Are SMEs Claiming to Be Circular, Actually Circular? An Empirical Study on the Implementation and Performance Evaluation of Circular Economy Practices

The circular economy is a key paradigm for ecological and ethical transition, particularly in the manufacturing sector. Although small and medium-sized enterprises are pivotal in advancing the circular economy, the implementation of circular economy practices remains limited, with a focus on less impactful practices such as recycling and energy efficiency. Recent studies have highlighted that inadequate performance measurement can impede the implementation of the circular economy. This study investigates whether small- and medium-sized enterprises claiming to be circular are actually circular, meaning they implement circular economy practices in a meaningful way and properly evaluate the related performance. Through a qualitative empirical analysis of 12 Italian small- and medium-sized manufacturing enterprises, this study explores the circular economy practices implemented and the performance indicators used to evaluate them. The results show that circular economy practices are often operational and isolated, with limited integration into broader strategies. Performance evaluation is inconsistent and mostly qualitative, with a heavy focus on economic aspects and minimal attention to environmental or social impacts. This hinders the evaluation of circular economy progress. By identifying the circular economy's untapped potential and suggesting ways to develop it further, this research provides valuable insights to support small- and medium-sized enterprises in their transition to the circular economy. This shift requires integrated efforts from customers, policymakers and practitioners to establish a healthy, functioning circular economy system.