IDEAS home Printed from https://ideas.repec.org/a/spr/circec/v3y2023i3d10.1007_s43615-022-00222-5.html
   My bibliography  Save this article

Financing-Related Drivers and Barriers for Circular Economy Business: Developing a Conceptual Model from a Field Study

Author

Listed:
  • Arttu Saarinen

    (Unit of Industrial Engineering and Management, Faculty of Management and Business)

  • Leena Aarikka-Stenroos

    (Unit of Industrial Engineering and Management, Faculty of Management and Business)

Abstract

The transition toward sustainability and the circular economy is shaping technology investment and business, leading to there being growing interest in financial aspects of circular economy businesses. As research on circular economy drivers and barriers, in addition to the literature on circular economy business and finance, has not yet provided a comprehensive view on drivers of and barriers to circular economy business financing, this study takes a theory-developing qualitative approach. It integrates extant theoretical knowledge and empirical new insights from an extensive field study in Finland, Europe, based on over 270 data sources, including interviews, workshops, reports, and media documents. From these data sources, this paper analyzes and conceptualizes the driving and inhibiting factors that have shaped the sources, criteria, and subjects of circular economy business financing. The study results that the sources of financing—being public and private sources—apply diverse criteria for financing, such as valuation and profitability of circular business models, their type, investment costs, and their business potential for financing industry itself, when they assess different subjects of financing, such as individual companies’ circular businesses, supply chains, and joint projects. Findings show that many factors that could serve as drivers have considered inhibitors. As a theoretical contribution, our study develops a conceptual model on the key factors shaping the financing of CE businesses and set of propositions on these factors inhibit and drive CE financing. Our findings provide guidance for practitioners such as managers and policy makers who aim to advance circular economy business.

