Implementing Circular Economy Practices in Innovative SMEs: Resources and Competencies for Engaging With Net-Zero Transitions

The transition toward a net-zero economy depends increasingly on the manufacturing sector, particularly innovative small and medium enterprises (SMEs) that might help mitigate environmental impacts through circular economy (CE) adoption. Despite their critical role, the specific organizational configurations of resources and competencies required to successfully implement CE practices remain underexplored. This study investigated how strategic capabilities, framed through the natural resource-based view, enable circularity via the “take–make–distribute–use–recover” fields of action. A survey of 99 Italian innovative manufacturing SMEs and a quantile regression analysis were used to examine the heterogeneity of drivers across different implementation levels. The findings show that SMEs need behavioral, interorganizational, and technical resources and competencies to support CE implementation across different fields of action. Resources are particularly relevant when SMEs initiate and diffuse CE practices, whereas competencies sustain progress toward circularity. These insights provide a roadmap for managers and policymakers seeking to strengthen CE implementation in the context of the net-zero transition.