Adaptive distributed leadership and circular economy adoption by emerging SMEs

Extant literature has identified the role of leadership skills in facilitating circular economy (CE) adoption. However, this claim is underexplored in the empirical literature. Similarly, examining the nexus in small and medium-sized enterprises (SMEs) from an emerging market context is limited. We address these gaps by exploring CE through the adaptive distributed leadership lens and developing a theoretical model for business innovation. We collected data using semi-structured interviews with 30 process-intensive SME managers in India. The findings suggest that distributed leadership facilitates CE adoption. It emphasises the importance of an environment where power-sharing, delegation, decision-making, authority-sharing, and a collaborative mindset are permitted. These invariably develop trust, skill sets and employee confidence, facilitating CE adoption. Our research offers several theoretical contributions. First, we highlight the relevance of the human element in CE adoption by emphasising the role of distributed leadership. We also contribute to the distributed leadership literature by showing its relevance to understanding significant business transformations such as adopting CE practices.

Furthermore, we provide a model that demonstrates the conditions necessary to facilitate innovation and a creative organisational culture. Our study is one of the first to explore the importance of distributed leadership in facilitating CE practices. The findings provide practical insights into how CE can be adopted in SMEs, especially in emerging markets.