Exploring the circular business model in the small and medium-sized enterprises: a business model adaptation perspective

The world is facing one of the grand challenges, such as Climate change. By tackling this grand challenge, policymakers, global leaders and industrialists heed a call for action for a sustainable future. Despite the extensive research on circular economy (CE) in the large companies, it captured a more ‘Eurocentric’ view. However, little is known about how Small and Medium Enterprises (SMEs) are transitioning from a linear to circular business model (CBM) in the Global South, specifically in the Pakistani context. Previous scholars mainly explored large firms. Hence, there limited research on SMEs especially in the Global South including Pakistan. Rooted in business model adaptation theory, we explored the circular business model by based on reducing, recycling and reusing principles in the SMEs from cross-sectorial companies e.g. aluminum, apparel, automotive, steel recycling, and textile. We employed multi-case study approach and conducted 9 semi-structured interviews from 9 SMEs. The data revealed resource efficiency, costs and profitability, customer awareness and stakeholder pressure are enablers for transitioning towards to circular business model in the SMEs. Our exploratory research contributes to body of knowledge on circular business model in SMEs especially in the Global South as this context is under-explored. This research provides a useful managerial insight to SMEs as they can think and act for sustainable future.