Circular Business Models Face Significant Barriers in Developing Economies
Category: Sustainability · Effect: Mixed findings · Year: 2025
Developing countries encounter substantial financial, regulatory, technological, market, organizational, and cultural obstacles when attempting to implement circular business models.
Design Takeaway
When designing for developing economies, prioritize solutions that are adaptable to existing infrastructure, leverage local resources, and actively involve local communities and stakeholders to overcome systemic barriers to circularity.
Why It Matters
Understanding these barriers is crucial for designers and businesses aiming to introduce sustainable products and services in emerging markets. Overcoming these challenges requires tailored strategies that address the unique socio-economic and infrastructural contexts of these regions.
Key Finding
The adoption of circular business models in developing countries is hindered by a range of issues from funding and regulations to technology and cultural acceptance, though supportive policies and innovation can facilitate the shift.
Key Findings
- Significant barriers include financial constraints, regulatory and institutional challenges, technological limitations, market and supply chain issues, organizational hurdles, and cultural resistance.
- Enablers for transition include policy support, innovation, stakeholder engagement, and capacity building.
- Research gaps exist in sectors like health, food supply chains, and plastic packaging.
Research Evidence
Aim: What are the primary barriers and enablers for adopting circular business models in developing countries, and where are the key research gaps?
Method: Systematic Literature Review
Procedure: A systematic review was conducted on 107 articles from Scopus and Web of Science databases to identify common themes related to circular business models in developing economies.
Sample Size: 107 articles
Context: Developing economies, circular economy, business models
Design Principle
Design for context: Adapt circular economy principles to the specific socio-economic, regulatory, and infrastructural realities of developing markets.
How to Apply
Before launching a circular product or service in a developing country, conduct thorough research into local financial, regulatory, and cultural landscapes to identify and mitigate potential barriers.
Limitations
Findings cannot be generalized due to variations in methodology, context, and topic across the reviewed research.
Student Guide (IB Design Technology)
Simple Explanation: It's hard for businesses in poorer countries to go 'circular' (reuse and recycle things) because they don't have enough money, clear rules, good technology, or sometimes even the right culture for it, but governments and new ideas can help.
Why This Matters: Understanding these barriers is crucial for designing sustainable solutions that are not only innovative but also practical and adoptable within the specific constraints of developing economies.
Critical Thinking: How might a designer proactively address the identified barriers (e.g., financial, regulatory, cultural) when developing a circular product or service for a specific developing country context?
IA-Ready Paragraph: The transition to circular business models in developing economies is fraught with significant challenges, including financial constraints, regulatory hurdles, technological limitations, and cultural resistance. However, strategic interventions such as supportive policies, fostering innovation, and robust stakeholder engagement can act as crucial enablers for this shift towards sustainability.
Project Tips
- When researching a design project in a developing country, investigate common financial, regulatory, and cultural challenges that might affect your product's lifecycle.
- Consider how your design can contribute to capacity building or leverage local stakeholder engagement to overcome adoption barriers.
How to Use in IA
- Reference this review when discussing the challenges of implementing sustainable design solutions in developing countries, particularly concerning business models and market adoption.
Examiner Tips
- Demonstrate an awareness of the contextual challenges in developing economies when proposing sustainable design solutions, rather than assuming universal applicability.
Independent Variable: ["Implementation of circular business models","Supportive policies","Innovation","Stakeholder engagement","Capacity building"]
Dependent Variable: ["Barriers (financial, regulatory, technological, market, organizational, cultural)","Enablers","Adoption rates of circular models"]
Controlled Variables: ["Economic development level of the country","Specific industry sector","Geographic region"]
Strengths
- Comprehensive systematic review methodology.
- Synthesis of a large body of literature on a critical topic.
Critical Questions
- To what extent do cultural factors uniquely influence the adoption of circular business models compared to economic or technological factors in developing countries?
- What are the most effective strategies for overcoming financial constraints in the context of circular design and production in these economies?
Extended Essay Application
- An Extended Essay could explore the feasibility of a specific circular product design for a particular developing country, detailing how it addresses identified barriers and leverages enablers.
Source
Transitioning to circular business models in developing countries: a systematic literature review of barriers, enablers, and future directions · Discover Sustainability · 2025 · 10.1007/s43621-025-01339-x