The Role of the Private Sector and MSMEs in Advancing the Circular Economy in Arid Metropolitan Regions

Circular economy (CE) has become a central policy framework for advancing sustainable urban development; however, evidence regarding the role of micro, small, and medium-sized enterprises (MSMEs) in metropolitan CE transitions remains limited, particularly in arid regions. This study examined how private sector firms and MSMEs engage with CE practices within an arid metropolitan context, adopting a place-based and governance-sensitive analytical lens rooted in urban studies scholarship. Using a structured quantitative survey of 180 firms across key urban–industrial sectors, the study analyzed levels of CE awareness, adoption patterns, perceived barriers, support needs, and future expectations. The findings reveal that MSMEs engage in resource-based and efficiency-oriented circular practices, whereas more systemic models involving supply-chain integration and platform-based solutions remain limited. Moreover, capability-related factors exert a stronger influence on adoption than awareness alone. Importantly, the study demonstrated high latent willingness among MSMEs to invest in circular practices under supportive policy and institutional conditions. The discussion reframed CE transitions as governance-mediated urban development processes, emphasizing metropolitan coordination, institutional capacity-building, and spatial infrastructure. These findings contribute to urban studies and CE research by positioning MSMEs as conditionally willing system-building actors whose engagement is critical for advancing inclusive and place-sensitive circular transitions in arid metropolitan regions.