Institutional Conditions and Practical Constraints in Circular Economy Transitions Among Small and Medium Enterprises
Main Article Content
Abstract
This study explores how small and medium enterprises engage with circular economy practices by examining enablers, barriers, and implementation patterns in the scholarly literature. Through a structured review of peer-reviewed sources, key conditions that support or hinder circular adoption in SMEs are identified. Organizational flexibility, local embeddedness, and entrepreneurial orientation appear as strategic assets, while financial constraints, regulatory fragmentation, and technical capacity gaps limit advancement. The research also highlights the critical role of managerial values, supply chain cooperation, and access to digital infrastructure. Sectoral diversity and geographical location further influence the degree of circular integration, indicating the need for differentiated approaches. Current frameworks often overlook these contextual variables, reducing the visibility of incremental and informal innovations occurring within smaller firms. To address these issues, the paper recommends deeper theoretical engagement with the SME context, improved measurement tools, and stronger support mechanisms through cross-sectoral partnerships. These recommendations aim to inform both policy development and scholarly inquiry by framing circular economy transitions in ways that reflect the realities of the most prevalent business segment globally. The study provides a comprehensive synthesis to guide future research and strategy formulation in sustainable enterprise development.
Article Details
Section
How to Cite
References
Abdullah, M. H. A. B., B. Gardi, & D. Darmawan. (2021). Innovation in Human Resource Management to enhance Organizational Competitiveness in the Era of Globalization, Journal of Social Science Studies, 1(1), 51 – 58.
Aghelie, A. (2017). Exploring Drivers and Barriers to Sustainability Green Business Practices within Small Medium Sized Enterprises: Primary Findings. International Journal of Business & Economic Development, 5(1), 41 – 48.
Alamin, S. R. L., D. Nurmalasari, D. Darmawan, & S. Arifin (2021). Comprehensive Relational Value Marketing Framework, Journal of Social Science Studies, 1(1), 299 – 304.
Arifin, S. & D. Darmawan. (2022). Adaptive Approach in Crisis Management for Economic Uncertainty in Organization, Journal of Social Science Studies, 2(1), 271 – 276.
Autio, E., Nambisan, S., Thomas, L. D., & Wright, M. (2018). Digital Affordances, Spatial Affordances, and the Genesis of Entrepreneurial Ecosystems. Strategic Entrepreneurship Journal, 12(1), 72-95.
Bocken, N. M. P., Short, S. W., Rana, P., & Evans, S. (2016). Product Design and Business Model Strategies for a Circular Economy. Journal of Industrial and Production Engineering, 33(5), 308–320.
Caldera, H. T. S., Desha, C., & Dawes, L. (2019). Transforming Manufacturing to be ‘Good for Planet and People’, Through Enabling Lean and Green Thinking in Small and Medium-Sized Enterprises. Sustainable Earth, 2, 1-19.
Chakravarty, S. (2022). Resource Constrained Innovation in a Technology Intensive Sector: Frugal Medical Devices from Manufacturing Firms in South Africa. Technovation, 112, 1-16.
Chatzakis, E. (2015). Maintaining Agility: A Study of Obscure New Product Development Practices in Small and Medium Sized Manufacturing Enterprises to Understand How They Maintain Relevance to Their Markets. University of Northumbria at Newcastle (United Kingdom), Newcastle.
da Silva, V. P. (2019). Economia Circular: Um Novo Valor Para Negócios Sustentáveis. RAE-Revista de Administração de Empresas, 59(3), 222-222.
Darmawan, D. (2013). Prinsip Prinsip Perilaku Organisasi. Pena Semesta - PT. JePe Press Media Utama, Surabaya.
Darmawan, D., Mardikaningsih, R., Sinambela, E. A., Arifin, S., Putra, A. R., Hariani, M., Irfan, M., Al Hakim, Y. R., & Issalillah, F. (2020). The Quality of Human Resources, Job Performance and Employee Loyalty. International Journal of Psychosocial Rehabilitation, 24(3), 2580–2592.
Darmawan, D. (2024). Distribution of Six Major Factors Enhancing Organizational Effectiveness. Journal of Distribution Science, 22(4), 47–58.
Darmawan, D., J. Jahroni, M. Irfan, & Y. R. Al Hakim. (2022). Leadership and Employee Welfare in Improving Organizational Productivity, Journal of Social Science Studies, 2(2), 173 – 176.
De Jesus, A., & Mendonça, S. (2018). Lost in Transition? Drivers and Barriers in the Eco-Innovation Road to the Circular Economy. Ecological Economics, 145, 75–89.
Dey, P. K., Malesios, C., Chowdhury, S., Saha, K., Budhwar, P., & De, D. (2022). Adoption of Circular Economy Practices in Small and Medium-Sized Enterprises: Evidence from Europe. International Journal of Production Economics, 248, 1-19.
Eddine, B. A. S., Darmawan, D., Mardikaningsih, R., & Sinambela, E. A. (2023). The Effect of Knowledge Management and Quality of Work Life on Employee Commitment. Journal of Human Sciences, 10(1), 87–100.
