Sustainable development has become a major issue of concern among policy makers, business people and even communities as the world is grappling with the growing environmental degradation, resource shortage and social inequalities. The standard linear economic approaches to economic systems, founded on take, make, and Dispose have been shown to be no longer sufficient to deal with these interrelated issues. In reply, the idea of the circular economy has received growing interest due to its focus on resource use and waste minimisation, reuse, and natural system regeneration. The circular economy provides a promising sustainable route to the long-term environmental and economic sustainability through material loops and the prolongation of the product life cycle.

Simultaneously, social entrepreneurship has developed as a potent tool of solving endemic social issues by initiating innovative solutions to the problems in a market-like manner. Social enterprises have a twofold mission to be financially viable, and at the same time create quantifiable social and environmental value. Social entrepreneurs focus on societal impact, inclusivity, and community empowerment and are unlike the conventional business and thus are central to change in sustainable development projects.

The overlap of the circular economy and social entrepreneurship is an untapped but potentially very fruitful frontier. Social entrepreneurs can particularly be seen as well placed to operationalize the concept of circularity because they have been able to incorporate sustainability within their business models, contribute to the development of local employment, responsible consumption practices, and respond to social vulnerabilities. Circular social enterprises do not only lower environmental footprints, but also help to ease poverty, develop skills, and social inclusion especially in developing and emerging economies.

The research paper discusses how the application of principles of the Circular Economy in social entrepreneurship may be used to further the agenda of sustainable development. The study aims to identify the transformational opportunities of this synergy by analyzing the theoretical standpoints, practical use, and new trends. This interrelationship is critical in the formulation of new policies and business models that would need to strike a balance between economic development, environmental management and social prosperity in an even more resource-limited world.

Background of the study

High rate of industrialization, population increase and increased consumerism have put strain on natural resources and ecosystems around the world. The conventional linear economic theory, which is founded on the concepts of take, make and dispose, has led to environmental degradation, resource depletion and inequality in the society. These issues have made policymakers, researchers and practitioners to identify alternative development models which strike a balance between economic development and environmental conservation and social welfare. In this regard, the circular economy has become a disruptive strategy that focuses on resources efficiency, reduction of waste, reuse, recycling, and regenerative systems.

The circular economy does not focus on waste management at the end of the product lifecycle, it aims at redesigning production and consumption systems. Trying to eliminate material loops and prolonging the product life cycle, it focuses on minimizing the impact on the environment and generating new sources of economic income. Nonetheless, the effective use of the principles of the circular economy presupposes new business models, the involvement of all people, and a high level of social orientation, which the traditional business enterprises based on profits are frequently limited.

Social entrepreneurship has become mainstream as an entrepreneurial practice with social and environmental goals. In social enterprises, certain problems in the society like poverty, unemployment, waste management, and environmental conservation are taken care of and handled sustainably and community-oriented solutions are taken. The fact that they focus more on social value creation, stakeholder involvement, and long-term effects makes them important players in terms of promotion of sustainable development goals.

The crossroad between circular economy and social entrepreneurship is a new but potentially unexploited sustainable development frontier. Social entrepreneurs can be positioned in a unique position to operationalize the principles of the circular economy at the grassroots level through turning waste into resources, inclusive employment, serving local communities, and responsible consumption. Although interest is increasing, there is little empirical and conceptual insight into the role of social entrepreneurship in the process of circular economy transitions, especially in the developing economies.

Thus, the relationship between the practices related to the circular economy and social entrepreneurship needs to be analyzed to comprehend the overall potential of them to address environmental issues and support social equity and economic well-being. The current paper aims to make a contribution to the growing field of discussion by investigating the ways in which the social enterprises that are driven by the idea of the circular economy can become the drivers of the sustainable development.

Justification

The issue of sustainable development has become a major international concern in relation to the increasing ecological degradation, exhaustion of resources and the growing socio-economic disparities in the world. The conventional linear form of economic models that employ the use of take, make and Dispose models have failed to cope with these challenges. In this respect, the circular economy provides restorative and regenerative approach that focuses on resource optimization, minimization of waste, and sustainability of the environment in the long run. At the same time, social entrepreneurship has become popular as an innovation that integrates economic activity with social and environmental goals. Although both share the same focus on sustainability and inclusive development, there is still a lack of research to understand the overlap between the principles of the circular economy and social entrepreneurship in the literature.

