Performance of small firms in a circular economy: configuring challenges and entrepreneurial orientation

Purpose Society's concerns about environmental degradation have tightened competitive pressure and brought new challenges to small firms. Against this backdrop, this study develops a decision model to determine a suitable configuration for entrepreneurial orientation to help small firms manage circular economy challenges and improve their performance. Design/methodology/approach This study used a multi-study and multi-method approach. Study 1, through qualitative in-depth interviews, identified a portfolio of circular economy challenges and entrepreneurial-orientation components. Study 2 applied the quality function deployment technique to determine the most important components of entrepreneurial orientation. Study 3 adopted a fuzzy set qualitative comparative analysis to determine the best configuration for challenges and components. Findings The findings reveal a set of challenges and identify the salient need to combine the negation of these challenges with the components of entrepreneurial orientation; this combination will improve the performance of small firms. The research extends the current knowledge of managing circular economy challenges and offers decision-makers insights into improving their resilience. Originality/value The use of the dynamic capability view, together with the multi-study and multi-method approach, may lead to an appropriate reconfiguration of entrepreneurial orientation, which, to date, has received limited empirical attention in the small-business-management discipline.