International Journal of

Environmental Research
and Public Health

Article
Is It Possible to Change from a Linear to a Circular
Economy? An Overview of Opportunities and
Barriers for European Small and Medium-Sized
Enterprise Companies
Concepción Garcés-Ayerbe 1 , Pilar Rivera-Torres 2 , Inés Suárez-Perales 1, * and
Dante I. Leyva-de la Hiz 3
1 Department of Management, University of Zaragoza, 50005 Zaragoza, Spain; [email protected]
2 Department of Marketing, University of Zaragoza, 50005 Zaragoza, Spain; [email protected]
3 Montpellier Business School, 34080 Montpellier, France; [email protected]
* Correspondence: [email protected]




Received: 12 February 2019; Accepted: 5 March 2019; Published: 8 March 2019


Abstract: The Circular Economy is a paradigm shift attempting to replace the end-of-life concept with
reducing, reusing, recycling and recovering materials and to slow down, close and narrow material
and power loops. This concept is much discussed in the academic literature, but limited progress
has been accomplished so far regarding its empirical analysis. The objective of this work is to study
circular economy practices and analyze in depth the circular economy behavior in European firms.
We find that firms’ circular economy behavior is a gradual process where measures are implemented
gradually, starting with activities involving control measures and ending with putting preventive
practices in place. We discovered also that the most proactive companies in implementing circular
economy measures generally come across certain common barriers such as administrative processes,
regulations and a lack of human resources to perform these practices, while firms that have not
implemented circular economy measures view financing, investment and cost–benefit barriers as the
most significant. Significant efforts need to be undertaken by firms to accomplished circular economy.
Also circular economy regulation should be improved to make it easier for companies to implement
strategies that will make them more sustainable.

Keywords: circular economy; sustainable development; implementation typology; barriers; 4Rs

1. Introduction
The current linear economy is based on converting natural resources into waste via production.
This traditional model, in which goods are manufactured and then discarded as waste, deteriorates the
environment. Although recycling is fully developed in our society, and improving resource efficiency
is encouraged, activities focused on achieving this efficiency fail to consider the finite nature of material
stock [1]. Conversely, a circular economy (CE), restores any damage done during resource acquisition
while ensuring not much waste is generated during the product life cycle. Some authors state that
CE may benefit or at least reduce waste or damage to the environment, economy and society [2] even
that may not have any net effect on the environment [3]. This is why the CE is currently attracting the
attention of the academic literature and institutions. The European Commission (EC) has also warned
organizations and society of their important mission to pave the way for a new economic model [4].
In the EC communication titled Closing the loop—An EU action plan for the Circular Economy [5], a CE
was defined as ‘one in which the value of products, materials and resources is maintained for as long
as possible’, thus minimizing waste and resource use. This is a starting point, but increasing waste

Int. J. Environ. Res. Public Health 2019, 16, 851; doi:10.3390/ijerph16050851 www.mdpi.com/journal/ijerph
Int. J. Environ. Res. Public Health 2019, 16, 851 2 of 15

prevention, reuse, recycling and recovery are fundamental actions of both the action plan and the
legislative package on waste [4].
From an academic viewpoint, the number of CE-related publications in top journals has increased
rapidly since 2007, and most were published in the 2014–2016 period [6]. The need to clarify the
concept of CE—and its goals, means and how to implement it—is incipient in the academic literature
since the concept is novel [6–10]. However, it is generally accepted that the CE is a paradigm shift
attempting to integrate economic activity and environmental wellbeing [7]; replace the end-of-life
concept with the 4Rs -reducing, reusing, recycling and recovering- in production and consumption
processes [9]; and slow down, close and narrow material and power loops [9,11]. Applied to the
meso level, this means turning goods that are at the end of their service life into resources for others,
thus stretching the economic life of goods and materials, closing loops and minimizing waste, that is,
the CE replaces production with sufficiency [12,13].
The principal aims of implementing a CE strategy in an organization are to reduce virgin
materials and waste output [14] and to protect the environment and prevent pollution [15]. In other
words, a CE strategy is implemented to accomplish sustainable development through increased
resource efficiency. The concept of sustainable development explains environmental quality, economic
development and social equity [9], while protecting the environment and preventing pollution [14].
Nevertheless, sustainable development refers to a ‘development that meets the needs of the present
without compromising the ability of future generations to meet their own needs’ [16] (p. 43).
This definition underpins the assumption that resources are finite and have to be managed to sustain
future generations [3].
Based on the document presented by the Ellen MacArthur Foundation [1], the CE rests on three
principles: (1) preserving and enhancing natural capital by controlling finite stocks and balancing
renewable resource flows; (2) optimizing resource yields by circulating products, components and
materials in use at the highest utility; (3) fostering system effectiveness by revealing and designing
out negative externalities. The 4Rs the CE is based on—reduction, reuse, recycling and recovery—are
extracted from these principles. The third in the list, recycling, has been implemented within the
traditional linear economy system—based on extract–produce–use–dump—because many policies
have promoted it [6]. By increasing product longevity through better manufacturing and maintenance,
the replacement rate decreases, resulting in reduced resource use [3]. Although recycling has been
fully developed, it is still the tip of the iceberg. The CE will require changes in legislation, the way
society produces and consumes innovations, while also using nature as an inspiration to respond to
societal and environmental needs [7].
Considering resource availability is important when talking about implementing CE activities.
Large enterprises are known to have more margins to invest in new production methods and can,
therefore, implement these kinds of activities. Nevertheless, as the Organisation for Economic
Co-operation and Development (OECD) stated [17], 95% of companies in OECD member countries are
small and medium-sized enterprises (SMEs) and, as [18] mentioned, 99% of companies in the EU are
SMEs. That is why the study of the CE strategy should focus on this kind of firm.
The objective of this work is to study CE practices and analyze in depth CE behavior at a
meso level. The novelty of the concept, the need for a literature background focused on business
management, the lack of consensus on practices associated with a CE strategy and the shortage of
empirical studies analyzing CE barriers are the motivation for this work. The paper is organized as
follows. The following section reviews the theoretical framework that could explain the CE. The third
section reviews the previous CE literature and highlights the need for further study. The fourth section
defines the empirical study and presents the results. The fifth section contains the study’s conclusions.

