Theoretical Mediation of Drivers and Practices to Enhance Circular Economy Capabilities in SMES: Overcoming Economic, Technological, Cultural, and Social Barriers

Objective: This study aims to use the theoretical mediation of drivers and practices to support SMEs in developing capabilities related to the circular economy (CE). Through this, it seeks to overcome economic, technological, cultural, and social barriers, generating environmental and financial benefits. Theoretical Framework: Circular economy (CE) theory highlights the need for multidisciplinary approaches to address barriers. These barriers, including economic, technological, social, and cultural challenges, hinder CE adoption, particularly in SMEs. Overcoming such obstacles requires innovative solutions, collaboration with green suppliers, and advanced recycling technologies. Practices like circular design, eco-efficiency, and education are critical in driving CE capability. Moreover, mediating variables, such as drivers in circularity and sustainability-focused education, facilitate the transition to CE, creating economic opportunities and fostering sustainable development across different industries. Design/Methodology/Approach: The methodology combines qualitative and quantitative research using PLS-SEM. An analysis of six hypotheses was conducted with questionnaires applied to 280 companies, obtaining 124 responses. This innovative approach demonstrates the impact of theoretical mediation between barriers and circular economy capability (CEC), validating five of the six hypotheses. Results: The key role of mediation in overcoming barriers to the CE is highlighted. Although the direct relationship between cultural and social barriers and the CEC was not validated, the intervention of the mediator construct allowed validation. Additionally, the predictive model is strengthened with indicators such as Q2 and VAF (Variance Accounted For), showing that SMEs can improve their CE capability by overcoming key barriers. Research Limitations/Implications: In Mexico, SMEs lack a detailed analysis of their economic impact and face obstacles to adopting CE. The described methodology can be replicated in other contexts to facilitate the transition to a circular economy. Originality/Value: The novel methodology offers a way to overcome barriers to the circular economy and promote a sustainable organizational culture in SMEs. It can be said that the strategy of this study was to achieve circular economy capability (CEC), with the mediating effect serving as the key tactic.