The Influence Of Circular Economy Practices On Green Entrepreneurship Among Agro-Processing SMEs in Ghana With Entrepreneurial Orientation As A Moderator

In the bustling economies of developing nations, small and medium-sized businesses are the engine of growth, providing jobs and driving production. Yet, this engine often runs on a fuel that leaves a heavy residue: waste. In the food processing sector, where crops are turned into marketable goods, the traditional way of doing business follows a simple, linear path. Resources are taken, transformed, used, and then discarded as trash. This "take-make-dispose" model creates pollution and drains natural resources, posing a serious threat to the environment. To counter this, a different approach has emerged known as the circular economy. Instead of throwing things away, this system treats waste as a resource, finding ways to reuse, recycle, and regenerate materials so they stay in use for as long as possible. The question facing business leaders and policymakers is whether adopting these circular methods can actually spark a new kind of business spirit—one that values the environment as much as profit. This spirit is called green entrepreneurship, where companies innovate to solve environmental problems while making money. But having a good plan is not always enough; the people running the businesses must also have a specific mindset, one that is willing to take risks and seek out new opportunities, known as entrepreneurial orientation.

Researchers in Ghana set out to explore how these ideas connect in the real world, specifically within the country's agro-processing sector. They focused on small and medium-sized enterprises that process agricultural products like palm oil, cassava, and rice. The team, led by scholars from the University of Skills Training and Entrepreneurial Development, wanted to see if using circular practices—such as minimizing waste, using resources efficiently, recycling materials, turning by-products into useful items, and designing eco-friendly products—directly leads to greener business models. They also investigated whether a company's willingness to be innovative and proactive acts as a catalyst, making these circular efforts even more effective at driving green entrepreneurship. To find the answers, the researchers visited 105 small businesses across the Ashanti and Central regions, gathering detailed responses from 320 managers, owners, and staff members. These participants represented a mix of ages, education levels, and roles, from junior staff to senior owners, ensuring a broad view of the industry.

The study revealed a clear and positive link between circular economy practices and green entrepreneurship. The data showed that when these small businesses actively worked to reduce waste, use their materials more efficiently, recycle what they could, and design products with the environment in mind, they became more successful at green entrepreneurship. For instance, the research found that minimizing waste during production had the strongest direct impact on a firm's ability to pursue green business goals, with waste minimization showing the highest positive coefficient among the practices studied. Similarly, the practice of recycling and reusing materials, as well as finding valuable uses for by-products that would otherwise be thrown away, significantly boosted green entrepreneurial activities. Eco-design, which involves creating products and processes that cause less harm to the environment from the very beginning, also demonstrated a significant positive influence, though its statistical impact was smaller than that of waste minimization. The findings confirmed that these five specific circular strategies are not just theoretical ideals but practical tools that help small businesses in Ghana become more sustainable and innovative.

The researchers also examined whether the mindset of the business owners changed the strength of this relationship. They looked at entrepreneurial orientation, which is essentially a company's tendency to be innovative, proactive, and willing to take calculated risks. The results showed that this mindset does play a role, but its effect is specific. The study found that a strong entrepreneurial orientation significantly strengthened the connection between eco-design and green entrepreneurship. In other words, when a business is already good at designing eco-friendly products, having a team that is eager to take risks and seize new opportunities makes the transition to a fully green business model even more successful. However, the study also noted that this mindset did not strengthen the relationship for other practices like waste minimization or resource efficiency in the same way. In fact, for resource efficiency, the data suggested a different, negative interaction, indicating that the path to green success is not the same for every type of circular practice.

This research provides a concrete roadmap for small business owners and policymakers in Ghana and similar developing economies. It demonstrates that moving away from the old "throw-away" model is not just an environmental necessity but a viable business strategy. By adopting specific circular practices, particularly those focused on eco-design and waste reduction, agro-processing firms can enhance their competitiveness and contribute to a healthier planet. The study suggests that while these practices are powerful on their own, they are most effective when paired with a business culture that encourages innovation and proactive risk-taking. The authors acknowledge that their work is limited to a specific region and a single point in time, and they suggest that future studies should look at these trends over longer periods and in different sectors. Nevertheless, the evidence gathered from hundreds of business leaders offers a compelling case: when small businesses in the food processing industry embrace the circular economy, they do not just survive; they evolve into greener, more resilient enterprises.