Published in Business Strategy and the Environment, a recent study from the University of Eastern Finland offers a fresh perspective on how circular economy startups succeed in developing their businesses in markets where consumer demand for sustainable products is uncertain and institutional support is limited. Established industry players are slow to change. The research highlights how these startups create new opportunities by committing to reducing their environmental impact, engaging in experimentation through piloting and feedback-driven development, and building close, collaborative relationships with customers and partners.

The study places particular emphasis on the role of value-driven entrepreneurship in shaping markets. Traditionally, research on the circular economy has focused on technologies and business models, often overlooking the human and motivational dimensions of change. The researchers argue that sustainability-oriented entrepreneurs do more than adopt innovative models; they actively work to create opportunities in markets that do not yet align with the principles of circularity. This perspective shifts attention from structural conditions alone to the intentions, values, and actions of entrepreneurs themselves.

Drawing on 31 narrative interviews with startup founders, the study examines the early stages of venture creation, including learning processes and efforts to influence market norms. The findings suggest that circular entrepreneurship is not about identifying ready-made opportunities, but about engaging in continuous learning, interaction, and systemic change. Entrepreneurs are motivated by a desire to address perceived flaws in existing systems, using their ventures as vehicles for broader transformation rather than short-term gain.

Notably, the study finds that many circular economy entrepreneurs view large, traditional markets as opportunities rather than obstacles. While such markets are often resistant to change, their size and inefficiencies offer significant potential for impact. This mindset reflects a readiness to challenge established practices and adapt to uncertainty, demonstrating a willingness to work within imperfect conditions to reshape expectations and behaviours gradually.

The research identifies three key practices through which circular economy startups influence markets. First, a strong commitment to environmental impact provides a clear value base that guides strategic decisions. Second, experimentation through pilots and feedback-driven development enables startups to learn quickly and refine their offerings in response to real-world conditions. Third, close collaboration with customers and partners helps build legitimacy, trust, and shared ownership of new solutions. Together, these practices allow startups to co-create markets while navigating regulatory and competitive pressures.

Overall, the study shows that sustainable startups play a crucial role in accelerating the transition towards more circular and sustainable economic systems. Driven by strong personal values and long-term visions, these entrepreneurs challenge established norms and encourage customers to adopt more sustainable practices. In doing so, they act as important agents of change, demonstrating that even in resistant markets, meaningful transformation can begin with values, experimentation, and collaboration.

More information: Ville-Veikko Piispanen et al, Navigating Market Constraints: Sustainable Startups Driving Transformative Change Through Venture Creation, Business Strategy and the Environment. DOI: 10.1002/bse.70438

Journal information: Business Strategy and the Environment Provided by University of Eastern Finland