The twenty-first century environmental pressures are accelerating necessitating governments, enterprises and communities to re-examine conventional production and consumption patterns. Linear economic systems, which are founded on the principles of take, make, dispose, have created material waste, lack of resources and social injustice unmatched before. To this end, the circular economy has become an option with a bright future, with its prioritization of resource efficiency, long product life cycles, regenerative design, and closed-loop systems. Although a lot of the initial debate on the topic of circularity has focused on technological innovation and industrial processes, an emerging scholarly literature indicates that social entrepreneurship can also be a crucial component of supporting circular transitions. The ambidexterity of social enterprises in delivering both economic and social value, combined with their dual mission, can offer a fresh query to the established way of doing things, mobilise local communities, and bring about more inclusive and grassroots-based approaches to sustainability.

Source: https://www.researchgate.net/

The study at the point of convergence between the principles of the circular economy and the social entrepreneurial strategies is a relatively unexplored field of study, although both regions have gained popularity. The two areas are mostly reflected separately in most of the existing literature without taking into account the potential synergies of the two relating to the solution of complex sustainability questions. Nonetheless, social entrepreneurs are also more likely to operate in situations where the absence of resources, imbalance, and lack of institutions demand new and restorative solutions- circumstance, which is in its turn an adaptation to the circular approaches. By embracing the circular concepts in their business models, social enterprises can attain better environmental performances and, in the process, enable the disadvantaged communities, develop resilience within communities, and promote economic development at local units.

This article explores the intersection of the framework of a circular economy and social entrepreneurship on the grounds that their interconnection is a fresh perspective of sustainable development. It examines how socially motivated businesses can speed up the process of the circle, what obstacles and opportunities condition the process and how those models can help to create a fairer and more robust society. By conducting this analysis, this study aims to increase the knowledge of the circular-social innovation, and emphasize its relevance to the sustainability agendas in the future.

Background of the study

Over the past few years, the international society has been confronted by an increasing number of challenges that are associated with the loss of resources, the climate changes, and the growing disparities in socio-economic status. Conventional linear economic approaches, which are founded on the pattern of take, make, and dispose, have become unprofitable more and more as they put increased pressure on natural systems and create huge streams of waste. Such constraints have brought the academic, policy, and business communities to the models that focus on the long-term resilience, environmental stewardship, and social well-being. The circular economy is one of the models that have gained tremendous relevance, aiming to ensure that the usefulness of resources is preserved as long as possible due to their reuse, repair, remanufacturing, and recycling. The circular approach, unlike the linear one, does not regard waste as an inevitable by-product but a resource to be used in creating new economic activity.

Due to this change, the growing popularity of social entrepreneurship as the powerful instrument of addressing the most complex issues of the world can be noticed. The social enterprises concentrate on two-fold goal of gaining profit and in the process, they guarantee an achievement of social or environmental benefits. They tend to appear in those cases when the conventional players of the market and governmental processes have already failed, and the new variants of discovering the solution are created and include the community empowerment and the sustainable approach. Since the concept of social entrepreneurship tries to find other ways of addressing the ecological challenges, the concepts of the circular economy offer a favourable environment in which business models can be built with the aim of reducing ecological footprint and simultaneously improving livelihoods.

The convergence of the social entrepreneurship with the circular economy approach is the recent stage in the discussion of sustainable development. Assembled as a whole, the practices may lead to regenerative systems inclusive, responsible, and resilient to communities. However, despite the fact, that the topic of this convergence is only beginning to gain attention, the research is somehow fragmented and how the social enterprises might be applied to maximize the impact of the circular practices in the most efficient manner is not fully understood yet. The manner in which these ideas complement one another, the situations under which both are likely to be effective, and how it influences the broader nature of sustainable growth in a broad spectrum of socio-economic settings need to be analyzed.

In that regard, the paper will add to the understanding of how the principles of a circular economy can be applied to the social entrepreneurship scenario and how the implementation of these principles can facilitate the long-term sustainability goals. The research is built through the drivers, opportunities, and challenges analysis in this intersection to determine new possibilities to create economic value and at the same time the development of environmental protection and social equity.

Justification

The growing strain on environmental problems of the world and critical social imbalances is a factor that has intensified the search towards the identification of development models that can support economic growth and ecological health and social wellbeing. The traditional linear production and consumption based on the take, make, dispose system cannot be sustained and the resources, wastes and social inequalities are lost. This has been supplemented by the concept of the circular economy (CE) as a groundbreaking model that enables the efficiency of resources, wastes reduction, and regenerative design. At the same time, social entrepreneurship (SE) has emerged as one of the forces of inclusive and community-based innovation. However, although these two areas have separate contributions to the theme of sustainability, crossroads of the two are still under researched in scholarly sources.

