Adopting circular economy strategies for SMEs: Exploring opportunities for competitive advantage

The uncontrolled extraction of natural resources is known to be one of the primary causes for the loss of 90% of global biodiversity and the visible impacts of climate change. The current linear economic model (i.e., take, make, and dispose) has been criticized for its negative impact on the environmental and social set up. This has prompted an urgent need for transitioning to more sustainable alternatives like, Circular Economy (CE). This transition, however, requires actions and policies at a strategic level and major shifts in the managerial mindset and collaborative efforts amongst all players along the value chain. Australian SMEs find it challenging to adopt CE principles and transitioning towards CE strategies, due to their limited capacities and organizational constraints. Although prior empirical-driven research on incorporating CE principles within the Supply Chain (SC) domain has been studied extensively, their actual implementation in the SC for SMEs remains unexplored in detail. Therefore, there is a need to explore if adopting CE strategies can help SMEs gain competitive advantage in highly dynamic markets. This research aims to identify opportunities for SMEs to align their business practices with CE strategies. This study has both research and managerial implications. It establishes a link between adopting CE principles and relevant opportunities for SMEs, ranging from improved brand image to social well-being. From a managerial perspective, understanding such relationships, managers and supply chain partners of SMEs can be motivated to make a shift towards more sustainable practices like CE. Moreover, the study also opens avenues for cross-country and sector specific research of CE adoption by SMEs.