it solicited input directly from the people who are most familiar with the challenges of making the transition from linear to CBM, i.e. the entrepreneurs themselves.