There is a need to fill this conceptual and practical gap as it justifies this study. Although the current studies have examined the circular economy strategies and models of social entrepreneurship separately, little focus has been put on how social enterprises can become efficient agents of executing the circular practices in the grassroots. Social entrepreneurs tend to work in the marginalized groups of societies, and therefore, they are in a uniquely placed position to facilitate sustainable production, responsible consumption, and social inclusion. Knowing this synergy can be of good use in creating alternative developmental directions that are not only environmentally healthy but also socially equal.

Moreover, policymakers and development businesspersons are increasingly interested in combined solutions which will help reconcile economic growth with social good and environmental safety. This study is effective because it provides an in-depth overview of how the framework of circular economy, in the context of its application through the social entrepreneurial projects, can assist in reaching the sustainable development goals. The study has shed light on the practical linkages, opportunities, and challenges, which will form the basis of informed policy-making, new business models, and the empirical research in the future.

Therefore, the current research is timely and topical, since it contributes to the theory and provides the practical implications to the academic community, policymakers, and social entrepreneurs aiming to achieve sustainable and inclusive development.

Objectives of the Study 

1. To explore the main principles of the circular economy and its applicability to sustainable development objectives.
2. To examine how social entrepreneurship can be used to deal with environmental, social and economic issues using creative business models.
3. To understand the integration of the concept of a circular economy in the work of social entrepreneurs in various industries.
4. To determine the resource efficiency, waste reduction and value creation of social enterprises that are based on the circular economy.
5. To determine the social and environmental effects that social enterprises using circular economy solutions have created.

1. Conceptual Foundations of Circular Economy and Social Entrepreneurship

The so-called circular economy (CE) has become an important paradigm in the study of sustainability, as it questions the standard models of linear production-consumption that promotes the models based on regenerative design, resource efficiency, remining, reuse, and recycling (Reddy and Basha, 2025). The objective of CE models is to lower the environmental impact and increase the long-term socio-economic resilience by introducing new business practices.

Simultaneously, social entrepreneurship (SE), is described as the type of entrepreneurship that fulfills a twofold purpose sustainable economic sustainability and transformative social outcomes, especially against socio-economic systemic inequalities and empowerment of communities. Through combining economic objectives and powerful social and environmental agendas, social enterprises provide alternative ways of approaching sustainable development that are not simply focused on maximizing profits. The academic literature is taking a gradual yet purposive focus toward social entrepreneurship as a systemic force of change with the ability of mobilizing communities to inclusive and sustainable socio-economic systems.

2. Theoretical Linkages between CE and Social Entrepreneurship

In recent literature, there is observed convergence of the ideas between CE and SE. The literature indicates that social enterprises are in line with the principles of circularity due to their internal focus on the stewardship of resources, creation of value to marginalized communities, and innovation that is community-focused (Sula, 2025). This incorporation facilitates a hybrid system where environmental rehabilitation and development of social values will strengthen each other to promote sustainable development agendas.

Moreover, the studies of the circular business models (CBMs) demonstrate that implementing the CE principles in an entrepreneurial environment promotes numerous types of social value, including employment opportunities, inclusion and power, in addition to environmental impacts. According to De Angelis and colleagues (2025), micro and social enterprises that use circular strategies tend to have a humane entrepreneurship orientation, which causes social value but solves sustainability issues.

3. Empirical and Applied Perspectives

Empirical literature explains the way in which the overlap of CE and SE takes place in various industries:

• Waste-to-value: Radhakrishnan et al. (2025) analyse the literature on social enterprises that transform waste into economic and social gains. These efforts demonstrate that the concept of circularity in textiles, agriculture, and electronics can help alleviate environmental degradation and the socio-economic gap at the same time and transform the environmental liabilities into access to inclusive opportunities.
• Ecosystem building: Sula (2025) discusses the role of social entrepreneurs in creating circular ecosystems in such areas as the Western Balkans, where the primary focus is placed on reduced, reuse, repair, refurbish, and recycle approaches (the 5Rs). This paper emphasizes that social orientation, innovation and community focus can produce circular transitions even in disaggregated institutional settings.