2. Previous Circular Economy Studies

Since the concept of the CE is still emerging, there are few studies where CE drivers and barriers
are analyzed, and most of them are based on reviews, merging CE literature with eco-innovation and
Int. J. Environ. Res. Public Health 2019, 16, 851 3 of 15

sustainable development concepts. Some studies confirm that the CE has been promoted mainly by
practitioners, the business community and policy makers, and interest in academic studies is now
growing, thus making the CE a trending concept [9]. This may be the reason why there is currently no
comprehensive and systematic analysis to understand the CE and, therefore, the emerging literature
has concentrated on the limitations and characterization of the CE concept, trying to arrive at a
consensus in the environmental management literature [6–9]. These studies have focused on finding a
generally accepted definition of the CE by analyzing previous studies related to implementing this
kind of activity.
Another group of studies has concentrated on developing a theoretical background essentially
based on the industrial ecology perspective [3,19–21]. One of the conclusions these papers share is
that industrial ecology tools (material power and water flows from industrial symbiosis) are needed
to fully support the CE. There is also a need to develop a theoretical framework based on business
management since research into the CE has paid particular attention to waste generation, resource
use and environmental impact, while neglecting business and economic perspectives [21]. One of
this study’s conclusions is that companies should not prioritize either environmental or economic
benefits because the ultimate objective of CE implementation strategy is achieving a fully regenerative
economy and natural environment.
Empirical studies related to CE practices are scarce. In one of these works, Urbinati et al. [19]
established four different modes of adopting CE principles in firms considering the value network
and customer value proposition and interface: linear, downstream circular, upstream circular, and full
circular, depending on the degree of circularity. Based on the case studies of 24 firms, these authors
observed that full circular companies could be either large firms with more years of activity, or new
ventures created to exploit the potential of circular business models. They also pointed out the need
for future empirical research to analyze CE policies and objectives and create awareness of the need
for product design practices.
De-Jesus and Mendoça [22] analyzed the factors that influence implementing CE activities or
policies using academic and ‘grey literature’. These authors used 40 works published in the 2006–2015
period to group CE drivers and barriers from hard to soft. They identified hard drivers and barriers
with technical factors (such as the availability of technology, technical support, training, and so on) and
economic factors (for example, capital requirements or transaction costs), and soft drivers and barriers
with social, regulatory and institutional factors. They found that the CE is driven particularly by soft
factors, and demonstrated the crucial role of institutional framing and increasing social awareness.
They concluded that, even when CE practices are technically feasible, their implementation is often
limited by economic and market limitations, thus underscoring the role of environmental innovation,
considered an essential pathway for overcoming CE barriers.
Ranta et al. [23] used a qualitative six-case study to examine the institutional CE drivers and
barriers in China, the US and Europe. In their work, they stressed the lack of institutional support for
other CE principles outside recycling, especially regulation-wise. They also found a major cultural
cognitive barrier to reuse, which is the customer preference for new products, concluding that the
general barrier to the CE could be the emphasis on recycling, which resonates with a lack of institutional
support for reuse.
Ormazabal et al. [18] conducted a survey study on SMEs in Navarre and the Basque Country in
Spain and discovered that the most critical barriers are the lack of support from public organizations,
insufficient financial resources and lack of customer interest in the environment—this idea is shared
by Kirchherr et al. [24]. By conducting a factor analysis, the authors identified and named two
different components for barriers in SMEs: hard barriers—lack of financial support, insufficient
information management systems, lack of adequate technology, insufficient technical resources,
insufficient financial resources, and lack of support from public institutions—and human-based
barriers—lack of customer interest in the environment, lack of qualified personnel in environmental
management, and commitment of the organization’s leaders. This work tried to shed light on CE
Int. J. Environ. Res. Public Health 2019, 16, 851 4 of 15

literature by identifying the opportunities and barriers to implementing the CE in SMEs. The authors
concluded that considering the activity sector while analyzing CE implementation is important because
some industries are more willing to implement environmental strategies in some CE cycle phases.
They also point out SMEs’ limited resources, short-term vision and lack of time in their everyday
activities, which imply they do not see the CE as one of their priorities.
As has been demonstrated, most of the literature on the CE focuses on reviewing the concept
and trying to establish a generally accepted definition and practices that characterize CE activities.
Few studies have analyzed the implementation of CE activities in business and the barriers companies
have to overcome and, in those cases, the methodology is limited. The sample of this type of study is
based on previous works, literature or samples focusing on limited geographical areas. In the following
section a theoretical background is reviewed focusing on the industrial ecology, which is the most
important theoretical view for CE at the time, and the resource based view.

