A Study of Circular Economy Practices in KSA’s Small and Medium Industries: Benefits, Challenges, and Future Potential

The circular economy (CE) can help businesses use resources more efficiently, but empirical evidence on CE adoption among non-European SMEs remains limited. This study examines CE practices, benefits, challenges, and future intentions in 220 Saudi Arabian SMIs. A structured survey collected data on four CE practice domains (resource efficiency, waste management, eco-design, and reverse logistics), four benefit dimensions (economic, environmental, operational, and reputational), four challenge dimensions (financial, organizational, technical, and regulatory), and six future intention items. CE adoption was moderate (M = 3.29 on a five-point scale) and balanced across all four practice domains, with resource efficiency scoring highest (M = 3.32). Benefit scores averaged 3.46, far outpacing challenges (M = 2.78). This benefit surplus of 0.68 points (on a five-point scale) indicates that Saudi SMIs perceive CE as worthwhile and view its barriers as manageable rather than prohibitive. Together, perceived benefits and perceived challenges explained 54.3% of the variance in CE adoption (R 2 = 0.543) in multiple regression analysis. Reducing perceived challenges may be a more effective lever for promoting CE adoption than amplifying perceived benefits, as challenges exerted a larger absolute standardised effect (β = −0.50) than perceived benefits (β = 0.39). Once perceptions were controlled, perceived benefits and challenges significantly predicted future CE intentions, but current CE practices did not. According to the Theory of Planned Behavior’s attitudinal pathway, firms without CE experience can develop strong forward-looking intentions if the business case is convincing and barriers are perceived as manageable. Technical and organizational barriers outweighed financial ones, indicating the need for capacity-building interventions over supplementary financing, unlike European findings. About 79% of respondents were neutral or positive about government-supported CE expansion. CE adoption did not differ significantly by firm size, geographic location, or ownership structure, suggesting that Vision 2030’s sustainability messaging has established a broad baseline of CE awareness across Saudi SMIs.