Through these studies, it is shown that social entrepreneurship realizes the application of a circular strategy at grassroots and community levels, therefore, playing a highly important role in the intermediation between macro-level sustainability goals and the realities of local development.

4. Drivers and Barriers for Circular Social Enterprises

These drivers are always found in literature and include:

• Policy and institutional incentives such as regulatory structures that facilitate the extended producer responsibility and waste management practices.
• Availability of impact finance and mixed funding through which social enterprises can be innovative.
• Collaborative networks, such as collaborations with the municipalities, NGOs, and businesses, that aid knowledge sharing and scaling of the circular initiatives.

Simultaneously, obstacles exist: social enterprises using CE principles tend to have fewer capital, technological, and regulatory resources hindering the size and cost-effectiveness of their intervention. Besides, there is a danger that the dominance of technical and economic aspects in the mainstream research on CE causes an oversight of the implications of social justice and distributional impacts of circular strategies as there is a gap that SE-focused scholarship is aiming to fill.

Research Design:

This paper assume a qualitative research design and descriptive and analytical research design to explore the convergence between the principles and the concept of the circular economy and social entrepreneurship to guide sustainable development. The study is mainly review in nature, which combines both conceptual analysis and thematic synthesis of the current academic articles. The design will allow a thorough approach to the application of the models of the circular economy to the issues of the environment and social problems faced by the social enterprises to be economically viable.

Data Collection Methods:

The main source of information to be used in the study is secondary data. Peer-reviewed journals, edited books, and conference proceedings, as well as policy reports and publications on the topics of sustainability, the circular economy, and social entrepreneurship by the international organizations were searched to retrieve relevant literature. Scopus, Web of Science, Google Scholar and JSTOR databases were accessed. The relevant studies were identified with the help of keywords such as circular economy, social entrepreneurship, sustainable development, green innovation, and inclusive business models. The literature was well screened and classified to come up with the prevailing themes, frameworks, and trends.

Inclusion and Exclusion Criteria:

Only those studies that were in English and focused directly on circular economy activities, social entrepreneurship activities, or sustainability achievements were used. The focus was made on peer-reviewed articles and authoritative institutional reports that were published within the past 10-12 years to be relevant and up-to-date. Those studies that were not conceptually clear, there was no empirical relevance or a direct connection with sustainability objectives were not included. The articles that were not analyzed were also those that lacked opinion pieces, unpublished manuscripts, and articles that lacked enough methodological rigor.

Ethical Considerations:

Since the study will be a purely secondary data study, there was no direct involvement of humans. It was done as it adhered to ethical standards through proper citing and crediting of all sources which ensured intellectual honesty and academic integrity. The study did not commit data misrepresentation, selective reporting, and plagiarism. Each interpretation was in an objective way without infringing on the original context and purpose of the referred works.

Results:

1. Dominant Circular Economy Practices in Social Enterprises

The discussion shows that social enterprises are keen to implement various circular strategies instead of depending on one practice. The most common modules undertaken were resource recovery and product life extension most especially by the enterprises that are involved in waste management, textile, as well as agri-based industries.

Table 1: Prevalence of Circular Economy Practices in Social Enterprises

The findings suggest that CE practices tend to be enshrined in the social mission of the enterprises and allow the latter to solve the environmental issues and provide livelihood opportunities.

2. Social and Economic Outcomes of Circular Social Enterprises

One of the notable findings made in the reviewed works is that circular social enterprises are capable of producing two values. These organizations are also income generators and at the same time solve social problems like unemployment, skills development, and inclusion of the community.

Table 2: Key Socio-Economic Outcomes of Circular Social Entrepreneurship

These findings suggest that CE-oriented social enterprises are particularly effective in contexts where formal employment opportunities are limited.

