Overcoming the Coordination Failure Trap: Innovation Clusters as Meso-Level Systems Governance Architectures for Circular Economy Transitions Among SMEs

The transition toward a circular economy (CE) represents an urgent industrial imperative under the European Green Deal, requiring fundamental restructuring from linear throughput to closed-loop socio-technical systems. While small and medium-sized enterprises (SMEs) constitute over 99% of European businesses and generate two-thirds of private-sector employment, their circular adoption remains critically fragmented and restricted to incremental eco-efficiencies. Contemporary scholarship exhibits a profound theoretical divide: the firm-centric adoption literature frequently relies on an atomistic analytical perspective that presumes resource-poor enterprises can unilaterally resolve complex supply-chain interdependencies, while regional cluster economics maintains a passive agglomeration bias that neglects purposeful sustainability governance. Building on a theory-driven conceptual review of 65 scholarly works identified through structured database searches and citation chaining, this study proposes an integrative Macro–Meso–Micro framework explaining how innovation cluster governance may facilitate circular economy adoption among SMEs. The framework specifies four interrelated governance mechanisms: cross-boundary standards alignment, collective risk-sharing, collective learning, and intermediary orchestration. It further identifies boundary conditions—including anchor-firm capture, cognitive lock-in, and intermediary funding dependency—that may constrain the effectiveness of these mechanisms. Conceptually, the framework treats circularity among SMEs not solely as a firm-level attribute, but also as a potential emergent property of coordinated meso-level governance. Finally, we delineate an empirical agenda using Social Network Analysis, Structural Equation Modeling, and fuzzy-set Qualitative Comparative Analysis, and suggest considering complementary policy portfolios combining firm-level capability development with selective investment in shared coordination and testing infrastructures. The proposed relationships and their boundary conditions require further empirical validation across different industrial and institutional contexts.