Barriers to Circular Economy Adoption in MSMEs: a WINGS Analysis of Challenges in Developing Economies

Abstract

The transition to a circular economy (CE) is a crucial global goal aimed at promoting sustainable production and consumption. However, its adoption among Micro, Small, and Medium Enterprises (MSMEs) in developing economies remains constrained by multiple barriers. This study builds upon prior research that identified sixteen key barriers to CE adoption through a systematic literature review. Employing the Weighted Influence Non-linear Gauge System (WINGS) method, the study ranks the barriers in terms of their internal strength as well as their intensity to influence other barriers in the specific context of MSMEs. Expert evaluations indicate that lack of investment support, financial constraints, lack of resource efficiency, inadequate infrastructure, and limited potential knowledge are the most influential barriers. The WINGS analysis also reveals that lack of investment support and lack of information are the two primary barriers affecting the greatest number of other barriers. Hence, the findings of our study suggest the urgent need for targeted policy interventions to enhance financial capacity, knowledge dissemination, and infrastructural support, collectively facilitating MSMEs’ transition to CE practices. This study contributes to the literature by identifying and prioritising the key barriers, as well as identifying the interconnectedness among them, which serves as a guide in order to design effective strategies supporting MSMEs in overcoming CE adoption barriers, thereby fostering sustainable economic growth in developing economies.