Journal of Cleaner Production 185 (2018) 157e167

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Circular Economy in Spanish SMEs: Challenges and opportunities

Marta Ormazabal a, *, Vanessa Prieto-Sandoval a, Roge

rio Puga-Leal b, Carmen Jaca a
a
Universidad de Navarra, TECNUN, Escuela de Ingenieros, San Sebastian, Spain
b
UNIDEMI, Faculdade de Ci^encias e Tecnologia, FCT, Universidade Nova de Lisboa, 2829-516 Caparica, Portugal

a r t i c l e i n f o a b s t r a c t

Article history: The important role of Small and Medium Enterprises (SMEs) in most economies underpins this research,
Available online 5 March 2018 which develops an empirical analysis that allows us to explore the potential for implementation of the
Circular Economy in SMEs and the barriers and opportunities they may distinguish from it. To that end, a
Keywords: survey was carried out in Navarra and the Basque Country, Spain. The main results show that companies
Circular economy are focused on complying with the law and, in many cases, they are worried about their company’s
SMEs
image. Moreover, they do not tend to be committed to environmental issues because they do not think it
Industrial symbiosis
would increase their profits and competitiveness. The focus on cost savings became clear from the Factor
Environmental strategy
Circular economy implementation
Analysis applied to the Take-Transform and Recovery phases of the Circular Economy. In this sense, three
factors were associated with the companies’ perception of the Circular Economy: 1) Material Provision,
2) Resources’ Reutilization and 2) Financial Advantage. With regard to the barriers, another Factor
Analysis suggested two different categories of barriers: Hard barriers and Human-based barriers, each
requiring different strategies for addressing them, must be considered. Finally, the study briefly examines
the integration opportunities between SMEs with other companies and industry associations or clusters
to develop industrial symbiosis and close their materials loop.
© 2018 Elsevier Ltd. All rights reserved.

1. Introduction about V119.5 million for Circular Economy proposals (European

The environmental, economic and social consequences of the
continual depletion of natural resources have uncovered the need
for humans, business, and governments to change the way they
manage their relationship with the environment. However, a wide
variety of companies are still immersed in a traditional and un-
sustainable linear economy which consists of “take, make, use and
waste”. In contrast, the Circular Economy (CE) is “an economic
system that represents a change of paradigm in the way that hu-
man society is interrelated with nature and aims to prevent the
depletion of resources, close energy and materials loops, and
facilitate sustainable development” (Prieto-Sandoval et al., 2018).
Countries like Germany, France, UK, Japan and China have
advanced in the development of policies that support the Circular
Economy in their society (Blomsma and Brenan, 2017; Murray et al.,
2017). In this way, the Circular Economy Package launched by the
European Commission in 2015 (https://www.eea.europa.eu/policy-
documents/com-2015-0614-final) and the EU’s contribution of
* Corresponding author.
E-mail address: mormazabal@tecnun.es (M. Ormazabal).
Commission, 2016) is one of the most significant incentives that
guide the actions of European countries and companies towards
implementation of the CE. The EU Action Plan also includes four
legislative proposals amending the following legal acts: 1) Waste
Framework Directive; 2) Landfill Directive; 3) Packaging Directive;
and 4) Directives on End-of-Life Vehicles, Batteries and Accumu-
lators, and Waste Electrical and Electronic Equipment. Besides.
These proposals have been adopted by the European Parliament’s
Committee on Environment, Public Health and Food Safety defining
specific goals in each case (Gordeeva, 2017).
Small and medium enterprises (SMEs) should have the most
important influence in this process because they make up 95% of
companies in OECD member countries (OECD, 2017). Specifically, in
the European Union, SMEs represent 99% of all enterprises (Filipe
et al., 2016). Given this situation, it is not a surprise that multiple
studies amply demonstrate the relevant impact of SMEs in envi-
ronmental problems, such as 70% of industrial pollution 40e45% of
all industrial air emissions, water consumption and energy con-
sumption in the EU, as well as 60e70% of industrial waste pro-
duction in France.
Switching to a sustainable economic and social system has
become necessary for organizations in order to meet economic,