3. Theoretical Framework
The current industrial economy is known as a linear resource consumption model that follows
a ‘take-make-dispose’ pattern. Following this linear model, firms in different industries use natural
resources to generate products and sell them to customers, who then discards them as waste [25].
The traditional linear model assumes an unlimited supply of natural free of charge resources and an
unlimited capacity of the environment to absorb waste and pollution [3,26]. Although great strides
have been made in increasing resource efficiency—especially with the recycling policy—this model
incorporates several waste and pollution sources along the supply chain [3,19]. These traditional
linear consumption patterns—together with the tendency for the world’s population to grow and the
exponential increase in the demand for raw materials, water and power—are limiting the availability
of resources. As a result, we can observe the overuse of resources, the removal of natural resources
from the environment and the reduction in the value of natural capital, what causes higher price levels
and more volatility in many markets [25].
A CE is a regenerative industrial system by intention and design [1] which offers a new perspective
on waste and resources management [27]. The concepts of restoration or regeneration are highly
important in CE because they show that the industry itself aims to repair previous damage by
developing new and better systems [3,28]. CE replaces the ‘end-of-life’ concept with restoration,
promote the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse,
and aims to eliminate waste through the superior design of materials, products, systems and business
models [1]. As Murray et al. [3] argued, the CE focuses on optimizing systems rather than components,
and on achieving value from redesigning manufacture and service supply systems rather than simply
improving resource utilization. Keeping this in mind, and focusing on firms’ circular behavior,
there are some literature approaches that could be applied to the study of the transition from a linear
to a circular economy.
The resource based view has been used in academic studies to examine the internal needs to
implement new or innovative practices for an organization [29]. This view proposes that internal
needs include tangible and intangible resources and capabilities to reach a competitive advantage [30].
According to the natural resource-based view—the first step towards incorporating the challenge
of the natural environment into strategic management—competitive advantage lies in the existence
of internal resources and competencies that are valuable, rare and difficult to imitate, considering
that (natural) resources are scarce [31–34]. The scarcity of these resources makes companies look for
substitute resources, which enables them to create additional value. Besides the changing environment,
all this requires major internal changes and cross-functional capabilities based on tacit competencies
that allow firms to adapt to new scenarios. The literature in this respect demonstrates that developing
dynamic capabilities can be viewed as a learning process that contributes to building, exploiting and transforming
new knowledge to address change [35]. Dynamic capabilities are seen as a process related to companies’
ability to reconfigure the source of their resources to respond more efficiently to changes and create
Int. J. Environ. Res. Public Health 2019, 16, 851 5 of 15

value [35,36]. This approach could be applied to the CE following the four principles of circular
value creation contained in the Ellen Macarthur Foundation communication [25]: (a) the tighter the
circles are, the larger the savings should be in the embedded costs in terms of resources; (b) keeping
resources—such as products, components, and materials- in use longer; (c) the arbitrage value creation
potential is rooted in the lower marginal costs of reusing the cascading (consecutive uses) material
as a substitute for virgin material inflows and their embedded costs; (d) to generate maximum
value, each of the above principles—requires a certain purity of material and quality of products and
components. All these CE bases for value creation require the development of dynamic capabilities
so that the firm can adapt to changes in the environment and benefit from the advantages of the
value creation consequences of implementing CE activities. From this perspective, as Kabongo and
Boiral [34] argued, firms are likely to develop dynamic capabilities for the CE as a result of a continued
learning process.
The CE could also be analyzed through an industrial ecology perspective, aimed at understanding
the circulation of materials and whose holistic goal is to guide the transformation of the industrial
system to a sustainable one [13,20]. Generally speaking, industrial ecology is the means whereby
humanity can deliberately approach and maintain sustainability, given continued economic, cultural and
technological evolution [21]. Specifically, the industrial ecology could be seen as a system view where
the general objectives are to optimize the total materials cycle from virgin material, to finished
material, to component, to product, to obsolete product, and to ultimate disposal [37–39]. Focusing on
management, industrial ecology is the study of material flows through industrial systems and it aims
to create closed-loop processes in which waste serves as an input, thus eliminating the notion of an
undesirable by-product within and outside the industrial system [21,25]. Industrial ecology adopts a
systemic viewpoint by developing production processes based on local ecological constraints, looking
at their global impact from the outset, and attempting to shape them [25]. Industrial ecology could
be applied at three levels [21,30]: (a) the factory or company level, where attention is paid to cleaner
production; (b) inter-firm level, where collaboration and synergies are emphasized and industrial
symbiosis (based on the biological analogy in nature: nutrients are cycled and power is cascaded down
among the actors in the systems in a mutually beneficial manner [3,27]) could be achieved due to
geographic proximity; (c) regional or global level. With the industrial ecology perspective, independent
companies would create physical links to use each other’s waste as resources—by exchanging power,
materials, water and by-products—and to slow down use cycles to delay waste output [3,20]. Focusing
on the company level—meso level-, CE activities would be implemented along the entire value chain,
creating multiple closed loops that make it easy to take advantage of reusing resource waste.
With this, the academic work analyzing the CE could be summarized in three general groups:
(1) First, there is an important group of papers which objective is to work on a definition of CE that
could be generally accepted [6–9]; (2) Second, there is a scarce number of academic works related to CE
to the theoretical background of the concept [3,19–21]. Usually, these works are focused on industrial
ecology background, and few of them focus on a management view; (3) The third group of papers is
the one that encompasses empirical analysis [18,19,22,23]. Following this study’s objective, which is to
analyze the status quo of the CE strategy and identify the typologies of CE activity implementation in
firms, we focus on the natural resource-based view and the industrial ecology perspective to reach this
objective. This allows us to discover which CE activities are most implemented, based on activity sector,
following the recommendation of Ormazabal et al. [18], and the barriers that have to be overcome to
implement this type of practice. All these is detailed in the next empirical section.

4. Empirical Study

4.1. Sample
To reach the objective proposed in this study we used the European SMEs and the Circular
Economy database, which is based on Flash Eurobarometer Survey number 441 [40]. The survey was
Int. J. Environ. Res. Public Health 2019, 16, 851 6 of 15

commissioned by the European Commission to explore SMEs circular economy activities following
the ambitious circular economy package which was adopted in December 2015 [5]. The survey was
carried out by TNS Political & Social network in the 28 Member States of the European Union between
the 18th and 27th of April 2016. Therefore, this database takes information from the year 2015 on
CE activities implemented in companies in European countries, as well as the barriers to these CE
practices. Thus, our sample consists of 10,618 companies in 28 EU countries. The sample focuses on
SMEs, as shown in Table 1.

