Circular Economy Transition in Brazil: The Power of Institutional Entrepreneurship of Local Governments

Abstract In light of the socio-environmental challenges faced by cities and the climate threats intensified by the linear economic model, it has become increasingly urgent to understand how local governments can lead the transition to more sustainable urban models, such as the Circular Economy. This research analyzes the actions and policies adopted by local governments to promote this transition in major Brazilian cities. The municipalities of Salvador (BA) and São Paulo (SP) were investigated through a multiple-case study and cross-case synthesis. The results indicate that these governments may assume roles and mobilize mechanisms consistent with institutional entrepreneurship by performing five key roles: strategic direction, normative adaptation, capacity building and collaboration networks, support for innovation and circular businesses, and circular urban management. In this research, the findings reveal a predominance of coercive institutional pressures, with a lower presence of normative and mimetic mechanisms, which limits the broader institutional diffusion of circular practices. It is concluded that promoting the CE requires an integrated and multilevel approach that articulates planning, regulation, and stakeholder engagement, as well as the strengthening of institutional capacities and collaborative networks to expand urban transformation. The study contributes by showing that the role of local governments in circular transition depends not only on the existence of governmental initiatives, but on how strategic roles, governance arrangements, and institutional pressures are combined to induce change toward circularity.