https://doi.org/10.1016/j.jclepro.2018.03.031
0959-6526/© 2018 Elsevier Ltd. All rights reserved.
158 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167
social and environmental expectations over time (Lozano, 2012;
Porter and Van Der Linde, 1995; Tibbs, 2006), indeed, no planet,
no business is possible. Nevertheless, implementing the CE entails
barriers and challenges which may or may not be easily overcome
according to an organization’s strategy, capabilities and influence in
the market (Geng et al., 2007; Geng and Doberstein, 2008). Based
on the described scenario of challenges and opportunities, this
study aimed to address the following research questions: What are
doing SMEs to develop the CE? And is it possible to identify and
classify the main barriers and opportunities of the CE for SMEs?
This study provides an exciting opportunity to advance our
knowledge of Circular Economy implementation in SMEs and the
barriers and opportunities they may distinguish from the Circular
Economy model. The study was conducted in the form of a survey,
with data being gathered online and analyzing Spanish SMEs from
Navarre and the Basque Country. Therefore, this study makes a
major contribution to research on Circular Economy since the
literature about barriers and opportunities have been mainly vali-
dated in environmental management in general but this study is
novel because it empirically validates them in the SMEs and in
relation to the CE.
This paper is divided into five sections. Section 2 discusses the
SME approach to the Circular Economy. Section 3 describes the
research method used to find answers to the research questions.
Section 4 analyzes the outcomes of the survey according to the
research questions. Finally, Section 5 concludes with a summary of
the main research results.
2. The SME approach to the Circular Economy
The Circular Economy is not a new concept, but the term was
first used in the literature in the early nineties by Pearce and Turner
(1990). They proposed a circular flow of value and resources with
restorative effects in the environment based on the previous
studies developed by Boulding (1966). Recent developments in the
field of Circular Economy have led to a proliferation of studies
focused on explaining the CE as a paradigm, its relationship with
sustainable development (Geissdoerfer et al., 2017; Prieto-Sandoval
et al., 2018) and the large amount of concepts that define it
(Kirchherr et al., 2017). Nonetheless, V. Prieto-Sandoval et al. (2018)
also proposed that the CE can be understood through four specific
components:
 The recirculation of resources and energy, the minimization of
resources demand, and the recovery of value from waste. This
cyclic flow has two advantages: it avoids exhausting a finite
environmental stock of materials, guarantees an infinite supply,
and it allows the supply of materials to be independent of na-
ture’s capacity (Tibbs, 2006).
 A multi-level approach due to its implementation at the micro
(enterprises and consumers) (Park et al., 2010), meso (economic
agents integrated in symbiosis) (Geng et al., 2012) and macro
(city, regions and governments) levels (Yuan et al., 2006).
 Its importance as a path to achieve sustainable development
(Prieto-Sandoval et al., 2017; Velenturf et al., 2017).
 Its close relationship with the way society innovates (Prieto-
Sandoval et al., 2018).
In broad terms, the recirculation of resources in the Circular
Economy derives from a cycle of taking, transform, use and return.
Industries take the resources from the environment and transform
them into services and products. Then, they are distributed and
used by consumers or other firms as part of other products. Finally,
those products should be returned as materials and energy in other
value chains (Ellen MacArthur Foundation, 2013; Park et al., 2010).
The waste can be managed in two ways: waste becomes a biological
or a technical resource which may be redirected and returned to the
biosphere or the industrial process, respectively (McDonough and
Braungart, 2002).
In this way, SMEs become important because they represent
most of the companies acting in the market. SMEs, in general, are
very heterogeneous units which have not reached the same stage of
environmental management maturity (Ormazabal and Puga-Leal,
2016). The implementation of the Circular Economy is not iso-
lated from the general practices of environmental management. On
the contrary, these practices are the initial path to advance towards
Circular Economy. A company that was founded on the linear
economy requires progressing step by step towards sustainability,
there are few cases in which a company can become circular from
one day to the next, except in the case of many startups that are
born under this paradigm. With an eye toward helping SMEs
improve their environmental management, Ormazabal et al. (2015)
proposed the Environmental Management Maturity (EMM) model,
which contains six maturity stages that can be overcome from the
lowest and most reactive level of maturity to the highest and most
proactive level of maturity.
Nevertheless, SMEs are still reactive to environmental issues as
they just see economic costs and they do not perceive a relation
between environmental practices and profit (Biondi et al., 2002). In
this way, Circular Economy or circular business models address this
issue giving an economic answer to environmental practices
because they help firms to “create, capture, and deliver value with
the value creation logic designed to improve resource efficiency
through contributing to extending useful life of products and parts
(e.g., through long-life design, repair and remanufacturing) and
closing material loops” (Nubholz, 2017). Improvements in envi-
ronmental management have spurred some firms to innovate in
their business models like recycling and remanufacturing (Geyer
and Jackson, 2004; Ongondo et al., 2013; Zhang et al., 2011), of-
fering renting services instead of selling (Bakker et al., 2014),
dematerialization (Ehrenfeld, 2000; Yang et al., 2014), among
others.
At some point, SMEs may advance to the meso-level approach
through their resources sharing or exchange through industrial
networks such as the industrial associations. Industrial associations
(IA) are voluntary organizations (Aldrich and Staber, 1988) founded
by other organizations from a sector or region in order to build
cooperation, foster information sharing, offer training and provide
a wide range of services designed to help members improve their
business performance (Nordqvist et al., 2010). Based on empirical
studies developed by Biondi et al. (2002) and Daddi and Iraldo
(2015), SMEs can take advantage of IAs and work with industrial
networks to create industrial symbiosis which facilitates the closed
loop of materials and make their operations more profitable.
Regarding the multi-level approach of CE, the industrial symbiosis
represents a key issue because it is “the activity that engages
traditionally separate industries in a collective approach to
competitive advantage involving physical exchange of materials,
energy, water, and/or by-products” (Chertow, 2000).
However, implementing the CE approach in SMEs requires that
numerous barriers be overcome; A considerable amount of litera-
ture has been published on the barriers that companies face to
implement the CE and related environmental management prac-
tices (Table 1).
In contrast, there are several opportunities that reduce uncer-
tainty in the long term (Table 2).
Firstly, the increase of prestige it is a result from the effective
communication of the firms’ sustainable strategies which let
improve the relationship with their consumers (Noci and Verganti,
1999) and increase their market share (Ormazabal and Puga-Leal,
 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167 159

