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Circular economy practices and financial performance of SMEs in Albania: evidence from an empirical survey

Author

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  • Klarida PRENDI

    (Aleksander Moisiu University, Durres, Albania)

  • Arif MURRJA

    (Agriculture University, Tirana, Albania)

Abstract

Objectives This paper explores how the adoption of Circular Economy (CE) practices influences the financial performance of Albanian micro, small, and medium-sized companies (SMEs). Drawing on sustainability and smart economy literature, it provides empirical evidence from an emerging market in Albania. Prior work Based on a survey of 82 companies, two composite indexes were developed: the Circular Economy Index (CE_Index) and the Financial Performance Index (FIP_Index) both demonstrating high reliability (alpha > 0.90). Results Correlation, regression, and ANOVA analyses reveal a strong and statistically significant positive relationship between CE adoption and financial performance, with firms reporting higher profitability, sales, and cash flow improvements. Size effects are evident: micro and medium enterprises outperform small firms in both CE adoption and financial outcomes. Implications The study concludes that CE is not only environmentally beneficial but also a driver of financial resilience and competitiveness, reinforcing its role in building a smart, sustainable economy.

Suggested Citation

  • Klarida PRENDI & Arif MURRJA, 2025. "Circular economy practices and financial performance of SMEs in Albania: evidence from an empirical survey," Smart Cities International Conference (SCIC) Proceedings, Smart-EDU Hub, Faculty of Public Administration, National University of Political Studies & Public Administration, vol. 13, pages 261-273, september.
    • Handle: RePEc:pop:procee:v:13:y:2025:p:261-273
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    File URL: https://scrd.eu/index.php/scic/article/view/873
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    JEL classification:

    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation

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