Table 1. Sample Distribution.

N %
Size
1–9 employees 6687 62.97
10–49 employees 2475 23.30
50–250 employees 1456 13.71
Activity Sector
Mining and quarrying 30 0.28
Manufacturing 1448 13.63
Electricity, gas, steam and air conditioning supply 61 0.57
Water supply, sewerage, waste management and remediation 100 0.94
Construction 1222 11.50
Wholesale and retail trade, repair of motor vehicles and 3627 34.15
Transportation and storage 656 6.17
Accommodation and food service activities 757 7.12
Information and communication 483 4.54
Financial and insurance activities 348 3.27
Professional, scientific and technical activities 1362 12.82
Administrative and support service activities 524 4.93
Country
France 401 3.8
Belgium 401 3.8
The Netherlands 403 3.8
Germany 400 3.8
Italy 400 3.8
Luxembourg 200 1.9
Denmark 402 3.8
Ireland 400 3.8
United Kingdom 400 3.8
Greece 400 3.8
Spain 400 3.8
Portugal 400 3.8
Finland 401 3.8
Sweden 400 3.8
Austria 400 3.8
Cyprus (Republic) 201 1.9
Czech Republic 400 3.8
Estonia 400 3.8
Hungary 402 3.8
Latvia 402 3.8
Lithuania 400 3.8
Malta 200 1.9
Poland 401 3.8
Slovakia 400 3.8
Slovenia 403 3.8
Bulgaria 400 3.8
Romania 401 3.8
Croatia 400 3.8
10,618 100

More than half the sample (62.97%) is composed of microenterprises with fewer than 10 employees,
and there are 1456 cases with between 50 and 250 members of staff, representing 13.71% of the sample.
It is also important to observe the sample companies’ business sector because their industry can
Int. J. Environ. Res. Public Health 2019, 16, 851 7 of 15

limit CE activity implementation. Based on the Statistical Classification of Economic Activities in the
European Community (NACE), more than 30% of the sample belongs to retail trade and transportation.
Major sectors, such as manufacturing (13.63%), construction (11.50%), and scientific and technical
activities (12.82%) are also represented in the sample.

4.2. CE Activity Implementation and Barriers

In Flash Eurobarometer Survey number 441 we found five different internal measures for the
CE: (1) re-planning of the way water is used to minimize usage and maximize re-usage; (2) use of
renewable energy; (3) re-planning energy usage to minimize consumption; (4) minimizing waste by
recycling and reusing waste or selling it to another company; (5) redesigning products and services
to minimize the use of materials or use recycled materials. Firms were asked if they had performed
any of these activities in the last three years (2013–2015). Out of the 10,618 total answers, 7843
said they had implemented or were implementing at least one of the CE measures—we call these
companies in-going firms—while 2775 said they had not implemented any CE activities—no-going
firms. The survey first asked in-going firms about the issues they had encountered when undertaking
CE activities. Five barriers were listed: (1) lack of human resources; (2) lack of expertise to implement
these activities; (3) complex administrative or legal procedures; (4) cost of meeting regulations or
standards; (5) difficulties in accessing finance. No-going firms were asked about the reasons why they
had not performed any CE-related activity. The possible reasons were: (1) lack of human resources;
(2) lack of expertise to implement these activities; (3) no clear idea about cost benefits or improved work
processes; (4) no clear idea about investment required; (5) complex administrative or legal procedures;
(6) cost of meeting regulations or standards; (7) difficulties in accessing finance. Table 2 shows that the
CE activity most performed by more than 56% of in-going firms is recycling and reusing, followed
by minimizing power consumption by at least 40% of the firms. In-going firms are also characterized
by meeting complex legal procedures and regulation standards while implementing CE activities.
No-going firms, however, stand out for financial barriers, such as no clear idea about cost benefits or
the investment required (Table 2).

Table 2. In-Going and No-Going firm’s distribution.

N % ( *)
In-Going Firms (N = 7843)
CE Activities’ Implementation
Water 1998 25.47
Renewable Energy 1850 23.59
Energy Consumption 4323 55.12
Recycle/Reuse 6052 77.16
Redesign 3652 46.56
Barriers to CE
Lack of human resources 1677 21.38
Lack of expertise to implement these activities 1708 21.78
Complex administrative or legal procedures 2459 31.35
Cost of meeting regulations or standards 2228 28.41
Difficulties in accessing finance 1798 22.92
No-Going Firms (N = 2775)
Barriers to CE
Lack of human resources 423 15.24
Lack of expertise to implement these activities 576 20.76
No clear idea about cost benefits or improved work 717 25.84
No clear idea about investment required 598 21.55
Complex administrative or legal procedures 467 16.83
Cost of meeting regulations or standards 436 15.71
Difficulties in accessing finance 610 21.98
( *)
∑ 6= 100%; The percentage is calculated with N = 7843/2775.
 Int. J. Environ. Res. Public Health 2019, 16, x 8 of 16

The information in Table 3 shows the differences between activity sectors in the in-going and
no-going companies. Using a chi-square test we examined whether there are statistically significant
Int. J. Environ. Res. Public Health 2019, 16, 851 8 of 15
differences in the distribution of no-going and in-going enterprises.

