An examination of barriers and enablers to circular economy transition among small and medium-sized enterprises in the Vietnamese fashion and textile industry

Abstract

The global textile and fashion industry is the second-largest industrial polluter, driven by its linear 'take-make-dispose' model, necessitating a transformative shift toward the circular economy. Implementation faces unique challenges in developing countries where the economic cornerstone sector creates critical environmental tension. This qualitative study investigated the internal and external barriers and enablers influencing CE adoption among SMEs in the Vietnam F&T sector. Drawing on Resource-Based View and Institutional Theory, data were collected through in-depth interviews with SME representatives, academic researchers, and government officials. Thematic analysis revealed key internal constraints (financial pressure, technological limits, a profit-first mindset, and knowledge gaps) and external impediments (weak customer demand, supply chain fragmentation, limited policy incentives, and infrastructure gaps). Nevertheless, enabling factors emerged, including strong leadership commitment, innovative business models, sustainability-oriented human resources, and capital sourcing networks, supported externally by market demand, stakeholder collaboration, and government regulations. The findings underscored that Vietnam's primary challenge was the absence of formal domestic recycling and reverse logistics systems, hindering the utilisation of readily available textile waste resources. This situation presented a significant opportunity for Vietnam to develop a new, high-value domestic circular industry. The study offers practical insights for policymakers and industry leaders to support SMEs in this transition with key recommendations focusing on capacity-building, improving infrastructure, and developing clearer regulatory frameworks.