Table 1 consumers seem to expect higher quality from this kind of products
Circular economy barriers. (Bougherara and Combris, 2009; Zanoli and Naspetti, 2002), and
Barriers References the creation of sustainable products may lead to the development
Lack of financial support (Geng and Doberstein, 2008; Ormazabal
of eco-innovation cycles; when the consumers’ demand and the
et al., 2016; Rizos et al., 2016) government and institutions requirements may lead to a blos-
Inadequate information (Geng and Doberstein, 2008; Ormazabal soming of inventions, designs, and new solutions in firms to fulfill
management systems (IMS)
n and Sandstro
et al., 2016; Ritze €m, 2017; the needs of humans and nature (Hofstra and Huisingh, 2014;
Rizos et al., 2016)
Prieto-Sandoval et al., 2016).
Lack of proper technology (Geng and Doberstein, 2008; Ormazabal
et al., 2016; Preston, 2012; Ritze
n and
Sandstro € m, 2017; Rizos et al., 2016; Shi 3Methods
et al., 2008)
Lack of technical resources (Geng and Doberstein, 2008; Ormazabal
A survey study was carried out in SMEs in Navarre and the
et al., 2016; Preston, 2012; Rizos et al.,
2016; Shi et al., 2008)
Basque Country in order to analyze the degree to which they have
Lack of financial resources (Geng and Doberstein, 2008; Ormazabal implemented a Circular Economy, their willingness to work in a
et al., 2016; Rizos et al., 2016; Shi et al., symbiotic relationship with other companies, and the barriers and
2008) opportunities they face.
Lack of consumer interest in the (Geng and Doberstein, 2008; Nubholz,
The regions of Navarra and Basque Country were selected for
environment 2017; Ormazabal et al., 2016; Preston,
2012) promoting the study since the leading University of this research is
Lack of support from public (Geng and Doberstein, 2008; Ormazabal located in these regions. A close relationship between the industrial
institutions et al., 2016; Preston, 2012; Rizos et al., tissue and the University has been being promoted throughout the
2016) years, which was supposed to enhance the perspectives of partic-
Lack of qualified professionals in (Geng and Doberstein, 2008; Ormazabal
environmental management et al., 2016; Preston, 2012; Shi et al.,
ipation. Furthermore, the aforementioned regions are among the
(EM) 2008) most industrialized regions of Spain, with a large predominance of
Lack of commitment on the part (Biondi et al., 2002; Geng and Doberstein, SME’s, thus constituting a reasonable standard reference for some
of the organizations’ Leaders. 2008; Ormazabal et al., 2016; Shi et al., level of further generalization.
2008)
Nevertheless, it becomes clear that the data were obtained from
a convenience sample, which imposes obvious precaution for
generalizing the conclusions and stresses the exploratory nature of
Table 2
the performed research.
Circular economy opportunities.
The survey method was selected because it serves to collect
Opportunities References information in a versatile, efficient and generalizable way (Schutt,
Increase of prestige (Del Río et al., 2016; Noci and Verganti, 1999; 2006). In addition, the survey was designed using Google forms
Ormazabal and Puga-Leal, 2016; Rizos et al., 2016) in order to collect the data online. According to Granello et al.
Cost reduction and (Noci and Verganti, 1999; Preston, 2012; Ritze
n
(2004), online data collection has multiple advantages such as
financial profitability and Sandstro €m, 2017)
Recovery of the local (Carrillo-Hermosilla et al., 2010; Ellen MacArthur
lower cost, the ease of data entry, flexibility and control over
environment Foundation, 2015; Moore and Manring, 2009; format, an easy format to achieve the recipient acceptance, among
Rizos et al., 2016) others.
Sustainability of the (Moore and Manring, 2009; Noci and Verganti, Despite the advantages of online surveys, this study had to
company 1999)
overcome a critical limitation of online data collection: the
response rate (Granello et al., 2004). Initially, the survey was sent
by email to almost 3500 companies on a private database. However,
2016). Nonetheless, this “green image” must be real and well sup- this initial attempt failed, as less than 1% answered the survey.
ported by credible actions (Del Río et al., 2016). Second, cost Then, a focus group of local practitioners and outstanding re-
reduction and financial benefits are explained by the efficiency in searchers in the region were asked about the best way to encourage
the use of resources and the value creation and capture from the SMEs to answer the online survey. Most of the experts consulted
market. Then, the recovery of the local environment is included as explained that firms tend to be skeptical with research projects. The
an opportunity because the firms’ innovations can contribute to the most common recommendation was to send the surveys through
regeneration of the natural environment through sustainable IAs and to use LinkedIn because the two channels involve a rela-
practices (Carrillo-Hermosilla et al., 2010). In this sense, Ellen tionship of trust with the survey respondents, and these platforms
MacArthur Foundation (2015) claimed that the implementation of may keep the survey as being perceived as junk mail (Evans and
CE in mobility, food, and built sectors can help the environment Mathur, 2005). Applying the previous recommendations in the
recovery because the “CO2 emissions could drop as much as 48 second attempt, the online survey was sent to 710 companies in
percent by 2030 and 83 percent by 2050, compared with 2012 Navarre and the Basque Country during MayeSeptember 2016,
levels. Primary material consumption measured by car and con- with a higher response rate of 13.38%. According to Nawrocka and
struction materials, real estate land, synthetic fertilizer, pesticides, Parker (2009), acceptable response rates vary between 10% and 50%
agricultural water use, fuels, and non-renewable electricity could in several studies; thus, in accordance with what was obtained in
drop as much as 32 percent by 2030 and 53 percent by 2050”. our study.
Lastly, the CE represents an opportunity to achieve the sustain- As Table 3 below shows, the respondents constitute a hetero-
ability of the company in the long term as it guarantees the avail- geneous sample from the region. The valid final sample was 95
ability and accessibility of resources in the future, and allows the respondents from Navarra and the Basque Country. These two
company to conquer new markets whose needs have not been met Spanish regions were analyzed together because of their
(Moore and Manring, 2009). geographical and cultural proximity, and with the intention of
Consequently, these opportunities are translated in multiple considering different economic sectors. In terms of the sectors to
advantages: companies might be able to open up new markets which the companies belong, we can say that the sample is het-
(Moore and Manring, 2009; Porter and van der Linde, 1995), erogeneous, and it allows to analyze companies that have different
160 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167

