A Multidimensional Model for the Transition of SMEs to the Circular Economy

Funding level: National

Funding agency: Italian Ministry of University and Research

Abstract: European small and medium enterprises (SMEs) account for 99% of total EU business and contribute 85% to employment by providing 2/3 of total private sector jobs (Eurostat, 2018). The challenge launched by the EU to make the economy more circular is a great opportunity that companies, even small ones, must be able to seize. The COVID-19 crisis, the war in Ukraine, and the consequent volatility of raw materials prices strengthen the need to shift from a linear economy (LE) to a circular economy (CE) to overcome a no longer sustainable development model. While large companies are more organised in handling the transition to the CE in a holistic way, SME) apply isolated and focused circular practices and struggle to rethink their business model.

Existing literature outlines the main assets for sustainable competitive success: governance oriented towards responsibility, relationships with stakeholders, and the attitude to innovation. At the same time, great focus is put on various aspects of CE implementation (e.g., core principles, business models, risk management, measurement tools, and reporting). However, the need for an integrated approach to the CE transition (Chen, 2020) still remains; in particular, such an approach should drive the objective setting and selection of actions and resources to support the adoption of circular models, jointly enhancing the main assets of sustainable development.

This research aims to: fill a gap highlighted in the literature by providing a methodological approach to support SMEs’ strategic transition to the CE in a comprehensive manner (Lewandowski, 2016; Korhonen et al., 2017); provide SMEs with an application model, which takes the form of a strategic management tool for the evaluation and planning of circularity, and which guarantees a strategic and non-fragmented approach to the CE, also considering different sector specificities.

The model planning is based on the engagement of key stakeholders for the selection of relevant sectors for the achievement of the SDGs, the identification of key performance indicators and sectoral benchmarks for each CE founding asset, as well as the testing activity in pilot companies and geographical areas.

Finally, the research outcomes will be disseminated to the national and international scientific community and local territories to make the model usable by SMEs.

The project proposal can have significant impacts. It benefits the international scientific community through further advancement of knowledge, bridging an existing gap by emphasizing the need to approach the CE with a systemic and integrated governance vision. Moreover, the project provides a practical contribution to society and the economy: SMEs will be able to enjoy the support, and also be useful to attract both private funds, as required by the European regulation on taxonomy for sustainable activities, and public financing, as provided by Italy’s 2021 Budget Law and the National Recovery and Resilience Plan (NRRP).

Disa role: Partner

DiSA Team Leader: Selena Aureli

DISA Team members Eleonora Foschi

Start date 28/09/2023 - End date 27/09/2025

Total project cost: €204.878

Funded by European Union - Next Generation EU