Adopting circular economy is likely to improve the environmental performance of SMEs, study finds

The goal of CE is to benefit businesses, society, and the environment through a systemic approach to economic development. A circular economy is regenerative by design and seeks to gradually decouple growth from the consumption of finite resources, in contrast to the linear "take-make-waste" model.

Professors Prasanta Dey and Pawan Budhwar of Aston Business School, Soumyadeb Chowdhury of the Toulouse Business School, Krishnendu Saha of Birmingham City University, Debashree De of the University of Essex, and Chrysovalantis Malesios were in charge of the project (Agricultural University of Athens).

Adopting circular economy is likely to improve the environmental performance of SMEs, study finds.

Approximately one hundred small and medium-sized enterprises (SMEs) from each of the four selected countries — Greece, France, Spain, and the United Kingdom — were surveyed to determine the current state of CE adoption. Subsequently, focus groups involving SMEs owners and managers, policymakers, and SMEs' customers and suppliers were convened in each country to develop strategies for enhancing sustainability performance.

The study finds that adoption of CE is likely to help SMEs in all of the participating countries achieve higher environmental performance. Small and medium-sized enterprises in France were likely to achieve a higher overall sustainability performance than those in the other participating nations.

It was also determined that the design of products, processes, and facilities is most likely to assist SMEs in all participating countries in adopting CE, while their waste management needs improvement.

Aston Business School Dean Professor Budhwar stated: "Although from prior research there is evidence of SMEs achieving superior environmental performance by adopting CE, economic and social performances are not assured. This motivated us to undertake empirical research to reveal the means for achieving higher sustainability performance (economic, environmental, and social) through CE adoption.". "The findings of this research enable us to continue CE adoption not only in other European countries but also in India, Thailand, Vietnam and Kenya."

The findings of this research enable CE adoption not only in other European countries but also in India, Thailand, Vietnam and Kenya

 

Aston Business School operations and information management professor Professor Dey said: "SMEs in the EU countries are likely to have sustainable design practices aligned with the CE philosophy. On the contrary, SMEs in the participating countries are likely to have worst recover function. This implies that customers' pressure works for SMEs to adopt CE principles as design function in most of the SMEs' businesses is governed by SMEs' customers. Whereas effective recover function depends on SMEs' self-motivation and policymakers' pressure." "CE adoption needs a structured approach of analysing current state of CE through analysing correlation of organisational value functions with sustainability performance, identifying issues and challenges, and suggesting means for improvement across value functions." says the report.

Journal Reference: Prasanta Kumar Dey, Chrysovalantis Malesios, Soumyadeb Chowdhury, Krishnendu Saha, Pawan Budhwar, Debashree De. Adoption of circular economy practices in small and medium-sized enterprises: Evidence from Europe. International Journal of Production Economics, 2022; 248: 108496 DOI: 10.1016/j.ijpe.2022.108496