The Role of the Private Sector and MSMEs in Advancing the Circular Economy in Arid Metropolitan Regions

Abstract

The circular economy (CE) has emerged as a central policy framework for advancing sustainable urban development; however, empirical evidence regarding the role of micro, small, and medium-sized enterprises (MSMEs) in metropolitan CE transitions remains limited, particularly in arid regions. This study examines how private sector firms and MSMEs engage with CE practices within an arid metropolitan context, using the Dammam Metropolitan Area (Saudi Arabia) as an illustrative case study. Adopting a place-based and governance-sensitive analytical perspective grounded in urban studies scholarship, the research employs a structured quantitative survey of 180 firms across key urban–industrial sectors. The analysis investigates levels of CE awareness, adoption patterns, perceived barriers, support needs, and future expectations. The findings indicate that MSMEs primarily engage in resource-based and efficiency-oriented circular practices, while more systemic models, such as supply-chain integration and platform-based circular solutions, remain limited. Moreover, capability-related factors, particularly skills and technological capacity, exert a stronger influence on adoption than awareness alone. Importantly, the study identifies a high level of latent willingness among MSMEs to invest in circular practices under supportive policy and institutional conditions. The discussion reframes CE transitions as governance-mediated urban development processes, emphasizing the importance of metropolitan coordination, institutional capacity-building, and shared spatial infrastructure. By grounding the analysis in the case of the Dammam Metropolitan Area, the study contributes to urban studies and CE scholarship by positioning MSMEs as conditionally willing system-building actors whose engagement is essential for advancing inclusive and place-sensitive circular transitions in arid metropolitan regions.