Does the transition to a circular economy contribute to business resilience and transformation? Evidence from SMEs

Abstract

The implementation of the circular economy in companies undoubtedly requires a transition of their business systems towards more environmentally oriented ones. However, there is a lack of empirical research on the topic in the micro-level. Based on a sample of 404 managers with positions of responsibility in SMEs that are in transition towards a circular economy, this paper analyses at the micro level, through the use of structural equation modelling, how internal and external drivers contribute to this transition process and, at the same time, how the process itself impacts the resilience of the company and, consequently, its transformation process. The obtained results contribute to the literature by observing that internal factors carry more weight than external factors when implementing the CE transition. They illustrate how resilience derived from the CE transition can foster transformative change and demonstrate the CE's impact beyond environmental sustainability, extending its influence into strategic management and organizational fields.