Suggested Citation

  • Arttu Saarinen & Leena Aarikka-Stenroos, 2023. "Financing-Related Drivers and Barriers for Circular Economy Business: Developing a Conceptual Model from a Field Study," Circular Economy and Sustainability, Springer, vol. 3(3), pages 1187-1211, September.
    • Handle: RePEc:spr:circec:v:3:y:2023:i:3:d:10.1007_s43615-022-00222-5
    DOI: 10.1007/s43615-022-00222-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43615-022-00222-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43615-022-00222-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vasileios Rizos & Arno Behrens & Wytze Van der Gaast & Erwin Hofman & Anastasia Ioannou & Terri Kafyeke & Alexandros Flamos & Roberto Rinaldi & Sotiris Papadelis & Martin Hirschnitz-Garbers & Corrado , 2016. "Implementation of Circular Economy Business Models by Small and Medium-Sized Enterprises (SMEs): Barriers and Enablers," Sustainability, MDPI, vol. 8(11), pages 1-18, November.
    2. Alfonso Aranda-Usón & Pilar Portillo-Tarragona & Luz María Marín-Vinuesa & Sabina Scarpellini, 2019. "Financial Resources for the Circular Economy: A Perspective from Businesses," Sustainability, MDPI, vol. 11(3), pages 1-23, February.
    3. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    4. Kannan Govindan & Mia Hasanagic, 2018. "A systematic review on drivers, barriers, and practices towards circular economy: a supply chain perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 56(1-2), pages 278-311, January.
    5. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    6. Dubois, Anna & Gadde, Lars-Erik, 2014. "“Systematic combining”—A decade later," Journal of Business Research, Elsevier, vol. 67(6), pages 1277-1284.
    7. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability, Springer, vol. 1(3), pages 787-798, November.
    8. Domenech, Teresa & Bahn-Walkowiak, Bettina, 2019. "Transition Towards a Resource Efficient Circular Economy in Europe: Policy Lessons From the EU and the Member States," Ecological Economics, Elsevier, vol. 155(C), pages 7-19.
    9. N. Eccles & S. Viviers, 2011. "The Origins and Meanings of Names Describing Investment Practices that Integrate a Consideration of ESG Issues in the Academic Literature," Journal of Business Ethics, Springer, vol. 104(3), pages 389-402, December.
    10. Claudia Ghisetti & Sandro Montresor, 2020. "On the adoption of circular economy practices by small and medium-size enterprises (SMEs): does “financing-as-usual” still matter?," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 559-586, April.
    11. Kirchherr, Julian & Piscicelli, Laura & Bour, Ruben & Kostense-Smit, Erica & Muller, Jennifer & Huibrechtse-Truijens, Anne & Hekkert, Marko, 2018. "Barriers to the Circular Economy: Evidence From the European Union (EU)," Ecological Economics, Elsevier, vol. 150(C), pages 264-272.
    12. Joerg S. Hofstetter & Valentina Marchi & Joseph Sarkis & Kannan Govindan & Robert Klassen & Aldo R. Ometto & Katharina S. Spraul & Nancy Bocken & Weslynne S. Ashton & Sanjay Sharma & Melanie Jaeger-Er, 2021. "From Sustainable Global Value Chains to Circular Economy—Different Silos, Different Perspectives, but Many Opportunities to Build Bridges," Circular Economy and Sustainability, Springer, vol. 1(1), pages 21-47, June.
    13. Max Russell & Alberto Gianoli & Stelios Grafakos, 2020. "Getting the ball rolling: an exploration of the drivers and barriers towards the implementation of bottom-up circular economy initiatives in Amsterdam and Rotterdam," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 63(11), pages 1903-1926, September.
    14. Leena Aarikka-Stenroos & Martina Don Welathanthri & Valtteri Ranta, 2021. "What Is the Customer Value of the Circular Economy? Cross-Industry Exploration of Diverse Values Perceived by Consumers and Business Customers," Sustainability, MDPI, vol. 13(24), pages 1-18, December.
    15. Garrido-Prada, Pablo & Lenihan, Helena & Doran, Justin & Rammer, Christian & Perez-Alaniz, Mauricio, 2021. "Driving the circular economy through public environmental and energy R&D: Evidence from SMEs in the European Union," Ecological Economics, Elsevier, vol. 182(C).
    16. Dubois, Anna & Gadde, Lars-Erik, 2002. "Systematic combining: an abductive approach to case research," Journal of Business Research, Elsevier, vol. 55(7), pages 553-560, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jose García‐Quevedo & Elisenda Jové‐Llopis & Ester Martínez‐Ros, 2020. "Barriers to the circular economy in European small and medium‐sized firms," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2450-2464, September.
    2. Antonella Zucchella & Pietro Previtali & Roger Strange, 2022. "Proactive and reactive views in the transition towards circular business models. A grounded study in the plastic packaging industry," International Entrepreneurship and Management Journal, Springer, vol. 18(3), pages 1073-1102, September.
