Internal and external barriers impede SME circular economy adoption.

Why It Matters

Understanding these multifaceted barriers is crucial for developing effective strategies and support systems that enable SMEs to successfully integrate circular economy principles into their operations. This knowledge can inform policy-making, industry initiatives, and the design of business support services.

Key Finding

SMEs struggle with circular economy adoption due to internal issues like risk aversion and lack of knowledge, as well as external challenges related to technology, markets, regulations, and consumer attitudes.

Key Findings

• Six company-internal barriers identified: risk aversion, short-term orientation, economically dominated thinking, unwillingness to engage in trade-offs, shortage of resources, and lack of knowledge.
• Four levels of company-external barriers identified: technology, market, legislative, and society and consumers.
• Interrelationships between these barriers were mapped and integrated into a sustainable strategic management framework.

Research Evidence

Aim: What are the primary internal and external barriers that prevent small and medium-sized enterprises from implementing circular economy principles, and how can these be integrated into a sustainable strategic management framework?

Method: Qualitative research

Procedure: Conducted 59 semi-structured interviews with managers from Swiss SMEs across three industries to identify and analyze barriers to circular economy implementation.

Sample Size: 59 participants

Context: Small and medium-sized enterprises (SMEs) in Switzerland, across three industries.

Design Principle

Anticipate and address systemic barriers to adoption when designing for complex system transitions like the circular economy.

How to Apply

When developing circular economy solutions for SMEs, conduct thorough stakeholder analysis to understand their specific internal constraints (e.g., financial, knowledge) and external market dynamics (e.g., available technologies, regulatory support).

Limitations

The study is focused on Swiss SMEs, and findings may vary in different geographical and economic contexts. The identified barriers are interconnected, making it challenging to isolate the impact of individual factors.

Student Guide (IB Design Technology)

Simple Explanation: Businesses, especially smaller ones, find it hard to become 'circular' (reusing materials and reducing waste) because they are often scared of risks, only think about short-term profits, don't have enough resources or knowledge, and face difficulties with technology, laws, and what customers want.

Why This Matters: Understanding these barriers helps you design solutions that are more likely to be adopted by businesses, making your design project more impactful and realistic.

Critical Thinking: How might a designer's approach to innovation need to change when targeting SMEs compared to large corporations, given the identified barriers?

IA-Ready Paragraph: Research indicates that small and medium-sized enterprises (SMEs) face significant internal and external barriers to adopting circular economy principles. Internal challenges include risk aversion, short-term financial focus, resource scarcity, and a lack of knowledge, while external barriers encompass technological limitations, market acceptance, legislative frameworks, and societal consumer behavior (Takacs et al., 2022). These factors collectively impede the integration of sustainable strategic management and circular practices within these businesses.

Project Tips

• When researching barriers for a design project, consider both what's inside the company (internal) and what's outside (external).
• Think about how different barriers might be connected, for example, how a lack of knowledge might lead to risk aversion.

How to Use in IA

• Reference this study when discussing the challenges of implementing sustainable design strategies, particularly within SMEs.
• Use the identified barriers to justify the need for specific design interventions or to explain why certain sustainable solutions might be difficult to implement without addressing underlying issues.

Examiner Tips

• Demonstrate an understanding of the real-world challenges that prevent the adoption of sustainable practices, rather than just focusing on the ideal design.
• Show how your design proposal accounts for potential barriers identified in research like this.

Independent Variable: ["Internal barriers (risk aversion, short-term orientation, economically dominated thinking, unwillingness to engage in trade-offs, shortage of resources, lack of knowledge)","External barriers (technology, market, legislative, society and consumers)"]

Dependent Variable: Implementation of circular economy measures

Controlled Variables: ["Industry sector","Company size (SME)","Geographical location (Switzerland)"]

Strengths

• Comprehensive identification of a wide range of barriers.
• Integration of barriers into a strategic management framework provides a holistic view.

Critical Questions

• To what extent do these barriers overlap or reinforce each other?
• How can a sustainable strategic management framework effectively overcome these identified barriers in practice?

Extended Essay Application

• Investigate the specific barriers to implementing a circular economy model for a particular product or service within a chosen SME.
• Develop a strategic design proposal that directly addresses the identified internal and external barriers to facilitate circularity.

Source

Barriers to a circular economy in small- and medium-sized enterprises and their integration in a sustainable strategic management framework · Journal of Cleaner Production · 2022 · 10.1016/j.jclepro.2022.132227