Challenges of the Introduction of Circular Business Models Within Rural Smes of Eu

Abstract

Recently the circular economy has got a lot of attention within discussions of policy makers, academics and practitioners. The circular economy proposes the treatment of environmental and climate change problems, simultaneously promising benefits for the business. The circular economy promotes the reduction of the consumption and reuse or recycling of the resources that in various aspects contradicts traditional business models that stream to linear growth of sales of their products. Yet the circular economy concept has been more discussed regarding its global scale, but there is a lack of scientific discussions about the approaches of the adoption of circular economy principles on the business level. This paper conceptualises multi-level dimensions of the circular economy and highlights challenges related to the perception of the circular economy principles in the micro business level. The conducted research shows that rural SMEs of six EU countries have rarely heard about the circular economy and even less about circular business models. While rural SMEs are more familiar with the bio and green economies forming good base for developing circular business models, they are reluctant towards introducing new business models. This paper aims to assess the level of the advancement in introduction of the circular business models among rural SMEs of EU countries. This article emphasizes the circular economy as an inseparable part of the business models of rural SMEs and rural economies of EU countries. This study has a policy implication as we suggest that the government should play an important role in promotion of circular business models in rural SMEs. The existing public support system is fragmented, and in most cases just incidentally encourage rural SMEs to adopt new circular business models. Also, the circular economy on a local level, especially in rural areas, has an important role in ensuring social wellbeing of local inhabitants. The methodological approach and research results presented in the paper can be used further developing EU support system and priorities beyond 2020.

A review of entrepreneurship and circular economy research: State of the art and future directions

“…In rural SMEs, both in the manufacturing and agriculture sectors, Uvarova et al (2020) observed challenges in the environment for innovation, innovation policies and support measures, lack of workforce and low competitiveness in the industry within rural SMEs. These SMEs have rarely heard about the CE and even less about CBMs.…”

The perspective of SMEs on the challenges of the circular economy in the 21st century Hungary

“…Similarly, Ruggieri et al (2016) find that fragmented regulation hampers the circular transition. The overarching barrier for rural SMEs in the EU is the lack of an appropriate environment to introduce circular business models (CBMs) (Uvarova et al, 2020). Roosendaal (2018) argues that entities face the issue of cultural barriers, namely the lacking consumer interest in circular products.…”

“…Reflecting on the absence of domestic support, Uvarova et al (2020) assert that strategic EU objectives and EU structural funds could catalyze rural SMEs from six countries to redesign their business models towards circularity. Similarly, Binek and Al-Muhannadi (2020) propose that SMEs should try to access EU funds and support, in case the domestic government does not offer beneficial solutions.…”

“…The matter of Hungarian SMEs related to the CE have been studied by others (T othn e et al, 2017;Kis-Orloczki, 2019), but neither studies reflect on the factors that could possibly prevent or accelerate firms' circular transition. Besides these studies, Uvarova et al (2020) include Western Transdanubia 1 of Hungary in their research to compare SMEs' transition between six EU countries, but the research focuses on rural, agricultural SMEs in the country's most western area. The methodology of the case study involves various stakeholders (SME representatives, policymakers, researchers, and business associations), and does not specify the ratio of subject groups.…”

“…Thereby, it is uncertain how much one stakeholder group influences the overall conclusions of the study. Nevertheless, Uvarova et al (2020) Accordingly, the paper is organized as follows: the next section seeks to give an overview of the existing literature on SMEs' circular transition to understand general trends. The third section describes the methodological approach, the sample and data of the research explored within this paper, as well as the limitations of the study.…”