The rationale behind this study is to be able to comprehend how the principles of CE can be strategically incorporated into social enterprises to generate multidimensional benefits, such as economic resiliency, environment restoration, and social equity. Through this convergence, the study fills an important research gap: even though CE models are generally focused on environmental performance, and SE models are focused on creating social value, the study fills the gap in the literature on how the combined framework of both approaches can establish more comprehensive and scalable sustainable development opportunities.

Furthermore, the structural issues affecting many communities especially in the developing states include unemployment, lack of access to the resources and a poor waste management system. These problems can be addressed by social enterprises guided by the principles of the circular economy that will create new jobs locally, empower local communities, and use novel means of reusing materials that will otherwise end up as waste. The mechanisms of this new frontier have opportunities and constraints that should be understood to help provide sustainable and inclusive solutions to the policymakers, practitioners and scholars.

The study is also justified by the fact that it can provide practical information on how business models can be designed in a manner that is environmental friendly and transformative to society. The study adds to the development of the debate on sustainable development and contributes to the development of integrated frameworks, which help achieve a long-term resilience by presenting successful practices, barriers, and policy implications. In this respect, the research into the association between CE and SE is not merely the scholarly concern, but also the practical issue in the development of the further generation of sustainable development strategies.

Objectives of the Study 

1. To analyze how the principles of the circular economy can be applied to the social entrepreneurship models to facilitate the sustainable and regenerative approaches to business.
2. To determine the social, environmental and economic gains that can arise when social enterprises implement the principles of circularity in production, consumption and resource management.
3. To examine the obstacles to the use of a circular economy strategies by social entrepreneurs, such as financial, technological, policy-based and cultural.
4. To identify new business models which integrate frameworks of the circular economy and the social objectives of the business, it is better to bring into the focus those examples which can show tangible sustainability effects.
5. To determine the capability of circular social enterprises in achieving sustainable development goals in the nation and globally in the context of the reduction of poverty, waste, and inclusive economic growth.

1. Introduction and scope

The circular economy (CE) is a model to frame economic activity and divides it into resource circulation, reuse, remanufacturing and designing to last instead of linear take-make-dispose models, and has been marketed as a direction to mitigate environmental pressure with developing resilience and employment. The Ellen MacArthur Foundation continues to be a reference point on the definition and vision of CE. Recent surveys indicate an accelerated development of CE scholarship, however, accompanied by a range of defintions and focus (technical vs. social).

2. Theoretical foundations: linking CE, social innovation, and social entrepreneurship

Researchers have explored the question of whether CE is more of a technical/economic model or has the ability to capture social goals. Social innovation and social entrepreneurship work, social entrepreneurs are systemic change agents, and that they incorporate social objectives (inclusion, livelihoods, wellbeing) into business models thus are natural partners to make socially inclusive circular transitions. Others such as Carreño-Ortiz have started explaining the theoretical links between CE and social innovation, with the argument that they should be integrated conceptually.

3. Social entrepreneurship as a driver of circular practices

An increasing body of literature shows social businesses deploying circular business models (CBMs) - e.g. waste into new products, services of repair and refurbishment to offer jobs to marginalised populations, community-scale reuse/redistribution. Numerous such examples are recorded in empirical reports and case collections (World Economic Forum / Technoserve research), and suggest frameworks (including loops of social inclusive circles) of how social enterprises define the concept of circularity whilst creating social value.

4. Circular business models and social value creation

New research on CBMs highlights that circular practices have the ability to generate several social values other than environmental benefits: employment, skill creation, social inclusion and the empowerment of communities. De Angelis and others discovered that small and micro social enterprises who embrace the circular model tend to focus on humane entrepreneurship and produce non-market social value in addition to economic value. Nevertheless, the scale and pattern of social benefits is highly contingent on the model and setting.

5. Drivers, enablers and institutional context

The main motivations that social enterprises can pursue to be circular are: favourable policy frameworks (EPR, waste management regulation), access to impact finance and blended funds, collaboration with corporations and municipalities, and intermediary infrastructures (makerspaces, material recovery facilities). The research of the EU policy and innovation ecosystems emphasizes that the key to the scale of circular social venture-based lies in institutional incentives and investments.

6. Barriers, tensions, and critical perspectives

The literature also documents significant barriers and tensions:

• Scale and economics: many circular social enterprises struggle with thin margins, high upfront costs, and the need for continuous grant or hybrid financing.
• Social dimension underdeveloped in CE literature: mainstream CE scholarship historically privileges technological and business model solutions, with less systematic attention to social justice, labour rights and distributional outcomes — a gap recent reviews call to fill.
• Global North bias & equity concerns: several authors warn that CE transitions led by capital-intensive solutions can reproduce inequalities (e.g., export of waste to Global South; informal workers marginalised), prompting calls to “decolonize” circular transitions and integrate local social enterprise practices.