The information inTable

Table3.3Sample
showsdistribution. In-Going
the differences and No-Going
between firms. in the in-going and
activity sectors
no-going companies. Using a chi-square test we examined whether there
No-Going are statistically significant
In-Going
differences in the distribution of no-going and Barriers CE Barriers Total
N % in-going enterprises.
N %
Scope Scope Scope
Mining and quarrying 4 distribution.
Table 3. Sample 13.33 0.50
In-Going and26No-Going
86.67firms. 2.10 1.38 30
Manufacturing 249 17.20 *** 1.56 1199 82.80 *** 2.01 1.38 1448
No-Going In-Going
Electricity, gas, steam and air
8 13.11 *** 0.50
Barriers 53 86.89 *** 2.52
CE 1.26
Barriers 61
Total
conditioning supply N % N %
Water supply, sewerage, waste Scope Scope Scope
6 6.00 *** 1.33 94 94.00 *** 2.58 1.69 100
management
Mining and remediation
and quarrying 4 13.33 0.50 26 86.67 2.10 1.38 30
Manufacturing
Construction 249
321 17.20
26.27 *** 1.56
1.72 1199
901 82.80
73.73*** 2.01
1.72 1.38
1.53 1448
1222
Electricity, gas, steam and air
Wholesale and retail trade, repair of 8 13.11 *** 0.50 53 86.89 *** 2.52 1.26 61
conditioning supply 922 25.42 1.44 2705 74.58 1.62 1.20 3627
motor supply,
Water vehiclessewerage,
and waste
6 6.00 *** 1.33 94 94.00 *** 2.58 1.69 100
Transportation
management and
and storage
remediation 265 40.40 *** 1.21 391 59.60 *** 1.27 1.32 656
Construction 321 26.27 1.72 901 73.73 1.72 1.53 1222
Accommodation and food service 122 16.12 *** 2.13 635 83.88 *** 2.18 1.49 757
Wholesale and retail trade, repair of
922 25.42 1.44 2705 74.58 1.62 1.20 3627
Information
motor vehiclesand communication
and 187 38.72 *** 1.10 296 61.28 *** 1.21 1.04 483
Transportation and storage
Financial and insurance activities 265
90 40.40
25.86 *** 1.21
1.22 391
258 59.60
74.14*** 1.27
1.68 1.32
0.96 656
348
Accommodation and food service 122 16.12 *** 2.13 635 83.88 *** 2.18 1.49 757
Professional, scientific and
Information and communication technical 454
187 33.33 ***
38.72 *** 1.04
1.10 908
296 66.67 ***
61.28 *** 1.44
1.21 1.00
1.04 1362
483
Financial and insurance
Administrative activities
and support service 90
147 25.86
28.05 1.22
1.15 258
377 74.14
71.95 1.68
1.68 0.96
1.06 348524
Professional, scientific and technical 454 33.33 *** 1.04 908 66.67 *** 1.44 1.00 1362
Total
Administrative and support service 2775
147 26.13
28.05 1.38
1.15 7843
377 73.87
71.95 1.68
1.68 1.26
1.06 10,618
524
TotalChi-square test. The difference between
2775 observed
26.13 and expected
1.38 7843values73.87
is statistically
1.68 significant
1.26 10,618
*** p-value
Chi-square < 0.01.
test. The difference between observed and expected values is statistically significant *** p-value < 0.01.

A high number of in-going firms work in the manufacturing, electricity, construction and
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to be more andin
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accommodation and food service sectors. These activity sectors seem to be
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communication, and professional, scientific and technical activities stand out for not implementing and
communication,
any CE practices and(no-going
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this information stand out forinnot
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Figure 1, which
any CE practices (no-going companies). All this
summarizes the information contained in Tables 1–3. information is detailed in Figure 1, which summarizes
the information contained in Tables 1–3.

Figure 1. Circular economy implementation and barriers.

In the right part of Figure 1, we can observe in-going firms for every activity sector; the darkest are
those sectors with more in-going firms than expected (statistically significant differences). Conversely,
 Figure 1. Circular economy implementation and barriers.

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important score. Nevertheless, there seem
with 15.24%, nearly 30% ofto the
be some differences
in-going companies in the perception
stated they were of the
financing,
second
procedure and regulation
most important obstacle tobarriers. While no-going
implementing firms did
CE activities. Wenot think
found theregulations were with
same situation an important
complex
barrier, with 15.24%,
administrative nearlyprocedures.
or legal 30% of the in-going
It seemscompanies statedfirms
that in-going they were
findthe second
more most important
barriers related to
obstacle to implementing CE activities. We found the same situation with complex
regulations, standards and procedures, while no-going firms find barriers related to investment and administrative
or legal procedures.
searching It seems
for financing. that in-going
Nevertheless, thisfirms
is an find more barriers
anticipated related
conclusion andtomore
regulations,
researchstandards
has to be
and procedures, while
conducted in this area. no-going firms find barriers related to investment and searching for financing.
Nevertheless, this is an anticipated conclusion and more research has to be conducted in this area.
4.3. CE Behavior for in-Going Firms
4.3. CE Behavior for in-Going Firms
With the objective of analyzing CE behavior in depth, two variables were built on the total
With the objective of analyzing CE behavior in depth, two variables were built on the total number
number of CE activities and barriers: CE scope and barriers scope. Firstly, we constructed the CE
of CE activities and barriers: CE scope and barriers scope. Firstly, we constructed the CE scope variable
scope variable using the total number of implemented CE practices. This variable is the sum of
using the total number of implemented CE practices. This variable is the sum of implemented CE
implemented CE activities, so it has a range of 1 to 5 (in-going firms should have implemented at
activities, so it has a range of 1 to 5 (in-going firms should have implemented at least one CE activity).
least one CE activity). Then, for the construction of the barriers scope variable we also totaled the
Then, for the construction of the barriers scope variable we also totaled the number of barriers to
number of barriers to implementing CE activities, resulting in a variable range of 0 to 5. With these
implementing CE activities, resulting in a variable range of 0 to 5. With these two variables, we used
two variables, we used the cluster analysis technique to obtain a typology of CE behavior. Figure 2
the cluster analysis technique to obtain a typology of CE behavior. Figure 2 shows that we obtained
shows that we obtained five groups for the CE scope and barriers scope in the cluster analysis.
five groups for the CE scope and barriers scope in the cluster analysis.