Table 3 almost half of the participants reported knowing something about

Sample description. Circular Economy, especially via the internet and corporate media.
Number of Percentage Moreover, people had also received information from academic
companies sources, news, television, and friends (Fig. 1).
Origin Subsequently, participants were asked about the environmental
Navarra 44 46% certifications their company has in order to determine which
Basque Country 51 54% companies had reached the medium maturity stage (Systematiza-
Number of employees
tion) according to the EMM model. Additionally, this aspect was
<10 39 41%
10e50 34 36% considered in the survey because the European Union’s action plan
51e100 10 11% for the Circular Economy included the environmental certification
101e250 12 13% as a tool to walk towards circularity. In this way, companies may
Position
improve their resource efficiency, develop systematic auditing and
General Manager 35 37%
Management positions and related 30 32%
show the transparency of their processes by following the Eco-
Head of Environmental Management 17 18% Management and Audit Scheme (EMAS) (European Commission,
Other area of the company 13 14% 2015). Nonetheless, that there is still a need for robust and effec-
Sector tive standards that would enable a solid foundation from which to
Mechanical and electrical engineering 14 15%
move towards the circularity of products (Tecchio et al., 2017).
Building 13 14%
Agriculture; plantations, other rural sectors 11 12% In this regard, just 39% of companies have one or more envi-
Food; beverages; tobacco 9 9% ronmental certifications. Of that 82% are the ISO 14000 certified
Chemical industries 8 8% and 7% are certified by the Eco-Management and Audit Scheme
Forestry; wood; cellulose; paper 8 8% (EMAS). The rest of the firms are at the most basic EMM maturity
Mass media; culture; graphic arts 8 8%
Financial services; professional services; 7 7%
stages: Legal Requirements, and Responsibility Assignment and
consultancy Training.
Others 17 18% After these introductory questions, participants were provided
Environmental Certifications with a definition of Circular Economy to reassure that all re-
Yes 35 37%
spondents could answer the following questions with the same
No 60 63%
understanding of the concept. The survey was conducted to study
the CE cycle in the following phases: Take-Transform, Use, and
Recovery. Each phase was assessed through a Likert-type scale
types of business. All the participants are SMEs with less than 250
ranging from 1 e “I never take it into account” to 7 e “I always take
employees, although 75% have fewer than 50 employees. Moreover,
it into account”.
the sample shows that many managers at SMEs were accessible to
In the TakeeTransform phase, companies should attempt to
the researchers, since more than two-thirds of the respondents are
make more effective and responsible use of biological and technical
general managers or had held managerial positions.
resources. It implies that companies can select the suppliers and
The first part of the survey was organized in three groups of
materials they use according to environmental criteria (Fig. 2).
questions according to the Circular Economy cycle: Take-Transform,
Use, and Recovery (Diez et al., 2016). In the second part, the
objective was to assess whether there was any integration among
companies through business associations and infrastructure
sharing. In the third part of the questionnaire, companies were
asked about the benefits of and barriers to implementing CE in their
SMEs.
The questionnaire was composed of 35 items. Some questions
were multiple choice, other questions required a response on a 7-
point Likert scale, and some questions allowed open-ended
responses.
In addition to the descriptive statistics, Factor Analysis was use
with some segments of the questionnaire. As is well known, Factor
Analysis can be used from an exploratory perspective, trying to find
a structure among the variables that might provide some clues
about the underlying dimensions (Hair et al., 2006).

4Results and discussion Fig. 1. Circular Economy information sources.

This section presents how respondents perceive Circular Econ-

omy in their SMEs analyzing three different aspects: 1) the CE Cycle
diagnostic, 2) the CE barriers and opportunities, and 3) the indus-
trial symbiosis management. Moreover, a factor analysis was
developed to provide a deeper understanding of the CE imple-
mentation in SMEs.

4.1. Descriptive analysis of CE cycle diagnostic

Initially, participants were asked about their previous knowl-

edge regarding the Circular Economy. According to the survey, Fig. 2. Level of implementation of the TakeeMake phase, on a 7-point Likert scale.
 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167 161

The survey shows that 42% of the participants never or rarely
use any environmental criteria for supplier selection, while just 17%
of participants continuously use environmental criteria to select
their suppliers. In analyzing resources, 42% of the companies re-
ported that they usually try to reduce the consumption of raw
materials while designing and to improve their processes. More-
over, the companies can go forward with the use of biodegradable
or circular materials, which can be repeatedly used in different
value chains like the glass or polyester, to improve their environ-
mental performance and decrease their potential pollutants but,
more than a half of the participants rarely or never use these kinds
of sources.
To diagnose the Use phase, the participants were assessed ac-
cording to how their customers can use their products through a
circular business model and by encouraging life cycle extension
through post-sales services or maintenance (Fig. 3). However, the
survey showed that SMEs in Navarra and the Basque Country are
not yet prepared to implement circular business models, such as
leasing instead of just selling a product and ending the relationship
with clients or offering services that prolong their products’ life
cycle.
Moreover, implementing a Circular Economy is a challenge for
SMEs that usually work with a “business to business” model in
economic sectors like mechanical and electrical engineering and
construction, and also for producers of perishable goods such as
food, drink, and tobacco. These producers usually cannot control
the final product. This finding, while preliminary, suggests that
most of these SMEs are losing track of the products, so they cannot
recover the materials and limit their actions to cleaner production
practices just inside the company.
In the last phase of the CE cycle, the responses indicate that
more than 41% of SMEs never or rarely reach the Recovery phase
(Fig. 4) by using waste heat, recirculating their own industrial
sources, using or selling by-products, or reclaiming used products
from their customers. However, in analyzing the small group of
SMEs that is implementing this strategy, we saw that they belong to
sectors like construction, agriculture and forestry. This is explained
by the high amount of biodegradable and circular materials they
use in their production process.
In brief, the important percentage of SMEs of the sample who
have achieved some environmental certification (39%) is not
directly associated with the level of implementation of CE, based in
the low use of biodegradable or circular materials, low imple-
mentation of circular business models and the poor resources re-
covery expressed by respondents. This result suggests that Circular
Economy implementation strategies such as the European Union
action plan should not be limited to encourage the current envi-
ronmental certification programs. As explained earlier, these kinds
of policies should drive the improvement or reinvention of stan-
dardizations schemes towards circularity.
4.2. Factor analysis of the CE cycle diagnostic
An exploratory Factor Analysis was performed to study the in-
terrelationships among the questions that were used to charac-
terize the phases of the CE cycle. Each question was added as a new
variable, as represented in Table 4.
The minimum requisites for the conducting a Factor Analysis
establish a sample size that is not less than 50, and a minimum ratio
of 5 observations per variable (Hair et al., 2006). Although a valid
sample of 95 respondents was obtained, the number of missing
answers regarding the Use phase was relatively high and would
compromise the factor analysis. Therefore, considering the risk of
producing misleading interpretation as regards the “Use” phase, we
decided that only the variables regarding the “Take-Transform” and
“Recovery” phases would be submitted to Factor Analysis. For these
phases, the requirements for utilizing the technique were fully
observed.
The KMO (Kaiser-Meyer-Olkin) measure of sampling adequacy,
which compares the linear correlations between variables with
their corresponding partial correlations, is above 0.5 (more exactly
0.698), thus fulfilling the minimum required for conducting a Factor
Analysis.
Principal component analysis was adopted for factor extraction,
using the Kaiser criterion for factor retention. This criterion es-
tablishes that only components (factors) with an eigenvalue above
Table 4
Variables and questions corresponding to the Take-Transform and Recovery phases.

