Strategic Adoption of Circular Economy Practices in
MSMEs
: Evidence From an Emerging Economy
Savita, Anshu Bhardwaj ABSTRACT
A circular economy (CE) has become an important tool for suggesting sustainable use, consumption, and management of resources and thereby reducing environmental impacts for businesses. This study aims to identify the awareness, barriers, and policy awareness to implement micro, small, and medium enterprises (MSMEs) in Charkhi Dadri district, Haryana, toward the concept of CE. Based on the resource‐based view (RBV) and institutional theory, the study examines the nature of relationships between organizational characteristics and institutional support, and CE's awareness and participation among MSMEs. Primary data were gathered by a structured questionnaire using a purposive sampling technique from 48 MSMEs. Data were analyzed with descriptive statistics, cross‐tabulation, chi‐square analysis, Fisher's exact test, Cramér's V , multiple response analysis, and Friedman test, using IBM SPSS statistics. The results showed that MSME type, number of years of operation, and number of employees were significant to the CE awareness, while the variable of industry type was nonsignificant. Insufficient awareness and institutional support, and costly implementation were the primary challenges facing CE adoption. The study revealed that there was also a significant linkage between the points of awareness of CE practices and government policies supporting CE practices. The results bring into prominence the significance of organizational strength, institutional support, and awareness of policy in empowering the organization of CE among MSMEs. This study adds empirical data from a local perspective in an emerging economy and offers insightful recommendations for policymakers and stakeholders of MSMEs to encourage sustainable and circular business practices.