Frictions and Fault Lines: How Entrepreneurs and Financiers Drive the Circular Economy Transitions in Differing Geographical Contexts

As the world buzzes about circularity, one question often gets lost in the noise: who is actually rolling up their sleeves to make it happen? This dissertation dives into that messy reality, unpacking how entrepreneurs and financiers drive Circular Economy (CE) transitions across diverse contexts. Their relationship is not a neat handshake. It is a tangled web of clashing values, institutional quirks, and power plays that prove circularity’s path is anything but simple or predictable.

Scaling Circular Ventures: All Internal, One External - And No Shortcuts

In CE transitions, business scale-up, understood as a growth of at least 20% over three consecutive years, is a high-stakes balancing act in emerging markets and developing economies. My research reveals that four internal conditions must be met within CE ventures simultaneously: i) strong company strategy and business model, ii) advanced skills and capabilities, iii) prior CE experience, and iv) a supportive company culture. But this internal readiness does not guarantee success. At least one external enabling factor - financing, infrastructure, or policy - must be present to unlock scale-up. One is sufficient, but it is non-negotiable.  

Things get murkier when it comes to impact investment in CE ventures. There is no “magic CE checklist.” What we are dealing with are multiple causal pathways and context-contingent configurations.

Strategic Collective System Building: Same Goal, Different Routes

If scaling up is complex, mainstreaming CE solutions into existing regimes takes that complexity to a whole new level. My research explores how entrepreneurs engage in strategic collective system building - mobilising coalitions, aligning institutions, and improving consumer awareness to embed CE practices. The strategies the entrepreneurs employ differ sharply by geography. In developed economies like Austria, entrepreneurs tend to follow structured, phased approaches: piloting innovations, securing early investment, and engaging technical collaborators.  

In contrast, entrepreneurs in the Southern Mediterranean adopt simultaneous, multi-front strategies rooted in societal innovation, community engagement, and problem-oriented partnerships. Despite these contrasts, certain system-building activities, such as business model innovation and knowledge development, are shared across contexts. Other activities, like lobbying or standardisation, rank low in priority regardless of geography. The study proposes a revised framework for strategic system building that integrates non-technological innovation, contextual specificity, and a temporal dimension, making it more reflective of real-world CE dynamics.

Financiers and Institutional Change: Rewriting the Logic from Within

My research also turns the lens to financial organisations, notably European ones, and examines how and why they are beginning to engage with CE. What emerges is a nuanced picture of institutional change.

One of the study’s most important findings is that, in some cases, sustainability logic temporarily overrides profitability logic during the early phases of CE engagement – a unique insight that, to date, has not been identified in any other sustainability transitions. This does not mean profit is abandoned. Rather, a dynamic coexistence of logics emerges, where sustainability leads, and financial rationality adapts, before eventually reasserting dominance as institutional practices mature.

The institutional change within banks is not driven purely by central authority. CE initiatives often originate among mid-level staff, self-organised as “thought collectives”, in a bottom-up manner. But successful change also involves top-down authorisation, formalisation, and resource allocation. It is the interplay between these forces that enables institutional learning (and critically, unlearning), allowing banks to question assumptions about linear economic growth and develop new appraisal metrics, risk models, and inter-organisational alliances.

Importantly, banks do not innovate in isolation. Peer learning across financial organisations, through consortia, pilots, and guideline-setting platforms, is a vital accelerator of CE finance. My findings challenge the idea that financial institutions are unwilling to lead sustainability transitions without regulatory pressure. While skepticism remains warranted, there are clear forerunners already moving ahead.

Final Thoughts: The Magic Behind Circular Chaos

CE transitions are not elegant leaps, they are iterative, imperfect, and charged with conflicting values of profitability versus sustainability. But this research shows that even in complexity, patterns emerge. What we need now is more intentional alignment between various actors, more humility about what can be centrally designed, and more recognition of the messy interplay between value, innovation, and context. The CE will not be unlocked by top-down policy alone, or by hero entrepreneurs alone, but through multi-actor, multi-value, multi-level strategies, and deliberate work of connecting the dots: between ambition and reality, between profit and purpose, and between siloed efforts that need to integrate to pull the weight of CE transition. 

As part of this broader research agenda, Olga Rataj will defend her dissertation titled “The Role of Entrepreneurs and Financiers in the Circular Economy Transitions in Differing Geographic Contexts” on 24 June 2025 at 12:45. Learn more.