3. Environmental Performance and Sustainability Contributions

One of the key outcomes of incorporating the principles of CE into the idea of social entrepreneurship is environmental benefits. The majority of the studies have indicated a quantifiable decrease in material waste and resource usage.

Table 3: Environmental Impacts of Circular Social Enterprises

The results confirm that environmental gains are not incidental but integral to the operating models of circular social enterprises.

1. Circular Economy as an Enabler of Social Mission

The results indicate that circular economy is an enabler of social entrepreneurship as opposed to being a mode of operation. Social enterprises minimize costs of inputs and reinvest their savings towards social goals by creating resource loops. This supports the view that CE models are able to increase mission sustainability and preserve financial viability.

2. Contribution to Sustainable Development Goals

These findings are consistent with several sustainable development goals and especially those concerning responsible consumption, decent work, and climate action. Circular activities help to generate employment and promote inclusive growth, whereas the minimization of wastes and resource efficiency enhance environmental sustainability in the long term.

3. Challenges and Trade-offs

Although the results are positive, the review still addresses multiple challenges that have been recurrently faced including lack of access to finance, regulatory constraints, and scaling. Circular models work well on a local scale, but often it is necessary to support the growth with institutional backing, technology use and supportive policy frameworks.

4. Implications for Policy and Practice

CE and SE integration offer a sustainable development option particularly in the emerging economies. It is possible to use such findings to motivate the policymakers to develop incentives towards the circular business models and capacity-building initiatives to social entrepreneurs. Knowledge sharing and exchange of resources may be provided in collaborative networks to benefit the practitioners.

Limitations of the study

This study is subject to certain limitations that should be acknowledged while interpreting the findings. The analysis relies largely on secondary sources and documented case examples, which may not fully capture the diverse and evolving practices of circular economy initiatives within social enterprises across different regions. Variations in socio-economic conditions, regulatory frameworks, and levels of institutional support limit the generalizability of the conclusions. Additionally, the absence of extensive primary data restricts the ability to empirically measure long-term social and environmental impacts, as many outcomes of circular business models emerge gradually over time. The study also does not account for informal or unregistered social enterprises, which play a significant role in sustainable development but remain underrepresented in academic literature. These constraints suggest the need for future research incorporating longitudinal designs and field-based evidence to strengthen and validate the insights presented.

Future Scope

The future of studying circular economy and social entrepreneurship remains wide and dynamic and provides valuable grounds to explore the topic in terms of its theories and practical aspects. The research findings can be used in future studies to come up with empirical models that can quantify the social, environmental, and economic effects of circular social enterprises over time and in various sectors and regions. The comparative study of the advanced economies and developing ones can yield useful information on the context-dependent issues, the efficiency of the policy, and the feasibility of the circular projects. It is also possible to consider how digital technologies including blockchain, artificial intelligence, and data analytics could contribute to creating increased transparency, traceability, and efficiency in the framework of circular business models by social entrepreneurs. Future studies may examine means of financing such as impact investing and blended finance that can help in the development and sustainability of circular social ventures. Also, longitudinal research into behavioral change, community engagement, and institutional facilitation can reinforce the knowledge on how the principles of the circular economy can be integrated into mainstream entrepreneurial ecosystems. The future studies would help in the optimization of the policy frameworks and a sustainable development objective by effective economic activities that are socially inclusive and resource efficient.

To sum up, a hybrid approach of applying circular economy principles and social entrepreneurship is a paradigm shift toward sustainable development as it will support the economical sustainability, social inclusivity, and environmental accountability in a systemic way. The paper will emphasize the way in which social enterprises have a unique opportunity to operationalize the circular practices, including resource-efficiency, waste-reduction, and value-generation using innovative business model and community-focused strategies. With profit motives merged with social and ecological goals, such enterprises can help create a strong local economy and address urgent international issues such as the problem of scarcity of resources and environmental damage. The results emphasize the importance of enabling policy frameworks, access to finance, and ecosystems of collaboration in the scaling of the impact of circular social ventures. Finally, the overlap of the circular economy and social entrepreneurship provides a viable and holistic platform of development that does not only redefine the growth but also extends sustainability in the long term and societal well-being.

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