Advancing sustainable rural development through circular economy practices: Evidence from SMEs in Central Java, Indonesia

Abstract

The circular economy (CE) has been widely promoted as a strategy for sustainable development, yet evidence of its implementation among rural small and medium enterprises in developing countries remains limited. This study aims to examine how rural enterprises in Banyumas District, Central Java, Indonesia, adopt CE practices and to identify the challenges and opportunities associated with these practices. Data were collected through focus group discussions, semi-structured interviews and field observations involving 20 participants from various rural enterprises. The data were analyzed using thematic analysis to generate insights into innovative practices. The findings reveal that innovative practices include the use of organic materials, renewable energy generation, and the utilization of industrial by-products. However, significant challenges persist, including a shortage of natural dye raw materials, unstable color quality, high production costs, low local market demand, and limited technical maintenance in biogas facilities. Education, training, and cross-sector collaboration emerge as essential enablers for advancing CE practices in rural SMEs.