Figure 2. CE Scope and Barriers to CE Scope.

Figure 2. CE Scope and Barriers to CE Scope.
There seems to be five differentiated behaviors concerning CE activity implementation, ranging
from firms that do not have much CE scope and barriers scope, to those that, on average, have an
integrated CE strategy and have overcome many barriers. The first group contains 577 companies
that, on average, have implemented 1.49 CE activities and found 4.16 barriers. These companies find
too many barriers for the small amount of CE-related activities they implement. The second group
is the largest, with 4637 companies; this seems to be the most common CE behavior, with 1.77 CE
Int. J. Environ. Res. Public Health 2019, 16, 851 10 of 15

activities implemented and 0.43 barriers on average. The third group comprises 1315 firms; companies
in this group seem to implement more CE practices (2.46 in average) and also overcome more barriers,
with an average of 2.68. The fourth group seems to contain the most efficient companies for CE activity
implementation; this group has 1007 companies that, on average, have implemented 4.25 CE activities
and they found fewer barriers to it (0.8). The fifth and last, the smallest group, also contains very
proactive CE-implementing companies with an average of 4.29 activities, and they found 3.76 barriers.
The behavior followed by group number four, with a high scope in implementing the CE and low
barriers, seems to be the most efficient. However, in all cases, we observed that the CE behavior seems
to follow a reactive-proactive pattern.
We developed a variance analysis (ANOVA) means contrast for the five groups obtained in the cluster
analysis and the CE activities and barriers to analyze this reactive-proactive pattern in depth. As shown
in Table 4, there are statistically significant differences between all CE activity and barrier groups. Certain
processes appeared in the different groups relating to implementing CE activities. We observed that the
first CE activity implemented in companies seems to be recycling/reuse, followed by minimizing power
consumption and product redesign. We also noted that groups 4 and 5 implemented all the CE activities
above the sample’s mean. These two groups differ in the barriers overcome: group four highlighted the
complex administrative or legal procedures as an issue, while group number five highlighted all of them,
paying special attention to the cost of meeting regulations or standards.

Table 4. CE behavior and barriers.

x x1 x2 x3 x4 x5 ANOVA Duncan Test

CE activities implemented
Water 0.18 0.13 0.13 0.26 0.71 0.77 640.80 x1 = x2
Renewable Energy 0.17 0.07 0.14 0.20 0.68 0.68 585.26 x4 = x5
Redesign 0.34 0.30 0.34 0.55 0.91 0.91 443.04 x1 = x2 ; x4 = x5
Energy Consumption 0.40 0.32 0.44 0.61 0.97 0.96 389.87 x4 = x5
Recycle/Reuse 0.57 0.66 0.71 0.82 0.97 0.97 118.08 x4 = x5
CE scope 1.68 1.49 1.77 2.46 4.25 4.29 3,465.75 x4 = x5
Lack of expertise to implement
0.21 0.82 0.07 0.46 0.10 0.63 976.23 x2 = x4
these activities
Difficulties in accessing finance 0.22 0.80 0.08 0.47 0.11 0.74 972.42 x2 = x4
Lack of human resources 0.21 0.77 0.07 0.43 0.12 0.64 836.27
Cost of meeting regulations or
0.28 0.88 0.09 0.63 0.20 0.88 1368.77 x1 = x5
standards
Complex administrative or
0.31 0.90 0.11 0.69 0.26 0.86 1280.48 x1 = x5
legal procedures
Barriers scope 1.26 4.16 0.43 2.68 0.80 4.16 6619.53
ANOVA: Reject H0: “x1 = x2 = x3 = x4 = x5 ” for p-value < 0.000; and Duncan Test: Reject H0: “xi = x j ”, for all
i 6= j. In bold and shadowed the CE activities and CE barriers according to the intensity and scope group where
belong (p-value < 0.00).

There seems to be a progressive process in the implementation of CE activities, due to the

behavior of the different groups. It was noted that all the groups have implemented recycling
and reuse. As mentioned in the theoretical background, this practice is ingrained in society and
industry. The second most implemented activity by in-going firms is related to minimizing power
consumption, followed by product redesign to minimize the use of materials or use recycled material.
After implementing this practice, it seems firms have reached a scale economy, where implementing
one more practice is not an extra effort. We observed that groups four and five have achieved this
point, and they also rethink the way water is used and follow renewable energy practices. Not only
does there appear to be a pattern from reactive to proactive behavior in implementing CE activities,
but also a progressive switch from control to prevention activities.
We also observed barrier typology. One barrier appeared in all the groups: administrative or legal
procedures. This barrier is followed by the cost of meeting regulations and standards and then the lack
Int. J. Environ. Res. Public Health 2019, 16, 851 11 of 15

of human resources. After coming up against and/or overcoming these three issues, firms also seem
to find it difficult to access the finance and expertise needed to implement CE activities.