Phase Question Variable name

Take- Please rate your suppliers’ compliance with SupplFulfill

Transform environmental legislation on a scale of 1e7.
Do you apply environmental purchasing SupplSelect
criteria in the selection of suppliers?
Does the company have environmental CriteReduce
criteria for reducing the consumption of
raw materials, water, or energy in the
design and improvement of its production
processes?
How much do you think the materials used MateBiodegrad
Fig. 3. Level of implementation of the Use phase, on a 7-point Likert scale. in production are designed to be
biodegradable?
How much do you think the non- MateNOBiodeg
biodegradable materials used in production
are designed for reuse, recycling or
remanufacturing?
Recover Does the company use energy from the RecocEnergy
recovery and utilization of waste heat?
Does the company use treatments TreatEnlaUtil
(filtration, soaking, etc.) to extend the use
of industrial resources such as oils, acids,
lubricants, etc.?
Does the company recover the products RecoverProduct
that its customers no longer use?
Does the company commercialize the CommerSubprod
industrial material it generates (sub-
chemicals, oils, packaging, plastics, etc.)?
Fig. 4. Level of implementation of the Recovery phase, on a 7-point Likert scale.
162 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167

1 must be retained since they explain more than an individual Table 8

variable. Variables of component/factor 1.

As Table 5 clearly demonstrates, this decision led to the utili- Question Variable
zation of 3 factors. The 4-factor solution was also studied, but the How much do you think the non-biodegradable materials MateNOBiodeg
final structure was not as meaningful as the one with 3 factors. used in production are designed for reuse, recycling or
The average of communalities (the percent of each variable that remanufacturing?
is explained by the factor solution) is slightly above 0.6, as can be How much do you think the materials used in production are MateBiodegrad
designed to be biodegradable?
seen in Table 6. Nevertheless, it becomes clear that the variable
Do you apply environmental purchasing criteria in the SupplSelect
“RecoverProduct” is not as well represented in the final solution as selection of suppliers?
the other variables, since its communality is clearly lower. Please rate your suppliers’ compliance with environmental SupplFulfill
The Varimax algorithm was used to perform an orthogonal legislation on a scale of 1e7.
rotation, envisaging the improvement of factor interpretation.
Table 7 shows the rotated component matrix.
Allocating variables to factors is straightforward overall, but the Component/Factor 2 includes the variables in Table 9.
allocation regarding RecoverProduct was not so clear, and a These variables include the company’s ability to apply treat-
meaningful structure emerged. ments that could extend the use of industrial resources and the
Component/Factor 1 includes the variables in Table 8. ability to use energy that comes from the recovery of residual heat,
It can be seen that this factor includes the questions regarding though it shows less clearly the recovery of products that are no
the suppliers as well as the materials included in the production, longer used by customers.
i.e., it includes the materials as well as the entities that are chosen A common pattern associated with Resources’ Reutilization
to provide them. Hence, it can be said that the factor is a global characterizes all three variables included in this component.
representation of Material Provision. Component/Factor 3 includes the variables in Table 10.
These variables include the company’s ability to commercialize
the industrial sub-products that it generates, and the application of
Table 5 environmental criteria that might contribute to reducing the con-
Eigenvalues and cumulative variance associated to principal components.
sumption of raw materials, water or energy. A common pattern also
Component Initial eigenvalues characterizes these variables, since they are both associated with
Total % of Variance Cumulative % financial savings or revenues, which come from commercialization
of products and/or less spending on production factors. Therefore,
1 2.751 30.566 30.566
2 1.593 17.700 48.266 one can say that this factor is associated with the Financial
3 1.062 11.795 60.061 Advantage that might come from CE’s implementation.
4 0.997 11.083 71.144 Therefore, if one considers the phases Take-transform and
5 0.694 7.715 78.859 Recover, three mains factors are associated with a company’s
6 0.601 6.678 85.537
7 0.483 5.368 90.905
perception of Circular Economy: Material Provision, Resources’
8 0.428 4.757 95.663 Reutilization, and Financial Advantage (Table 11).
9 0.390 4.337 100.000 It is interesting to notice that one variable from the Take-
transform phase (CriteReduce) and a variable from the Recovery
phase (CommerSubprod) were grouped together in the Factor
Table 6 Analysis instead of sharing behavior with others from the same
Communalities for the 3-factor solution. phase (Table 11). The reason appears to be the fact that both might
Variable Initial Extraction represent financial advantages, which seems to be an independent
factor as regards companies’ perceptions about the Circular
SupplFulfill 1.000 0.581
SupplSelect 1.000 0.500 Economy.
CriteReduce 1.000 0.692
MateBiodegrad 1.000 0.485
MateNOBiodeg 1.000 0.656 Table 9
RecovEnergy 1.000 0.712 Variables of component/factor 2.
TreatEnlaUtil 1.000 0.743
Question Variable
RecoverProduct 1.000 0.197
CommerSubprod 1.000 0.840 Does the company use treatments (filtration, soaking, etc.) to TreatEnlaUtil
extend the use of industrial resources such as oils, acids,
lubricants, etc.?
Does the company use energy from the recovery and RecocEnergy
Table 7 utilization of waste heat?
Component matrix after orthogonal rotation. Does the company recover the products that its customers RecoverProduct
Rotated component matrix no longer use?

