Transforming Trash into Treasure Troves: SMEs Co-Create Industrial Ecology Ecosystems with Government

Industrial ecology addresses newer business models that improve flows of energy, water, and materials, mimicking interconnections found in natural systems. Businesses can function interdependently to extend the life cycle of resources by setting up systems to repurpose waste or transfer a byproduct of manufacturing as an input for creating another product. Although the extant literature focuses on the role of businesses in closed-loop processes, governments can catalyse sustainable entrepreneurship to transition to a circular economy. There is a limited understanding of how public–private partnerships can facilitate this shift in small and medium enterprises. Multiple case studies were conducted to examine industrial ecology projects that were spearheaded by a state grant scheme in Australia. The long-term progress in establishing initiatives across commercial and industrial projects was monitored. The findings show government incentives to start up projects facilitate conditions to develop technology and other capabilities for responsible production and consumption. This study extends the theory of innovation ecosystems into practice. The model demonstrates that sustainable value for business and society can be realized through financial support and collaboration that enables entrepreneurship and drives circularity across cities and regions.