European Commission. (2015). Closing the Loop – An EU Action Plan for the Circular Economy. European Commission, Brussels.
Fogarassy, C., & Finger, D. C. (2020). Theoretical and Practical Approaches of Circular Economy for Business Models and Technological Solutions. Resources, 9(6), 1-9.
Gani, A., R. K. Khayru, & D. Darmawan. (2021). Minimalism Trends in Consumption Behavior: Social Inequality and Industrial Dynamics, Journal of Social Science Studies, 1(1), 129 – 134.
Gani, A. & D. Darmawan. (2022). Ethics and Accountability in Artificial Intelligence-Based Managerial Decision Making, Journal of Social Science Studies, 2(1), 147 – 152.
Geissdoerfer, M., Savaget, P., Bocken, N. M. P., & Hultink, E. J. (2017). The Circular Economy – A New Sustainability Paradigm?. Journal of Cleaner Production, 143(1), 757–768.
Geng, Y., Fu, J., Sarkis, J., & Xue, B. (2012). Towards a National Circular Economy Indicator System in China: An Evaluation and Critical Analysis. Journal of Cleaner Production, 23(1), 216–224.
Ghenta, M., & Matei, A. (2018). SMEs and the Circular Economy: From Policy to Difficulties Encountered During Implementation. Amfiteatru Economic, 20(48), 294-309.
Ghisellini, P., Cialani, C., & Ulgiati, S. (2016). A Review on Circular Economy: The Expected Transition to a Balanced Interplay of Environmental and Economic Systems. Journal of Cleaner Production, 114, 11–32.
Gibb, A. A. (2000). SME Policy, Academic Research and the Growth of Ignorance: Mythical Concepts, Myths, Assumptions, Rituals and Confusions. International Small Business Journal, 18(3), 13–35.
Gold, S., & Heikkurinen, P. (2018). Transparency Fallacy: Unintended Consequences of Stakeholder Claims on Responsibility in Supply Chains. Accounting, Auditing & Accountability Journal, 31(1), 318-337.
Haack, P., & Rasche, A. (2021). The Legitimacy of Sustainability Standards: A Paradox Perspective. Organization Theory, 2(4), 1 – 25.
Hart, C. (1998). Doing a Literature Review: Releasing the Social Science Research Imagination. SAGE Publications, London.
Hofstetter, J. S., De Marchi, V., Sarkis, J., Govindan, K., Klassen, R., Ometto, A. R., Spraul, K. S., Bocken, N., Ashton, W. S., Sharma, S., Erben, M. J., Jensen, C., Dewick, P., Schroder, P., Sinkovics, N., Ibrahim, S. E., Fiske, L., Goerzen, A., & Vazquez-Brust, D. (2021). From Sustainable Global Value Chains to Circular Economy—Different Silos, Different Perspectives, But Many Opportunities to Build Bridges. Circular Economy and Sustainability, 1(1), 21-47.
Howard, M., Böhm, S., & Eatherley, D. (2022). Systems Resilience and SME Multilevel Challenges: A Place-Based Conceptualization of the Circular Economy. Journal of Business Research, 145, 757-768.
Ishaq, M. S. H. B., D. Darmawan, & Sudjai. (2021). Gig Economy on Workers’ Welfare and Labor Market Stability, Journal of Social Science Studies, 1(2), 167 – 170.
Kamulegeya, G., Mugwanya, R., & Hebig, R. (2019). Requirements for Measurement Dashboards and Their Benefits: A Study of Start-Ups in an Emerging Ecosystem. In 2019 45th Euromicro Conference on Software Engineering and Advanced Applications, 13(2), 300-308.
Kirchherr, J., Reike, D., & Hekkert, M. (2018). Conceptualizing the Circular Economy: An Analysis of 114 Definitions. Resources, Conservation and Recycling, 127, 221–232.
Kristoffersen, E., Blomsma, F., Mikalef, P., & Li, J. (2021). The Smart Circular Economy: A Digital-Enabled Circular Strategies Framework for Manufacturing Companies. Journal of Business Research, 120, 241–261.
Lieder, M., & Rashid, A. (2016). Towards Circular Economy Implementation: A Comprehensive Review in Context of Manufacturing Industry. Journal of Cleaner Production, 115, 36–51.
Mardikaningsih, R & S. Arifin. (2021). Study on Education Level and Consequences of Licensing and Interest in Making Small Business Licensing, Journal of Social Science Studies, 1(1), 19-24.
Mardikaningsih, R. & D. Darmawan. (2021). Business Sustainability Strategies in the Facing of Regulatory Uncertainty and Managerial Challenges, Journal of Social Science Studies, 1(2), 111 – 118.
Miocevic, D., & Morgan, R. E. (2018). Operational Capabilities and Entrepreneurial Opportunities in Emerging Market Firms: Explaining Exporting SME Growth. International Marketing Review, 35(2), 320-341.
Mittal, S., Khan, M. A., Romero, D., & Wuest, T. (2018). A Critical Review of Smart Manufacturing & Industry 4.0 Maturity Models: Implications for Small and Medium-Sized Enterprises. Journal of Manufacturing Systems, 49, 194-214.