    3. Marcelo Werneck Barbosa, 2022. "A Critical Appraisal of Review Studies in Circular Economy: a Tertiary Study," Circular Economy and Sustainability, Springer, vol. 2(2), pages 473-505, June.
    4. Nathalia Suchek & João J. Ferreira & Paula O. Fernandes, 2022. "A review of entrepreneurship and circular economy research: State of the art and future directions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2256-2283, July.
    5. Garrido-Prada, Pablo & Lenihan, Helena & Doran, Justin & Rammer, Christian & Perez-Alaniz, Mauricio, 2021. "Driving the circular economy through public environmental and energy R&D: Evidence from SMEs in the European Union," Ecological Economics, Elsevier, vol. 182(C).
    6. Moritz Böhmecke‐Schwafert & Marie Wehinger & Robin Teigland, 2022. "Blockchain for the circular economy: Theorizing blockchain's role in the transition to a circular economy through an empirical investigation," Business Strategy and the Environment, Wiley Blackwell, vol. 31(8), pages 3786-3801, December.
    7. Julia Martínez-Cabrera & Francisco López-del-Pino, 2021. "The 10 Most Crucial Circular Economy Challenge Patterns in Tourism and the Effects of COVID-19," Sustainability, MDPI, vol. 13(9), pages 1-41, April.
    8. Rohit Agrawal & Vishal A. Wankhede & Anil Kumar & Sunil Luthra, 2021. "Analysing the roadblocks of circular economy adoption in the automobile sector: Reducing waste and environmental perspectives," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1051-1066, February.
    9. German Arana‐Landin & Waleska Sigüenza & Beñat Landeta‐Manzano & Iker Laskurain‐Iturbe, 2024. "Circular economy: On the road to ISO 59000 family of standards," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1977-2009, May.
    10. Graziela Darla Araujo Galvão & Steve Evans & Paulo Sergio Scoleze Ferrer & Marly Monteiro de Carvalho, 2022. "Circular business model: Breaking down barriers towards sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1504-1524, May.
    11. Do, Quynh & Mishra, Nishikant & Colicchia, Claudia & Creazza, Alessandro & Ramudhin, Amar, 2022. "An extended institutional theory perspective on the adoption of circular economy practices: Insights from the seafood industry," International Journal of Production Economics, Elsevier, vol. 247(C).
    12. Ipek Kazancoglu & Yigit Kazancoglu & Emel Yarimoglu & Aysun Kahraman, 2020. "A conceptual framework for barriers of circular supply chains for sustainability in the textile industry," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1477-1492, September.
    13. Rodríguez-Espíndola, Oscar & Cuevas-Romo, Ana & Chowdhury, Soumyadeb & Díaz-Acevedo, Natalie & Albores, Pavel & Despoudi, Stella & Malesios, Chrisovalantis & Dey, Prasanta, 2022. "The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs," International Journal of Production Economics, Elsevier, vol. 248(C).
    14. Jing Shao & Cedric Aneye & Alyona Kharitonova & Wei Fang, 2023. "Essential innovation capability of producer‐service enterprises towards circular business model: Motivators and barriers," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4548-4567, November.
    15. Osei, Vivian & Bai, Chunguang & Asante-Darko, Disraeli & Quayson, Matthew, 2023. "Evaluating the barriers and drivers of adopting circular economy for improving sustainability in the mining industry," Resources Policy, Elsevier, vol. 86(PB).
    16. Yamoah, Fred A. & Sivarajah, Uthayasankar & Mahroof, Kamran & Peña, Iker González, 2022. "Demystifying corporate inertia towards transition to circular economy: A management frame of reference," International Journal of Production Economics, Elsevier, vol. 244(C).
    17. Nan-Hua Nadja Yang & Ana Carolina Bertassini & Jéssica Alves Justo Mendes & Mateus Cecílio Gerolamo, 2021. "The ‘3CE2CE’ Framework—Change Management Towards a Circular Economy: Opportunities for Agribusiness," Circular Economy and Sustainability, Springer, vol. 1(2), pages 697-718, September.
    18. Serdar Durdyev & Kerim Koc & Aidana Tleuken & Cenk Budayan & Ömer Ekmekcioğlu & Ferhat Karaca, 2025. "Barriers to circular economy implementation in the construction industry: causal assessment model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(2), pages 4045-4081, February.
    19. Sultan Çetin & Vincent Gruis & Ad Straub, 2021. "Towards Circular Social Housing: An Exploration of Practices, Barriers, and Enablers," Sustainability, MDPI, vol. 13(4), pages 1-23, February.
    20. J. C. Morris & I. Georgiou & E. Guenther & S. Caucci, 2021. "Barriers in Implementation of Wastewater Reuse: Identifying the Way Forward in Closing the Loop," Circular Economy and Sustainability, Springer, vol. 1(1), pages 413-433, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:circec:v:3:y:2023:i:3:d:10.1007_s43615-022-00222-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.