Table 5. In-Going typology.

x1 x2 x3 x4 x5
Size
Micro (1–9 Employees) 59.3 357 61.872 2905 62.648 721 54.829 504 50.050 166 54.072
Small (10–50 Employees) 24.7 146 25.303 1096 23.636 358 27.224 254 25.223 87 28.339
Medium (50–250 Employees) 15.9 74 12.825 636 13.716 236 17.947 249 24.727 54 17.590
% of R&D
Less than 5% of turnover 71.9 425 76.715 3527 82.119 894 71.406 606 68.090 190 66.667
Between 5–10% 9.0 52 9.386 331 7.707 167 13.339 114 12.809 39 13.684
Between 10–15% 5.3 31 5.596 192 4.470 86 6.869 77 8.652 27 9.474
More than 15% of turnover 6.6 46 8.303 245 5.704 105 8.387 93 10.449 29 10.175
Activity sector
Mining and quarrying 0.3 2 0.347 14 0.302 5 0.380 4 0.397 1 0.326
Manufacturing 15.3 87 15.078 625 13.479 235 17.871 191 18.967 61 19.870
Electricity, gas, steam and air
0.7 1 0.173 26 0.561 8 0.608 15 1.490 3 0.977
conditioning supply
Water supply, sewerage, waste
1.2 5 0.867 36 0.776 23 1.749 21 2.085 9 2.932
management and remediation
Construction 11.5 86 14.905 477 10.287 187 14.221 103 10.228 48 15.635
Wholesale and retail trade, repair of
34.5 212 36.742 1704 36.748 426 32.395 278 27.607 85 27.687
motor vehicles and
Transportation and storage 5.0 36 6.239 234 5.046 66 5.019 40 3.972 15 4.886
Accommodation and food 8.1 54 9.359 313 6.750 105 7.985 118 11.718 45 14.658
Information and communication 3.8 20 3.466 207 4.464 38 2.890 26 2.582 5 1.629
Financial and insurance 3.3 9 1.560 157 3.386 45 3.422 43 4.270 4 1.303
Professional, scientific and technical 11.6 45 7.799 609 13.133 125 9.506 109 10.824 20 6.515
Administrative and support 4.8 20 3.466 235 5.068 52 3.954 59 5.859 11 3.583
Water supply, sewerage, waste
0.3 2 0.347 14 0.302 5 0.380 4 0.397 1 0.326
management and remediation
Country
France 3.9 49 8.492 123 2.653 83 6.312 31 3.078 23 7.492
Belgium 4.3 30 5.199 172 3.709 63 4.791 58 5.760 14 4.560
The Netherlands 4.0 17 2.946 178 3.839 65 4.943 45 4.469 11 3.583
Germany 4.0 11 1.906 209 4.507 43 3.270 44 4.369 10 3.257
Italy 3.6 21 3.640 187 4.033 40 3.042 26 2.582 10 3.257
Luxembourg 2.2 8 1.386 89 1.919 21 1.597 45 4.469 8 2.606
Denmark 3.6 5 0.867 229 4.939 20 1.521 22 2.185 3 0.977
Ireland 4.7 20 3.466 194 4.184 62 4.715 66 6.554 23 7.492
United Kingdom 4.4 17 2.946 220 4.744 43 3.270 57 5.660 12 3.909
Greece 3.7 20 3.466 183 3.947 37 2.814 36 3.575 11 3.583
Spain 4.3 27 4.679 189 4.076 60 4.563 45 4.469 20 6.515
Portugal 4.4 21 3.640 194 4.184 54 4.106 64 6.356 11 3.583
Finland 4.1 11 1.906 169 3.645 62 4.715 64 6.356 15 4.886
Sweden 3.9 12 2.080 192 4.141 44 3.346 43 4.270 12 3.909
Austria 4.4 13 2.253 192 4.141 61 4.639 64 6.356 13 4.235
Cyprus (Republic) 1.9 7 1.213 106 2.286 13 0.989 19 1.887 3 0.977
Czech Republic 3.8 22 3.813 172 3.709 69 5.247 20 1.986 13 4.235
Estonia 2.7 6 1.040 160 3.451 19 1.445 23 2.284 2 0.651
Hungary 3.3 33 5.719 128 2.760 62 4.715 24 2.383 15 4.886
Latvia 3.0 36 6.239 131 2.825 48 3.650 13 1.291 4 1.303
Lithuania 2.8 21 3.640 148 3.192 27 2.053 15 1.490 5 1.629
Malta 2.4 5 0.867 127 2.739 19 1.445 33 3.277 5 1.629
Poland 3.4 48 8.319 120 2.588 81 6.160 10 0.993 11 3.583
Slovakia 3.5 29 5.026 174 3.752 48 3.650 20 1.986 6 1.954
Slovenia 3.7 17 2.946 162 3.494 44 3.346 48 4.767 19 6.189
Bulgaria 2.5 17 2.946 136 2.933 33 2.510 8 0.794 4 1.303
Romania 3.4 35 6.066 126 2.717 55 4.183 31 3.078 16 5.212
Croatia 4.2 19 3.293 227 4.895 39 2.966 33 3.277 8 2.606
In bold and shadowed the in-going typology according to the group where belong (p-value < 0.00).
Int. J. Environ. Res. Public Health 2019, 16, 851 12 of 15

After demonstrating the apparent typology of CE behavior, it is interesting to describe how each
group is obtained and behaves. Table 5 shows the statistically significant differences between size,
R&D investment, activity sector and country in the distribution of each CE group. Firms in group
one, which stand out for implementing recycling or reuse and coming across all the CE barriers, are,
on average, microenterprises with less than 5% of R&D investment. Apparently, they concentrate on
manufacturing, construction, retail and transportation activities and are located in eastern European
countries (Hungary, Latvia, Poland, Slovakia and Romania). Group two is characterized by a low
scope in CE activities (only implementing recycling and minimizing power consumption) and low
barrier scope (only administrative and legal procedures). Firms in this group are also microenterprises,
but they invest a little more in R&D; they belong to the information and communication and scientific
and technical sectors—which leads us to believe that the increase in R&D investment could be due to
their business type—and are mostly located in Germany, Italy and Denmark. Group three, with
a medium scope for CE activities and barriers, is slightly larger than the two previous groups.
These companies also invest more in R&D than those in groups one and two, almost 15% of their
turnover on average, and they belong to the construction and retail sectors; French companies are
predominant in this group. Finally, groups four and five stand out for implementing all the CE-related
activities. Firms in these groups are larger and also invest more in R&D. Both groups find that legal
procedures, regulations and human resource standards are barriers. They also share the same sectors,
namely manufacturing and water supply and waste management, and country of location (Ireland).
This could suggest that these sectors and this country could have more procedures or costs that hinder
the implementation of CE activities.