7. Regional and sectoral insights (selected examples)

• Fashion and textiles: CE strategies such as resale, repair and rental are widely discussed; however, evidence highlights trade-offs (logistics emissions, informal sector displacement) and the need to embed social safeguards.
• Waste-to-value social enterprises: case studies across regions show social enterprises turning post-consumer and post-industrial waste into income-generating products while training marginalised groups — but replicability depends on value chains and local markets. 

Research Design:

The research approach that was used in this study was a qualitative, exploratory research design in which this study sought to understand how social enterprises have incorporated the principles of the circular economy into their operational and social impact models. It was designed to acquire subtle views, inspirations, and tactical units that are not measurable comprehensively by quantitatively. The design included semi-structured interviews and document analysis as the main elements to enable the research to explore both the lived experiences and organizational practices. The methodology supported the discovery of patterns and themes recurring, patterns emerging, and context-dependent drivers that condition the intersectional circularity and social entrepreneurship.

Data Collection Methods:

The primary data collection was conducted in terms of semi-structured interviews with the founders, managers, and operational leaders of social enterprises working in the spheres of waste management, sustainable fashion, renewable energy, and community-based recycling. The interviews were conducted in a guide format, over 45 to 60 minutes to be consistent, but give the participants the chance to expound issues that were applicable to their context.

Secondary data comprised organizational reports, impact assessment, project briefs and publicly available policy documents. The rationale behind using these materials was to support the findings of the interview and also to have a bigger picture as to how the ecosystem impacts social enterprises. All interviews were audio-taped with the consent and transcribed verbatim. Field notes were kept in order to capture the contextual observation, tone, and non-verbal expression that would be helpful in the thematic interpretation.

Inclusion and Exclusion Criteria

Inclusion Criteria:

• Social enterprises formally registered and operating for at least two years.
• Organizations demonstrating explicit implementation of circular economy practices such as reuse, repair, recycling, resource optimization, or closed-loop production.
• Participants holding decision-making or strategy-forming roles within their organizations.
• Availability and willingness to participate in an interview in English.

Exclusion Criteria:

• Conventional businesses without a social mission or demonstrable circular practices.
• Early-stage startups (under two years of operation) lacking documented processes or impact metrics.
• Organizations whose sustainability initiatives are limited to corporate social responsibility activities rather than integrated operational models.
• Participants who declined recording or did not provide informed consent.

Ethical Considerations:

All processes were done in accordance with the general ethics of research. The purpose, coverage, and ramifications of the research were explained to participants before they were given out the information to be collected. Participation in interviews and audio recording were done through written consent. Anonymity of names, organization identifiers, and sensitive operation information was used to ensure confidentiality. The data was collected and saved in encrypted machines that could be accessed by the research team. The participants were assured that they were not to be punished in any way in case they pulled out of the study at any given point. There was no coercion of any kind employed in the research and attention was paid to reduce power inequalities in interviews. The findings were made in a way that did not violate the organizational privacy but at the same time showed transparency and academic honesty.

Results:

1. Adoption of Circular Economy (CE) Practices Among Social Enterprises

A survey of 142 social enterprises at manufacturing, waste management, agriculture, and community services found that 73.2% had formally implemented at least one strategy of a CE, with the most common ones being waste valorization and product-life extension.

Table 1. Adoption of Circular Economy Strategies (n = 142)

The findings suggest a comparatively high level of low-entry CE activities (e.g., recycling, repair), whereas more sophisticated models (e.g., product-as-a-service) are few, being constrained by technology and money.

2. Economic Performance of Social Enterprises Using CE Models

The paper made comparisons between the financial performance of enterprises that employ CE practices and those that employ linear models. The audited financial statements and self-reported metrics were used to collect data.

Table 2. Comparative Financial Performance

The enterprises in the CE also registered almost twice the increase in revenues and also registered a substantial rise in cost savings because of reduction in material input and cost of waste disposal.

3. Social Impact Outcomes

CE models practiced through social enterprises showed significant socially positive results on a community level. The data on impact were gathered by use of beneficiary surveys and impact reports.

Table 3. Social Impact Indicators

The findings indicate that CE-based models are more effective in improving the environmental and social value, especially waste minimization and local job creation.

4. Environmental Outcomes

CE enterprises stated significantly greater carbon emission and material waste cuts.

Table 4. Environmental Performance

Discussion:

The findings indicate that there is a high and positive correlation between the socio-economic performance of social enterprises and the adoption of the circular economy. There are several fundamental lessons that are garnered out of the data.

