Circular Business Models in Manufacturing SMEs: Empirical Evidence from Northern Europe

Circular Business Models in Manufacturing SMEs: Empirical Evidence from Northern Europe

While circular economic paradigms have been broadly studied within multinational corporations, small- and medium-sized enterprises (SMEs) face distinct resource asymmetries, structural rigidities, and capital constraints when operationalizing circularity. This study investigates the institutional conditions, organizational capabilities, and technology integration mechanisms required for manufacturing SMEs to transition successfully toward closed-loop industrial ecosystems. Employing an empirical mixed-methods design, we examine survey data from 142 enterprise owners and executive directors across Sweden, Denmark, and Finland, triangulated with 18 in-depth qualitative field audits of advanced manufacturing facilities conducted between 2023 and 2025. Our findings reveal that while 68% of surveyed firms maintain strategic intent toward product remanufacturing and material recovery, fewer than 22% have embedded circular performance metrics into their capital expenditure authorizations or supplier appraisal frameworks. We identify cross-tier reverse supply chain transparency, digital product passport infrastructure, and collaborative multi-stakeholder municipal hubs as paramount determinants for commercial viability. Conversely, regulatory friction in waste taxonomy classification persists as the primary institutional impediment across Nordic jurisdictions. We conclude by presenting an actionable 4-phase circular transition archetype for enterprise management alongside 3 policy directives for European industrial decarbonization frameworks.