Institutional and Entrepreneurial Drivers of Small and Medium-Sized Enterprises’ Circular Economy Practices in Central and Eastern Europe and the Western Balkans
Abstract
1. Introduction
2. Theoretical Background
2.1. Entrepreneurship and Circular Economy Practices in SMEs
2.2. Formal Institutions, EU Conditionality, and Policy Transfer
2.3. Informal Institutions, Trust, and Stakeholder Collaboration
3. Materials and Methods
3.1. Data Source and Country Sample
3.2. Construction of Indicators
3.3. Statistical Methods
4. Results
4.1. SME Eco-Performance Country Clustering
4.2. Correlation Analysis
4.3. LASSO Regression
5. Discussion
5.1. Institutional Absorption Capacity in EU and Non-EU Countries
5.2. Circular Economy Actions and Spillovers
5.3. Financial Support, Targeted Incentives, and Entrepreneurial Ecosystems
6. Conclusions
- The case of Romania demonstrates that robust SME policies and institutions, combined with the capacity to absorb EU funds, lead to high levels of eco-performance and eco-innovation. Therefore, countries in the analyzed regions do not need to be restrained by their (post-)socialist legacies.
- CE actions, focused on resource efficiency, are important, especially minimizing waste and saving materials. However, they represent the first step toward the more advanced actions (designing green products and green production processes).
- While low-performing countries should focus their policies on the most impactful resource-efficiency actions and benchmarking against more efficient countries, moderate-performing countries need to address gaps in institutional development and the functioning of entrepreneurial infrastructure. High performers might wish to scale their successful experience in the SME sector and apply it to other sectors of the national economy, especially when there is an opportunity to merge the digital economy initiatives with CE practices [30].
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Cluster | N | Min. | Max. | Mean | Std. Dev. |
---|---|---|---|---|---|
Cluster 1 (Low Performers) | 2 | −1.59 | −1.45 | −1.5196 | 0.09658 |
Cluster 2 (Moderate Performers) | 6 | −0.94 | 0.25 | −0.1125 | 0.46802 |
Cluster 3 (High Performers) | 4 | 0.58 | 1.51 | 0.9285 | 0.42204 |
Indicator | Cluster 1 | Cluster 2 | Cluster 3 |
---|---|---|---|
Weighted no. of SMEs | −2.06683 | 0.28456 | 0.60657 |
Saving water | −1.42234 | −0.21114 | 1.02788 |
Saving energy | −1.64359 | −0.08559 | 0.95018 |
Using predominantly renewable energy | −1.40135 | 0.05021 | 0.62536 |
Saving materials | −1.61708 | −0.14377 | 1.02420 |
Switching to greener suppliers of materials | −1.35546 | −0.26783 | 1.07948 |
Minimizing waste | −1.57726 | −0.09190 | 0.92649 |
Selling residues/waste to another company | −1.68983 | 0.02658 | 0.80504 |
Recycling (reusing material/waste internally) | −1.51166 | −0.21650 | 1.08057 |
Designing maintainable/reusable products | −1.30278 | −0.19155 | 0.93871 |
Saving Water | Saving Energy | Using Predominantly Renewable Energy | Saving Materials | Switching to Greener Suppliers of Materials | Minimizing Waste | Selling Residues and Waste to Another Company | Recycling by Reusing Material or Waste Within the Company | Designing Products That Are Easier to Maintain, Repair, or Reuse | |
---|---|---|---|---|---|---|---|---|---|
Saving water | 1 | 0.974 ** | 0.719 ** | 0.973 ** | 0.910 ** | 0.948 ** | 0.791 ** | 0.888 ** | 0.763 ** |
Saving energy | 1 | 0.813 ** | 0.983 ** | 0.895 ** | 0.959 ** | 0.852 ** | 0.902 ** | 0.781 ** | |
Using predominantly renewable energy | 1 | 0.758 ** | 0.724 ** | 0.805 ** | 0.692 * | 0.752 ** | 0.709 ** | ||
Saving materials | 1 | 0.923 ** | 0.973 ** | 0.887 ** | 0.946 ** | 0.835 ** | |||
Switching to greener suppliers of materials | 1 | 0.929 ** | 0.830 ** | 0.926 ** | 0.923 ** | ||||
Minimizing waste | 1 | 0.882 ** | 0.946 ** | 0.890 ** | |||||
Selling residues and waste to another company | 1 | 0.839 ** | 0.878 ** | ||||||
Recycling by reusing material or waste within the company | 1 | 0.902 ** | |||||||
Designing products that are easier to maintain, repair, or reuse | 1 |
Predictor | Standardized β |
---|---|
(Intercept) | 0.0000 |
Saving water | 0.0000 |
Saving energy | 0.1300 |
Using predominantly renewable energy | 0.0844 |
Saving materials | 0.1548 |
Switching to greener suppliers of materials | 0.1536 |
Minimizing waste | 0.1998 |
Selling residues and waste to another company | 0.0852 |
Recycling by reusing materials or waste within the company | 0.0861 |
Designing products that are easier to maintain, repair, or reuse | 0.0662 |
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Alfirević, A.M.; Mihaljević Kosor, M.; Alfirević, N. Institutional and Entrepreneurial Drivers of Small and Medium-Sized Enterprises’ Circular Economy Practices in Central and Eastern Europe and the Western Balkans. Sustainability 2025, 17, 7239. https://doi.org/10.3390/su17167239
Alfirević AM, Mihaljević Kosor M, Alfirević N. Institutional and Entrepreneurial Drivers of Small and Medium-Sized Enterprises’ Circular Economy Practices in Central and Eastern Europe and the Western Balkans. Sustainability. 2025; 17(16):7239. https://doi.org/10.3390/su17167239
Chicago/Turabian StyleAlfirević, Ana Marija, Maja Mihaljević Kosor, and Nikša Alfirević. 2025. "Institutional and Entrepreneurial Drivers of Small and Medium-Sized Enterprises’ Circular Economy Practices in Central and Eastern Europe and the Western Balkans" Sustainability 17, no. 16: 7239. https://doi.org/10.3390/su17167239
APA StyleAlfirević, A. M., Mihaljević Kosor, M., & Alfirević, N. (2025). Institutional and Entrepreneurial Drivers of Small and Medium-Sized Enterprises’ Circular Economy Practices in Central and Eastern Europe and the Western Balkans. Sustainability, 17(16), 7239. https://doi.org/10.3390/su17167239