Variables Component

1 2 3 Table 10
MatNOBiodeg 0.808 0.049 -0.019 Variables of component/factor 3.
MateBiodegra 0.695 -0.031 -0.038
Question Variable
SupplSelect 0.666 0.217 0.094
SupplFulfill 0.638 -0.025 0.418 Does the company commercialize the industrial material it CommerSubprod
TreatEnlaUtil -0.120 0.849 0.084 generates (sub-chemicals, oils, packaging, plastics, etc.)?
RecovEnergy 0.090 0.834 0.094 Does the company have environmental criteria for reducing CriteReduce
RecoverProduct 0.257 0.358 0.054 the consumption of raw materials, water, or energy in
CommerSubprod -0.102 0.079 0.907 the design and improvement of its production
CriteReduce 0.462 0.282 0.631 processes?
 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167 163

Table 11
Factors associated with a company’s perception of the Circular Economy, consid-
ering the Take-transform and Recovery phases.

Factors/Components

Material provision Resources’ reutilization Financial advantage

Variables MateBiodegrad RecovEnergy CommerSubprod

MateNOBiodeg TreatEnlaUtil CriteReduce
SupplFulfill RecoverProduct
SupplSelect

4.3. Descriptive analysis of Circular Economy barriers and Fig. 6. Importance perception of CE opportunities according to SMEs, on a 7-point
Likert scale.
opportunities

This section was developed to identify and classify the main

barriers and opportunities of the CE implementation for SMEs. the sustainability of the company over the long term (Fig. 6). This
According to the theoretical framework, the barriers were result shows that SMEs are not convinced about the financial
classified as nine aspects: lack of financial support, inadequate in- benefits they could get from CE. Finally, the market sustainability is
formation management systems (IMS), lack of proper technology, the worst rated opportunity and with the major number of SMEs
lack of technical resources, lack of financial resources, lack of con- which are not sure about the importance of this fact. This result also
sumer interest in the environment, lack of support from public suggests that this benefit is not clear and cannot be used as a
institutions, lack of qualified professionals in environmental man- motivation to implement the CE, at least in the short term.
agement (EM) and lack of commitment on the part of the organi-
zations’ leaders. Then, these aspects were evaluated by participants 4.4. Factor analysis of CE barriers and opportunities/benefits
using a Likert scale that ranged from 1 e “It never affects us” to 7 e
“It is a constant barrier”, or “Don’t know-don’t answer” in case of Factor Analysis was also performed with the questions repre-
respondents who have not a clear idea (Fig. 5). senting the potential benefits and barriers associated to Circular
Regarding the proposed barriers, the most critical barrier Economy. Table 12 presents the questions and the adopted name
established by the participants are lack of support from public or- for the corresponding variable.
ganizations, insufficient financial resources and lack of customer The obtained KMO measure of sampling adequacy was 0.708,
interest in the environment. On the other hand, the companies clearly above the required minimum, and Bartlett’s test of sphe-
surveyed did not think that the lack of leaders’ commitment and ricity was successful.
the lack of qualified people is a problem for CE implementation. Principal Component Analysis was adopted for factor extraction
With regard to opportunities assessed in this study, they were and only components with an eigenvalue above 1 were considered
analyzed through four aspects: the increase of prestige, cost in the final solution. As presented in Table 13, a solution with 3
reduction and financial benefits, recovery of the local environment factors explained more than sixty percent of the variance.
and the sustainability of the company in the market. In this section, As reflected in Table 13 the 3-factor solution presented a very
the participants evaluated each item with a Likert scale from 1 e “It balanced distribution of communalities, with values above 0.5 for
never benefits us” to 7 e “It is a constant benefit”, or “Don’t know”. all variables and an overall average of 0.639.
In general, most of the companies, rate from 5 to 7 that CE An orthogonal rotation of the components’ matrix was per-
implementations may be a great benefit for increasing prestige and formed, using the Varimax algorithm. The resulting rotated matrix
environmental recovery. This result confirms the importance of CE is shown in Table 14.
to influence the public opinion about the SMEs and help them in-
crease their participation in the market. Then, the opinion about
how CE benefits the environmental recovery suggest that SMEs are
Table 12
conscious of their influence in this aspect. Consequently, both op-
Collected variables and corresponding questions about opportunities/benefits and
portunities can be highlighted as potential motivations to boost the barriers regarding CE.
CE implementation in SMEs.
Question Variable name
In contrast, companies are not fully convinced that CE can bring
them tangible benefits in cost reduction or financial profits and in Opportunities/ Prestige increase BPrestige
Benefits Costs reduction (V) BCostRed
Environmental recovery, at least at the BEnvironRecov
local level
Guarantee the permanence of the BTimestay
company over time
Barriers Lack of financial support BREconomic
Insufficient information management BRInfoSystem
systems
Lack of adequate technology BRTechnolo
Insufficient technical resources BRTecResources
Insufficient financial resources BRFinacReources
Lack of customer interest in the BRCustoInterest
environment
Lack of support from public institutions BRPublSupport
Lack of qualified personnel in BRLackPerson
environmental management
Commitment of the organization’s BRLeadership
Fig. 5. Importance of perceived barriers to CE according to SMEs, on a 7-point Likert
leaders
scale.
164 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167

