Learning from Failure and Success: The Challenges for Circular Economy Implementation in SMEs in an Emerging Economy

Abstract

While there is ample research on the barriers and enablers for implementing circular economy (CE) in large companies and developed economies, scant research exists concerning the factors impacting CE implementation in small and medium enterprises (SMEs) in emerging economies. To address this gap, our research seeks to determine the internal and external barriers SMEs face when implementing CE initiatives in emerging economies and identify how they can leverage CE implementation through bottom-up approaches. We present a multiple-case study of five SMEs in Mexico. Our findings suggest that the lack of regional enabling conditions and unsuitability between the CE business strategy and the context can further exacerbate implementation barriers. In this sense, we found that in our study’s unsuccessful case, the company failed to align its business to the particularities of the markets where it operated. Contrary, successful initiatives adopted strategies that incorporated contextual attributes in their business models, such as available infrastructure, current regulations, or consumer characteristics. Our results provide lessons from both failing and successful CE initiatives implemented by SMEs in an emerging economy. This work intends to help practitioners, policymakers, and researchers to create the required enabling conditions to accelerate the transition toward a CE in these regions.