📄 Abstract
The Micro, Small, and Medium Enterprises (MSME) sector is the backbone of India's national economy, contributing around 30% to GDP, providing livelihoods for over 110 million people, and making up over 95% of the country's industrial units. Many MSMEs in India are still operating under a traditional linear economy model of manufacturing (extraction of green resources, producing products, and disposal of waste) which is environmentally and economically unsustainable. The circular economy, which focuses on the elimination of waste through design, extends the life of products and materials, and regenerates natural ecosystems offers an alternative that has the potential to dramatically enhance the competitiveness and sustainability of MSMEs. We examine the impact of circular entrepreneurship (the development and scale-up of businesses that use circular economy principles) on the economic success and sustainability of MSMEs in India. We used a mixed methods approach to collect data: we collected quantitative data through a structured questionnaire disseminated to 150 MSME owners in Coimbatore district, Tamil Nadu, of which 120 responses were usable for analysis; we collected qualitative data through in-depth interviews with ten MSME owners who were purposely selected; and, we captured secondary sources of information from government reports, NITI Aayog publications, the Ellen MacArthur Foundation, and other peer reviewed academic literature. The empirical analysis — including descriptive statistics, correlation analysis, Cronbach’s alpha reliability testing, and regression modelling — indicates that circular business practices have a statistically significant positive relationship with the economic performance of MSMEs (R² = 0.67, p < 0.01). MSMEs reported an average 10-25% reduction in raw material costs, improved profit margins, and increased brand loyalty when using three or more circular business practices. Nonetheless, MSMEs are hesitant to adopt these practices because of the prohibitively high initial investment costs; lack of awareness; inadequate government incentives; and insufficient trained personnel to support implementation. The research concludes with a five-stage Circular MSME Growth Framework that provides practical recommendations for entrepreneurs, policymakers and industry stakeholders to facilitate the transition towards eco-efficient business models in India.
🏷️ Keywords
📚 How to Cite:
Sugunapriya T, Bala Akaash , CIRCULAR ENTREPRENEURSHIP AND SUSTAINABLE GROWTH OF MSMES: INVESTIGATING THE ECONOMIC IMPACT OF CIRCULAR BUSINESS MODELS IN INDIA , Volume 14 , Issue 7, July 2026, EPRA International Journal of Economic and Business Review(JEBR) , Pages: 1 - 11 , DOI: https://doi.org/10.36713/epra28584