Table 13 Table 16
Eigenvalues and cumulative variance associated with principal Variables of component 3.
components.
Question Variable
Component Initial eigenvalues
Lack of customer interest in the environment BRCustoInterest
Total % of Variance Cumulative % Lack of qualified personnel in environmental management BRLackPerson
Commitment of the organization’s leaders BRLeadership
1 4.561 35.084 35.084
2 2.426 18.659 53.742
3 1.319 10.148 63.890
4 0.974 7.491 71.381 Table 17
5 0.882 6.785 78.167 Factors associated with company perception of CE implementation, considering the
6 0.665 5.112 83.278 barriers and opportunities/benefits.
7 0.483 3.712 86.990
8 0.467 3.590 90.580 Factors/Components
9 0.392 3.016 93.596 Component 1 - Hard Barriers
10 0.325 2.503 96.098 Variables Lack of financial support BREconomic
11 0.193 1.484 97.582 Insufficient information management systems BRInfoSystem
12 0.164 1.262 98.845 Lack of adequate technology BRTechnolo
13 0.150 1.155 100.000 Insufficient technical resources BRTecResources
Insufficient financial resources BRFinacReources
Lack of support from public institutions BRPublSupport
Table 14 Component 2 - Opportunities/Benefits
Component matrix after orthogonal rotation. Variables Prestige increase BPrestige
Costs reduction (V) BCostRed
Rotated component matrix Environmental recovery, at least at the local BEnvironRecov
level
Variables Component
Guarantee the permanence of the company BTimestay
1 2 3 over time
Component 3 - Human-based Barriers
BRTecResources 0.798 0.163 0.048
Variables Lack of customer interest in the environment BRCustoInterest
BRFinancResources 0.795 -0.162 0.048
Lack of qualified personnel in environmental BRLackPerson
BRTechnolo 0.795 0.142 0.042
management
BREconomic 0.785 0.108 0.131
BRPublSupport 0.727 0.006 0.234
BRInfoSystem 0.721 0.189 0.336
BEnvironRecov 0.101 0.851 0.194 As a consequence, the overall set of barriers and benefits as
BPrestige 0.005 0.772 0.244
regards the implementation of Circular Economy can be synthe-
BTimestay 0.009 0.768 0.019
BCostRed 0.179 0.749 0.002 tized as presented in Table 17.
BRLeadership 0.041 0.218 0.801
BRLackPerson 0.273 0.189 0.711
BRCustoInterest 0.147 -0.018 0.699 4.5. Integration opportunities among SMEs