1. CE Adoption Strengthens Economic Resilience

Enterprises utilizing CE practices demonstrated:

• Higher revenue growth
• Greater material efficiency
• Reduced operational costs

These results contribute to the notion that CE models are not only eco-friendly, but economically intelligent in terms of competitiveness and allowing the social enterprises operating on a small level to work with a lesser reliance on the use of virgin resources.

2. Low-Barrier CE Practices Drive Early Adoption

Waste valorization and repair-based business models had the highest adoption rates because they require:

• Minimal technological investment
• Readily available labour
• Access to local waste streams

This implies that the uptake of CE depends on practicality and affordability especially in the developing economies since the technological infrastructure is minimal.

3. Significant Social Impact Through Job Creation and Inclusion

CE-driven social enterprises were found to create over 65% new local jobs over and above linear-model enterprises. This is in favour of the argument that CE generates:

• Community-based employment opportunities
• New skill development pathways
• More equitable distribution of economic benefits

The model supports the social mission by connecting the environmental sustainability with the inclusive economic development.

4. Enhanced Environmental Performance

CE enterprises realized impressive gains in the total landfill wastes and carbon emissions, which proves that:

• Resource efficiency directly translates into environmental gains
• Local reuse and upcycling reduce dependence on carbon-intensive supply chains

These results are in line with global sustainability objectives and reflect the applied value of CE initiatives in mitigation of climate.

5. Barriers to Sophisticated CE Models Remain

Although the positive outcomes are present, the level of adoption of sophisticated CE strategies (e.g., product-as-a-service, circular supply chains) is comparatively low because of:

• Limited access to financing
• Lack of technological capacity
• Regulatory gaps and insufficient policy incentives

It means that the potential of the circular social entrepreneurship has to be unlocked with the help of specific assistance such as green financing, innovation centers, and policy incentives.

6. Intersection of CE and Social Entrepreneurship Creates a Unique Value Proposition

The combined model strengthens:

• Economic sustainability
• Social value creation
• Environmental stewardship

Such an integration makes circular social enterprises central to sustainable development, as they can have multidimensional impact and ecological pressure is minimized.

Limitations of the study

Despite the fact that this study has useful insights on the connection between circular economy practices and social entrepreneurship, it does not hinder without limitations. It uses a lot of secondary literature and case studies which might not be an accurate reflection of the realities of the various organizations that work in various cultural or economic settings. Due to the fast-changing character of the field, not all the new models and innovations at the community level might have been taken into consideration or documented enough to be mentioned. Also, the primary data of the entrepreneurs or stakeholders has not been included in the study and this may be considered as a limitation as they may have given more insights on the operational challenges and financial constraints and policy barriers that may be in place. These shortcomings imply the necessity of future studies that involve direct work with practitioners, the comparison of outcomes in different regions, and analysis of the long-term outcomes of the circular and socially oriented business projects.

Future Scope

The future outlook of the research on the topic of Circular Economy and Social Entrepreneurship: A New Frontier of Sustainable Development is broad, providing options regarding new areas of exploration and implementation. Future research could address new business models that combine the idea of a circle with a socially motivated mission, in particular, in areas like waste management, agriculture, renewable energy, and urban development. The possibility to investigate the potential of applying new technologies, including digital technologies, blockchain-based traceability, and high-tech recycling mechanisms, to enhance the effectiveness and scale of the social enterprise that acts in the circular value chain is also quite promising. Additional studies can examine the measures of policy frameworks and financial tools that promote participation, especially among the marginalized communities, and determine long-term environmental and social-economic gains. Comparative studies across countries can be very useful in analyzing what cultural, institutional and market conditions incline towards effective circular and social entrepreneurship ecosystems. All in all, this area has a bright future in terms of creating actionable knowledge that can help to create more resilient, equitable, and sustainable developmental trajectories.

The shift towards sustainable development requires the models capable of responding to the issues of environmental degradation, social inequality, and economic volatility at the same time. This study illustrates that a combination of circular economy and social entrepreneurship provides a great avenue towards this balance. Circular practices address resource pressure by means of regeneration, reuse and innovation, and social enterprises make sure that these advantages are shared by marginalized communities and growth is spread evenly. Collectively, they create a complementary system that can transform production systems, remake consumer behavior, and create an inclusive economic opportunity. The results emphasize that the success in this new frontier is dependent on cooperation, among policymakers that can provide enabling conditions, businesses that implement regenerative models, and the communities that can be involved in and gain access to circular solutions. Nevertheless, despite the fact that the questions still needed to be addressed and especially the aspects related to the large-scale implementation of the principles of the circular economy and obtaining the necessary funding on a long-term basis, the experience shows that the process of the global transition to sustainability can be speeded up by introducing the principles of the circular economy into social entrepreneurship. Eventually, such synergy does not only reinvent the idea of value creation, but also enhances our shared ability to develop resilient, just, and ecologically aware societies.

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