Sustainability, circular economy, and internationalization of SMEs: Literature Assessment, Managerial Implications, and Academic Perspectives

The circular economy (CE) has become a central lens for rethinking how firms reconcile economic growth with environmental degradation (Geissdoerfer et al., 2017) and social constraints. While sustainability, CSR, and circularity have received increasing attention in management research (Bocken et al., 2014), their integration into the internationalization strategies of small and medium-sized enterprises (SMEs) remains fragmented (Csibi, 2026). Existing studies have mainly focused on multinational enterprises (Chabowski et al., 2025; Kansheba et al., 2024; Di Stefano et al., 2023), despite Small and medium-sized enterprises (SMEs) being recognized as drivers of growth and key in the transition to more sustainable models by disseminating new standards and changing international frameworks (Sinkovics et al., 2021). We have a limited understanding of how circular principles reshape international trajectories, strategic choices, and organizational tensions in smaller firms. SMEs face major challenges, often limited by a lack of experience (Zaheer, 1995), small size (Aldrich & Auster, 1986), and limited resources (Johanson & Vahlne, 2009) when internationalizing. Recent studies suggest that SME internationalization entails significant trade-offs for sustainability (Denicolai et al., 2023), with social and environmental goals remaining underexplored (Manesh & Rialp-Criado, 2019). Sustainability strategies, such as the circular economy, remain underexplored in international business research despite their increasing strategic importance (Bartel-Radic et al., 2024). Therefore, this study explores how SMEs integrate circular economy principles into their internationalization strategies and through which managerial, organizational, and contextual mechanisms this occurs.