Mottet, A., Bicksler, A., Lucantoni, D., De Rosa, F., Scherf, B., Scopel, E., Ridaura, S. L., Herren, B. G., Kerr, R. B., Sourisseau, J. M., Petersen, P., Chotte, J. L., Loconto, A., & Tittonell, P. (2020). Assessing Transitions to Sustainable Agricultural and Food Systems: A Tool for Agroecology Performance Evaluation (TAPE). Frontiers in Sustainable Food Systems, 4(1), 579-584.
Nath, P. (2020). Taking Measure: The Link Between Metrics and Marketing’s Exploitative and Explorative Capabilities. European Journal of Marketing, 54(7), 1549-1580.
Negara, D. S., D. Darmawan, B. Gardi. (2021). The Approach of Consumer Reviews to Product Competitiveness and Management Strategies, Journal of Social Science Studies, 1(2), 149 – 154.
Niet, T., Arianpoo, N., Kuling, K., & Wright, A. S. (2022). Increasing the Reliability of Energy System Scenarios with Integrated Modelling: A Review. Environmental Research Letters, 17(4), 1-7.
Nuraini, R., S. N. Halizah, R. Mardikaningsih, Y. Vitrianingsih, & M. E. Safira. (2022). The Role of Social Entrepreneurship in Environmental Conservation: Challenges, Strategies, and Sustainability, Journal of Social Science Studies, 2(1), 47 – 54.
Ormazabal, M., Prieto-Sandoval, V., Puga-Leal, R., & Jaca, C. (2016). Circular Economy in Spanish SMEs: Challenges and Opportunities. Journal of Cleaner Production, 142, 268–279.
Priyono, A., Idris, F., & Lim, S. B. A. H. (2020). Achieving Ambidexterity in Internationalization: Analysis of How Smes Cope with Tensions Between Organizational Agility–Efficiency. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 188-196.
Ranta, V., Aarikka-Stenroos, L., Ritala, P., & Mäkinen, S. J. (2018). Exploring Institutional Drivers and Barriers of the Circular Economy: A Cross-Regional Comparison of China, the US, and Europe. Resources, Conservation and Recycling, 135, 70–82.
Revell, A., & Blackburn, R. A. (2007). The Business Case for Sustainability? An Examination of Small Firms in the UK's Construction and Restaurant Sectors. Business Strategy and the Environment, 16(6), 404–420.
Rizos, V., Behrens, A., Van der Gaast, W., Hofman, E., Ioannou, A., Kafyeke, T., Flamos, Alexandros, Rinaldi, R., Papadelis, S., Hirschnitz-Garbers, M., & Topi Corrado. (2016). Implementation of Circular Economy Business Models by Small and Medium-Sized Enterprises (SMEs): Barriers and Enablers. Sustainability, 8(11), 1212-1220.
Salvioni, D. M., Bosetti, L., & Fornasari, T. (2021). Implementing and Monitoring Circular Business Models: An Analysis of Italian SMEs. Sustainability, 14(1), 270.
Schaper, M. (2002). The Challenge of Environmental Responsibility and Sustainable Development: Implications for SME and Entrepreneurship Academics. Radical Changes in the World: Will SMEs Soar or Crash?, 1(1), 541–553.
Scheel, C., Aguiñaga, E., & Bello, B. (2020). Decoupling Economic Development from the Consumption of Finite Resources using Circular Economy. A Model for Developing Countries. Sustainability, 12(4), 1291 – 1302.
Sharma, N. K., Govindan, K., Lai, K. K., Chen, W. K., & Kumar, V. (2021). The Transition from Linear Economy to Circular Economy for Sustainability among SMEs: A Study on Prospects, Impediments, and Prerequisites. Business Strategy and the Environment, 30(4), 1803-1822.
Stahel, W. R. (2010). The Performance Economy (2nd ed.). Palgrave Macmillan, London.
Storey, D. J. (1994). Understanding the Small Business Sector. Routledge, London.
Su, B., Heshmati, A., Geng, Y., & Yu, X. (2013). A Review of the Circular Economy in China: Moving from Rhetoric to Implementation. Journal of Cleaner Production, 42, 215–227.
Takacs, F., Brunner, D., & Frankenberger, K. (2022). Barriers to a Circular Economy in Small-and Medium-Sized Enterprises and their Integration in A Sustainable Strategic Management Framework. Journal of Cleaner Production, 362, 1-16.
Tilley, F. (1999). The Gap Between the Environmental Attitudes and the Environmental Behaviour of Small Firms. Business Strategy and the Environment, 8(4), 238–248.
Tranfield, D., Denyer, D., & Smart, P. (2003). Towards a Methodology for Developing Evidence‐Informed Management Knowledge by Means of Systematic Review. British Journal of Management, 14(3), 207–222.
Ünal, E., Urbinati, A., Chiaroni, D., & Manzini, R. (2019). Value Creation in Circular Business Models: The Case of a US Small Medium Enterprise in the Building Sector. Resources, Conservation and Recycling, 146, 291-307.