5. Conclusions
This work has found that the CE concept is novel and emerging, above all in the academic
literature on management. As public and private institutions have stated [1,4], there is now a need
to change the system and stop using linear production models. The importance of SMEs in Europe
highlights the need to analyze the CE in terms of these firms. Changing the system, paradigm and
industrial model requires a series of small steps to gradually encourage circular production processes,
thus promoting the implementation of the 4Rs.
This study has confirmed the need for a theoretical framework in environmental management
literature and it has attempted to provide an overview of the CE with a focus on resources and dynamic
capabilities, but without forgetting industrial ecology. These two theoretical perspectives should be
used jointly to analyze the CE model as they complement each other. While the industrial ecology or
science of sustainability introduces natural biological cycles into business management, turning the
waste of one process into the raw material of another, the dynamic capabilities perspective views the
introduction of new circular measures as the creation of knowledge through a process of adapting to an
environment that is constantly changing. When implementing CE activities in a business, the company
should consider its dynamic environment, and stakeholders’ movements, positions and preferences.
From the perspective of dynamic capabilities, CE activity implementation is viewed as a process
whereby companies develop skills that will enable them to take advantage of their efforts and attain
economies of scale in introducing sustainability measures.
Our review of the literature has uncovered that the few studies on the CE analyze it from a
concept perspective, seeking its taxonomy and exploring the characteristics of this type of activity.
Not many studies focus on the empirical analysis of this type of strategy. In our study, we have
analyzed the behavior of several companies to obtain an implementation typology of these practices.
We have observed that the CE behavior is a gradual process that starts by implementing material
recycling and reuse measures. The next step is to put into practice measures to minimize power
consumption and to redesign products. As a last step, the most proactive firms in implementing CE
measures also rethink their water use and turn to renewable energy. We observed that CE measures are
implemented gradually, starting with activities involving control measures and ending with putting
Int. J. Environ. Res. Public Health 2019, 16, 851 13 of 15

preventive practices in place. These implementation profiles, ranging from the most reactive behavior,
based on introducing pollution control measures, to the most proactive with prevention measures,
coincide with previous studies analyzing the implementation of proactive environmental strategies in
business [41–43].
Implementing CE practices could be conditioned by several factors. Our work has analyzed
the barriers affecting both proactive CE companies, called in-going firms, and reactive companies,
called no-going firms. We discovered that in-going firms believe they have overcome different barriers
to no-going firms. Firms that have not implemented CE measures view financing, investment and
cost–benefit barriers as the most significant. In other words, companies that do not implement CE
measures generally seem to believe that the factors that have prevented them from doing so are
essentially economic.
In the cluster analysis classifying the in-going companies based on the CE measures they have
implemented and the barriers they came across, we have observed five typologies whose scope differs,
in both the number of CE measures and the number of barriers. After obtaining the typologies,
we found that the most proactive companies in implementing CE measures generally come across
certain common barriers: administrative processes, regulations and a lack of human resources to
perform these practices. These results partly coincide with previous authors’, such as Urbinati et al. [19]
and Ranta el al. [23], who refer to the need for institutional support, for example policies and regulations
that enable CE measures to be created and implemented in companies. They do not coincide with
the results obtained by Ormazabal et al. [18], who concluded that the lack of financial resources was
one of the main CE barriers. The results also show that firms implementing the most measures are
medium-sized. There also seems to be a positive relationship between the scope of CE activities and
R&D investment. In view of the results, considering external factors, such as the company’s business
sector or country location, is also important. Regulations, standards or practices can determine
how or whether businesses will implement CE measures and react to any barriers they come across.
Consequently, we can conclude that CE regulations should be improved to make it easier for companies
to implement strategies that will make them more sustainable.
It is important to note that the concept of barrier should not be seen as negative. When companies
overcome barriers, it implies they have acquired and accumulated knowledge and this helps them to
implement practices better, have more understanding of the production process and identify possible
improvements, and, therefore, create more circular, sustainable and efficient processes.
The main limitation of this work is that these are initial results. Due to the lack of data for analysis
and the fact that the CE is a recent concept, the factors promoting the implementation of these practices
and the effects they have on the companies performing them should be explored in more depth. As a
result, we propose the factors that facilitate the CE and its impacts on firms as a future line of research.

Author Contributions: All the authors collaborated in the development of all the parts of this work and in the
paper elaboration with similar levels of effort. Specifically, I.S.-P. and D.I.L.-d.l.H. have focused on the theoretical
background of the study. P.R.-T. performed the empirical study, applied the method and carried out the data
analysis. C.G.-A. contributed interpreting the results and developing the discussion and conclusions of the paper.
Funding: This work was supported by the European Regional Development Fund, the Spanish Ministry of
Economy and Competitiveness MINECO-MECC and the Government of the Autonomous Community of Aragon
(ECO 2013-48496-C4-3-R; ECO2017-86305-C4-3-R/Reference Research Group S42_17R: CREVALOR). This research
was also supported by project grant ECO2016-77-P (AEI/FEDER, UE).
Acknowledgments: The author would also want to acknowledge the Ibercaja Foundation, CAI foundation and
University of Zaragoza for the grant for research stays (CH3/18).
Conflicts of Interest: The authors declare no conflict of interest.
Int. J. Environ. Res. Public Health 2019, 16, 851 14 of 15

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