SMEs are likely to achieve higher environmental performance through circular economy adoption, new research finds

CE is a systemic approach to economic development designed to benefit businesses, society, and the environment. In contrast to the 'take-make-waste' linear model, a circular economy is regenerative by design and aims to gradually decouple growth from the consumption of finite resources.

The project was led by Professor Prasanta Dey and Professor Pawan Budhwar from Aston Business School along with Soumyadeb Chowdhury (Toulouse Business School), Krishnendu Saha (Birmingham City University), Debashree De (University of Essex) and Chrysovalantis Malesios (Agricultural University of Athens).

Data was gathered from around 100 SMEs from each of the four selected countries -- Greece, France, Spain and the UK using a survey to study the current state of CE adoption, and subsequently, focus groups were organised which involved SMEs owners and managers, policymakers, SMEs' customers and suppliers, in each country to derive means for improving sustainability performance.

The study reveals that SMEs in all the participating countries are likely to achieve higher environmental performance through CE adoption. SMEs in France were likely to achieve higher overall sustainability performance than other participating countries.

It also found products, processes and facilities design is likely to help SMEs most in all the participating countries to adopt CE, while their waste management all needed improvement.

Professor Budhwar, head of Aston Business School, said:

"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."

Professor Dey, a professor in operations and information management at Aston Business School, 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."