The Role of Circular Economy Practices in Enhancing Competitive Edge in Small and Medium Enterprises (SMEs)
DOI:
https://doi.org/10.51137/wrp.ijarbm.622Keywords:
Sustainability, SMEs, Reporting, Circular Economy, Competitive Advantage, EfficiencyAbstract
The rapid increase in global emphasis on sustainable development has compelled businesses to reassess traditional linear production in favour of circular economy practices. As a result, small and medium-sized enterprises (SMEs) are adopting circular strategies to enhance their sustainability performance while maintaining a competitive advantage. This study adopted a systematic literature review to explore how circular economy strategies enhance competitive advantage among SMEs. The study synthesizes the empirical and conceptual literature, with more emphasis on the influence of circular practices on profitability, resource efficiency, and sustainability reporting. The reviewed literature reveals that the adoption of the circular economy enables SMEs to optimize resource utilization, lower operational costs, and reduce waste generation. The findings further indicate that adopting circular practices fosters innovation through recycling, product redesign, remanufacturing, and sustainable supply integration, which strengthens market differentiation and long-term competitive edge. Contradictory, the findings highlight the challenges faced by SMEs in implementing circular economy practices, including a lack of managerial expertise, regulatory barriers, constrained technological capabilities, and limited financial resources. However, to facilitate successful circular transitions, the study demonstrates the critical role of stakeholder collaboration, institutional support, and digital technologies in the implementation of circular transformation.
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Copyright (c) 2026 Sibonelo Sibahle Mpanza, Nkululeko Nqobile Ngwenya (Author)
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