The transition to a circular economy (CE) has garnered widespread attention as a solution to address economic, environmental, and social challenges. While large enterprises and policymakers have made steps in adopting CE practices, small and medium-sized enterprises (SMEs) face unique challenges due to limited resources and expertise. Understanding the multi-level perspective (MLP) is essential for SMEs to successfully transition to a CE, as it considers factors at the micro, meso, and macro levels. However, current research often focuses on single levels, necessitating a comprehensive understanding of the phenomenon through systematic research. To address this need, this study conducts a systematic literature review (SLR) using the MLP framework to analyse existing research on SMEs' transition to a CE. The study aims to identify macro-, meso-, and micro-level factors, actors, and mechanisms influencing the transition process. The SLR contributes to academic understanding by developing a conceptual model that elucidates the dynamics of the circular transition process within SMEs. Additionally, it provides practical recommendations to support SMEs in navigating the transition successfully. The adoption of the MLP framework empowers SMEs, policymakers, industry associations, and consumers to play their roles effectively in driving the CE transition. While the study acknowledges certain limitations, it opens avenues for future research and enhancement of CE practices in SMEs.

PURPOSE: This study examines the interplay between stakeholder pressure (internal and external), circular economy (CE) practices, firm size, and their impact on the sustainability and economic performance of Small and Medium sized Enterprises. This research underscores firm size as a key moderator in the relationship between stakeholder pressures and CE adoption, aiming to provide a comprehensive understanding of this dynamic in SMEs. METHODOLOGY: Based on a cross-sectional survey of 124 SMEs in Estonia, Latvia, and Lithuania, with respondents primarily being owners and managers of firms, a three-step approach tested the proposed model for CE practices. First, Confirmatory Factor Analysis (CFA) was used to ensure that the observed variables represented latent constructs. Second, Ordinary Least Squares (OLS) and Weighted Least Squares (WLS) regression methods were used to control for factors influencing CE adoption. Finally, the interaction terms assessed the moderating role of firm size. FINDINGS: The research shows that firm size moderates these effects, with external stakeholder pressure significantly influencing CE adoption more than internal pressure. These finding underscores how firm size shapes SMEs’ responses to stakeholder pressure when adopting CE practices. IMPLICATIONS: This study provides empirical evidence that stakeholder pressure significantly influences SMEs in the Baltic States to adopt CE practices, thus impacting economic and sustainability performance. Smaller firms can enhance CE practices by strategically managing stakeholders, whereas larger SMEs should align with external stakeholder expectations for more effective CE initiatives, leading to improved organizational performance. ORIGINALITY AND VALUE: This study demonstrates how stakeholder pressures drive CE practices and impact organizational sustainability and economic performance. Firm size plays a crucial role as a moderator amplifying the influence of external stakeholder pressure on CE practices.

This article examines how environmental awareness, stakeholder pressure, circular economy orientation and internal barriers influence circular economy practices in international and non-international micro-firms. For this, we utilised fuzzy set qualitative comparative analysis (fsQCA) using data from 128 micro firms operating in different manufacturing industries in Estonia. Three paths were identified for explaining circular economy practices in internationally operating micro-firms and two paths for explaining it in micro-firms that do not operate internationally. Our results show that understanding the impact of the four before-mentioned aspects can be beneficial for engaging in circular economy efforts in both international and non-international micro-firms. The intricate five pathways (three for international and two for non-international) through which environmental awareness, stakeholder pressure, circular economy orientation, and internal barriers shape circular economy practices in micro-firms, challenging conventional understandings and offering nuanced insights for effective engagement in sustainable business practices. Based on the findings, theoretical and practical implications of this study and directions for future research are discussed.

As the world becomes increasingly aware of the negative impacts of human activity on the environment, there is an urgent need for sustainability. Small and medium-sized enterprises (SMEs) are essential contributors to the economy and their role in promoting sustainability cannot be overstated. This study examines the role of stakeholders in promoting the sustainable development of SMEs, with focusing on environmental sustainability and innovation. Specifically, it investigates the role of customers, local governments, competitors, and non-governmental organizations (NGOs). This study employs a qualitative approach using 10 semi-structured interviews to collect data from SMEs operating in Estonia. These findings suggest that stakeholder engagement is crucial for promoting the sustainable development of SMEs. While the government may not play an active role in promoting sustainability, NGOs, consumers, and competitors can all play an important role in supporting SMEs' sustainability efforts. These findings provide insights into the various stakeholders that SMEs should consider in their sustainability strategies and highlight the importance of collaboration and engagement with stakeholders to achieve sustainable development goals. The study contributes to the understanding of the role of stakeholders in promoting sustainable development in SMEs, specifically in the context of Estonia. Received: 22 January 2024 | Revised: 10 June 2024 | Accepted: 12 July 2024 Conflicts of Interest The authors declare that they have no conflicts of interest to this work. Data Availability Statement Data available on request from the corresponding author upon reasonable request. Author Contribution Statement Tarlan Ahmadov: Conceptualization, Methodology, Validation, Formal analysis, Writing - original draft, Writing - review & editing, Supervision. Siret Ulp: Methodology, Validation, Formal analysis, Resources, Data curation, Visualization. Wolfgang Gerstlberger: Writing - original draft, Supervision, Project administration, Funding acquisition.