Drivers of Circular Economy Adoption in SMEs: Evidence from Developing Countries

The CE has attracted widespread interest due to the urgent issues of climate change and resource depletion. The implementation of the CE within small- and medium-sized enterprises (SMEs) is crucial, as they play a major economic role globally, including significant contributions to CO₂ emissions and resource depletion in developing countries. The existing literature has primarily examined the factors that hinder and enable the adoption of the CE in SMEs in developed nations. The most critical gap in the previously mentioned literature is the very slow adoption of the CE in developing nations, attributable to a limited understanding of the drivers of its adoption. Through a systematic literature review (PRISMA 2020) and content analysis, we identified 52 potential drivers, which were refined to 33 final drivers using the Fuzzy Delphi Method (FDM) with 20 experts from six developing countries. These drivers were categorized using the Triple Bottom Line (TBL) framework and prioritized through IVIF-BWM with 15 experts. The results show that 33 drivers of CE adoption are classified into three groups: economic, environmental, and social/organizational. Environmental drivers accounted for 53.02% of the total weight, followed by social/organizational (24.85%) and economic (22.14%) drivers. The three most significant drivers identified were from the environmental drivers category, while purely financial drivers ranked notably lower than expected. These findings suggest that policymakers in developing countries should prioritize regulatory frameworks and environmental infrastructure over financial incentives alone and that SME owners prioritize resource security and compliance for CE transition.