Identifying entrepreneurial opportunities in the circular economy

Abstract

The circular economy has recently gained increasing attention as a means towards sustainable development. Entrepreneurs and SMEs have been identified as key custodians in leading the transition to a circular economy. Opportunity identification is the cornerstone of entrepreneurship and has been extensively studied in traditional business venturing. However, research on circular opportunity identification is very limited. This paper addresses this gap firstly by exploring (1) how entrepreneurs identify opportunities in the circular economy, underpinned by an adaptation of Patzelt and Shepherd’s (2011) sustainable opportunity identification model, and (2) how circular economy principles are reflected in the opportunities identified by circular entrepreneurs, through the lens of the Ellen MacArthur Foundation’s (2015) ReSOLVE circular economy framework. Nine in-depth interviews were conducted with circular entrepreneurs from three EU member states with high (Netherlands), middle (Ireland) and low (Malta) Resource Efficiency Scoreboard rankings. The study sheds light on the factors that facilitate the identification of entrepreneurial opportunities in the circular economy, suggesting that circular entrepreneurs identify opportunities as a result of stocks of prior knowledge, motivational factors, entrepreneurial experience and social capital. The study also offers actionable suggestions for entrepreneurs looking to develop circular enterprises through the integration of the ReSOLVE framework (EMF, 2015) to illustrate the circular nature of the identified opportunities. Considering the crucial role that circular entrepreneurship plays in delivering market solutions whilst addressing environmental and societal challenges, this study addresses UN SDG8 (Decent Work and Economic Growth), SDG11 (Sustainable Cities and Communities), SDG12 (Responsible Consumption and Production) and SDG13 (Climate Action).