Financial performance of new circular economy companies in rural settings

Adriana Serrano Magdalena (), Beatriz Cuellar Fernández () and Yolanda Fuertes Callén ()
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Adriana Serrano Magdalena: University of Zaragoza
Beatriz Cuellar Fernández: University of Zaragoza
Yolanda Fuertes Callén: University of Zaragoza

Small Business Economics, 2025, vol. 64, issue 4, No 16, 1953-1980

Abstract: Abstract This study examines how rural conditions affect the establishment and performance of new circular economy (CE) companies—those that reduce, reuse, recycle, and recover materials in their processes—focusing on their longevity, financial performance, and distribution of economic value to stakeholders. We hypothesize that while rural conditions generally lead to fewer business establishments, the liability of rurality is less severe for CE companies than for others. We also anticipate that new CE companies will grow more slowly but achieve better performance, resulting in higher survival rates compared to those in other sectors. Our empirical analysis includes all CE companies established in Spain over the past decade. The results indicate that rural CE companies have higher survival rates than their urban counterparts, even after controlling for factors like subsidies and personnel costs. Although rural CE companies exhibit slower growth, they achieve greater profitability. Thus, the CE sector in rural areas demonstrates sustainability not only through its circular practices but also in financial terms, offering significant implications for investors seeking sustainable ventures.

Keywords: Entrepreneurship; Circular economy; Survival; Stakeholders; Financial performance; Rural studies (search for similar items in EconPapers)
JEL-codes: L25 L26 M13 M21 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-024-00971-7

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