Consequently, this study included a brief analysis of the level of

The obtained structure is quite objective and meaningful, integration between SMEs and other companies and IAs, because
without any doubt regarding the allocation of variables to factors. It industrial networks have been identified as a successful way to
becomes clear that all variables regarding the Opportunities/Benefits increase sector influence in the market, lower costs for doing
are grouped together in the same factor/component (component business, and encourage the effective use of resources (Alfaro et al.,
2), which means that the benefits coming from the implementation 2017; Cohen-Rosenthal, 2000; Porter, 1998). Even, Ruiz Puente et al.
of Circular Economy are seen as a whole, without a distinct (2015) argue the importance of industrial symbiosis in SMEs to
behavior for any particular benefit. However, the same situation create value and competitive advantage from waste management.
does not occur as regards the potential barriers, which are clearly Furthermore, closing the loop of materials requires cooperation
divided into two different categories. between firms that can share their resources and reintroduce res-
Component 1 comprises the variables in Table 15. idues from other value chains as proposed in the industrial meta-
All these variables are objectively observable and correspond to bolism theory (Ayres, 1989; Ayres and Kneese, 1969). This industrial
what can be classified as Hard Barriers, in accordance with their metabolism through the IA intermediation may help SMEs to
objective nature. advance to the meso-level approach of the Circular Economy. Thus,
Component 3 comprises the variables in Table 16. participants were asked about how frequently they share resources
Interestingly, all these variables are associated with Human- or infrastructure with other firms, from 1 e “Never” to 7 e “Al-
based Barriers, either from the customers’ standpoint, job market ways”. Even though half of the respondents never or rarely share
insufficiency or the lack of leadership. infrastructure, there is a growing interest in this practice from
diverse sectors of the economy (Fig. 7).
Participants were then asked about the industrial associations
Table 15 they belonged to, based on the fact that the associations or clusters
Variables of component 1. may help SMEs to create synergies and systematic innovation in the
Question Variable economic sector where they work (2015). The result was that 68%
of SMEs surveyed belonged to some business association related to
Lack of financial support BREconomic
Insufficient information management systems BRInfoSystem their economic sector and region. Moreover, it is interesting to note
Lack of adequate technology BRTechnolo that 47% of companies agreed that associations usually give support
Insufficient technical resources BRTecResources in terms of improving environmental management, but the most
Insufficient financial resources BRFinacReources remarkable association mentioned by SMEs was the one which
Lack of support from public institutions BRPublSupport
supports the wood firms involved in businesses like logging,
 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167
Fig. 7. Degree of infrastructure sharing among SMEs.
forestry, sawmills, biomass, manufacturing all kinds of wood
products, joinery and workshop, engineering and construction
wood and the furniture trade.
5. Conclusions
The novelty of the paper consists in the attempt to explore
empirically the potential of the Circular Economy implementation
in SMEs and the barriers and opportunities they perceive.
Firstly, this study shows that SMEs are still focused basically on
environmental management practices like environmental certifi-
cation achievement, and they usually try to reduce the amount of
materials consumed, while the use of ecological or biodegradable
materials in their process is not frequent. This short-term vision
also limits SMEs’ environmental management to legal re-
quirements, systematization and costs savings.
In this research, three factors with nine variables were defined
through a Factor Analysis. Those factors were associated with a
company’s perception of the Circular Economy, considering the
Take-transform and Recovery phases: 1) Material Provision, 2)
Resources’ Reutilization and 2) Financial Advantage. The impor-
tance of cost savings also emerged in the Factor Analysis, in fact, the
variables regarding the commercialization of sub-products and the
reduction of water consumption, energy, and raw material were
grouped together, stressing the importance of the financial advan-
tage factor.
The survey also shows that SMEs from Navarra and the Basque
Country seemed less prepared to implement a Circular Economy as
the questions advanced along the CE cycle. This means that for
SMEs it is easier to adopt measures regarding the selection of
suppliers and sources than the strategies need to return and enrich
materials and energy in the system, in other words, close the cycle.
This is also clear from the Factor Analysis, showing that the vari-
ables associated with the material provision factor were clearly
distinguished from those that characterize the recovery strategies.
However, according to the survey, some economic sectors have
greater willingness to implement environmental strategies in some
phases of the Circular Economy cycle. For example, the construction
sector has high limitations on implementing strategies in the Use
phase, but it has greater willingness to return and enrich the ma-
terials they use in other products. This industrial behavior is
coherent with the high support offered by IAs from those sectors to
their associated firms.
Then, with the aim to identify and classify the main barriers and
opportunities of the CE for SMEs, this paper analyzed the impor-
tance of barriers and opportunities perceived by the SMEs. Partic-
ipants revealed that they do not think that the Circular Economy
could help them increase the profitability of their business and
their sustainability in the market. In this way, they probably will
not consider the investments in better material or technology
needed to close the loop in their processes. Moreover, the SMEs’
165
limited resources and short-term vision and lack of time in the daily
activities imply that they do not see the Circular Economy as one of
their priorities.
In addition, participants consider that support from public in-
stitutions is one of the most critical barriers, and we believe that
further research must be oriented in two ways. First, effective
policy instruments that reward and support the Circular Economy
implementation strategies in Spanish SMEs, consistent with the
European action plan. As regards the utilization of policy in-
struments, it should be considered that barriers to the imple-
mentation of the Circular Economy may have different
characteristics, requiring different strategies. In fact, our analysis
revealed two types of barriers; Hard barriers and Human-based
barriers which are perceived differently. Hard barriers can be
addressed by financial stimulation and technological moderniza-
tion, as they are connected to the lack of financial resources,
technology, inadequate information systems, etc. However, the
Human-based barriers include issues like company leadership or the
lack of customer interest in the environment.
The analysis of the integration opportunities between SMEs
with other companies and IAs show that the degree of infrastruc-
ture sharing is not usual, but it would be possible to boost that
practice through IAs, since 62% of SMEs in the survey belong to one
or more of them.
6Limitations and suggestions for future research
As previously mentioned the data were obtained from a con-
venience sample restricted to two specific regions of Spain.
Therefore, although some valuable conclusions could be with-
drawn, leaving clues for better interpretation of the CE challenges,
one must obviously be prudent when discussing their generaliza-
tion, being the study mainly exploratory.
Despite all the efforts developed by the research team, as
consequence of some missing answers, the obtained sample size
prevented the utilization of Factor Analysis with the “Use” phase. In
fact, this seemed to be a proper decision, since the output of the
technique could be quite misleading under those circumstances.
Naturally, a replication of the study in different geographic re-
gions can provide valuable insights as well as a step towards
confirmatory purposes.
Additionally, this study considers that there is an interesting
research gap to point out, regarding the critical role of Industrial
Associations (IA) in the results because most of the companies from
the sample belong to some IA, but they have not developed an
industrial symbiosis yet. In this regard, Industrial Associations
should take measures to boost industrial symbiosis among their
affiliated enterprises. In this regard, a deeper exploration should be
carried out to assess how IAs or similar business associations can
help their SMEs members to develop industrial symbiosis and close
their materials loop.
Future empirical studies on the current topic are therefore rec-
ommended to prove that the Circular Economy provides business
opportunities to SMEs and it should be part of their corporative
strategy. Besides, further research should be done to investigate the
value creation in SMEs and the increase of their competitive ad-
vantages through the implementation of Circular Economy.
To address Human-based barriers, actions within the companies
as well as actions geared towards society must be stimulated,
focusing on increasing the awareness and importance of the Cir-
cular Economy as being vital to long-term sustainability. Moreover,
it might be useful to analyze the companies that achieved the
highest scores in the survey to identify their best techniques and
practices in order to implement the CE in other SMEs with a similar
context of action.
166 M. Ormazabal et al. / Journal of Cleaner Production 185 (2018) 157e167
Acknowledgments
The support of the National Program for Fostering Excellence in
Scientific and Technical Research of Spain (No. DPI 2015-70832-R)
is gratefully acknowledged. The authors would like to thank the
journal anonymous reviewers for their recommendations for
improving the paper.
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