The simultaneously increasing world population and demand for natural resources are having devastating effects on the environment (Haunss and Sommer, 2020). Politicians come together to define targets like the Paris Agreement or the Sustainable Development Goals to counteract negative environmental development (Hák et al., 2016; Moser et al., 2021; United Nations, 2021). In this situation, the industry plays an important role and is advised to produce and consume in a more responsible way (Hák et al., 2016). As a result, the current linear economic system is under scrutiny, posing the question of how primary resources can be replaced by recycled materials or reusable components (Korhonen et al., 2018). The common linear economic system (take-make-waste) is generally defined by raw material extraction from the environment and subsequent processing, use and disposal (Otekenari, 2020). Numerous drawbacks result from this linear approach like losing valuable resources or reducing biodiversity (Walcher and Leube, 2017).

The origin of the circular economy which dates back as far as 1966 is one solution to this problem (Lotz et al., 2021). Materials and end-of-life products that are already available in the economic system are used as resources for new production processes (Fellner et al., 2017). This decouples the consumption of finite resources from economic activities and enables, that products and materials can circulate to minimize emerging waste (Scheel et al., 2020; Pieroni et al., 2021). An endless and efficient flow of materials is created in which waste is seen as a valuable resource (Ghisellini et al., 2016; Röhr, 2021).

The circular economy is also gaining increasing academic and political attention, and new processes are defined and broken down (Walcher and Leube, 2017). The core activities of the circular economy to reorientate the economic system are described as the 10 R strategies of circular economy (D’Amato, 2021). The R strategies “Refuse,” “Rethink” and “Reduce” focus on smarter product use and manufacturing (Hermann and Vetter, 2021). “Reuse,” “Repair,” “Refurbish,” “Remanufacture,” and “Repurpose” explore options to extend the lifespan of a product and its parts (Venturini, 2021). Finally, “Recover” and “Recycle” aim at the reclamation of raw materials or energy from end-of-life products (Vermeulen et al., 2019).

In special consideration of the politics in Austria, an Austrian Circular Economy Strategy was defined, to support companies from different branches in the transformation process (Jacobi et al., 2018; Hauer et al., 2020; Lotz et al., 2021). The Environment Agency Austria outlined 600 concrete measures which contribute to the development of the Austrian Circular Economy Strategy 2050 (Schally, 2018; Angelini et al., 2021; Schöggl et al., 2022). The Austrian strategy goes along with the initiative of the European Union to achieve carbon net neutrality in 2050 (Madeddu et al., 2020; Tillner and Peverini, 2021). There are different measures that the European Union focuses on to reach this target, besides changing the habits and lifestyle of the end-users, technological change, CO₂ capturing and storage plus the transformation to the circular economy are important topics (Rodrigues et al., 2022). The circular economy approach should predominantly support the industrial sector, which accounts for 11.4% of the greenhouse gas emissions in Austria in 2020 (Zechmeister et al., 2022), to reduce their CO₂ emissions and resource consumption and become more independent, resilient, and economically successful in the long term (Hysa et al., 2020).

The potential of the circular economy is increasingly recognized by society and companies, as more than 80% of the participants of an Austrian survey think that the circular economy will have an impact on their organization in the coming years (Huber-Heim and Kronenberg, 2019). Nonetheless, companies face different obstacles in the process of closing the loops and as a result, the level of implementation is low (Sharma et al., 2021; Kara et al., 2022). There is still a lack of knowledge about circular economy in Austria. In an Austrian survey more than 60% of the participants from politics, education and economy indicate that they would need more information about the circular economy (Huber-Heim and Kronenberg, 2019). Furthermore, a missing separation between the circular economy and waste management is highlighted (Huber-Heim and Kronenberg, 2019; Schöggl et al., 2022). Achieving circular products requires systems thinking on a larger scale beyond waste management. Aspects include eco-design, efficient production, intensive use of products (Bengtsson et al., 2018), extension of the life cycle of products and a purposeful recovery of materials (Walsh, 2010). The companies cannot meet these requirements due to processes being fixated on consumption and not on the strive for maximum economic benefits (Sousa-Zomer et al., 2018; Dieckmann et al., 2020).

In Austria just only about 10% of the economy is structured according to the principles of the circular economy. The circular material use rate, which quantifies the percentage of material recovered and redirected into the economy system, in 2017 in Austria was at 11.6% (European Commission, 2018), thus just over the EU27 average of 11.5% (while the Netherlands scored highest with 29.7%) (European Commission, 2018). Raw material consumption per capita in Austria in 2017 was 33 tons while the EU-28 average was 23 tons (Eisenmenger et al., 2020). In general, the Environment Agency Austria considers that the Austrian economic system has a good recycling performance (Frischenschlager et al., 2010; Salmenperä, 2021). However, the areas of repair, reuse, refurbish are underdeveloped resulting in a drastic overall need to reduce consumption of primary raw materials (Perstel and Hölzl, 2014; Wieser and Tröger, 2018; Moser et al., 2021).

The question arises why the Austrian industry cannot take on a leading role in terms of the circular economy. Given the worldwide gap between the potential of the circular economy and its level of implementation, which can also be observed in Austria, practical and theoretical approaches to implementing circular principles deserve great attention. However, there are numerous gaps in the existing research regarding practical barriers to the implementation of a circular economy (Kirchherr et al., 2017). The existing literature offers a solid theoretical framework for implementing a circular economy, but repeatedly fails to:

This paper addresses these research gaps by analyzing and prioritizing the main challenges on the path from a linear economy to a circular economy for the Austrian manufacturing industry. This is of particular interest when looking at the structure of manufacturing companies in Austria, where it is shown that the industry is responsible for 45% of the revenue of manufacturing companies (Statistik Austria, 2020). Therefore, in the following paper the research questions are answered:

Therefore, in this paper, the main barriers from a literature review are outlined and clustered. Furthermore, a survey (the survey can be viewed in Supplementary material) for Austrian companies was conducted to rank the defined barrier clusters and barriers. The methodology and procedure, the results and the discussion of the survey are described in the following chapters to prioritize the barriers on the way to the circular economy.

A systematic literature review and qualitative content analysis are conducted to provide an overview of the current situation in the transition from linear economy to circular economy. Known challenges and barriers on the way to a circular economy are identified and listed (Gläser-Zirkuda, 2011; Bayer et al., 2021).

As the listing and clustering do not yet provide any information about the significance of the challenges for the Austrian manufacturing industry, a survey is conducted to prioritize the challenges. The target group of the study is exclusively employees from companies in the Austrian manufacturing industry, to ensure the industry focus and the regional focus in the prioritization.

The survey aims to look at the circular economy in the Austrian manufacturing industry from different perspectives. The paper briefly examines which level of importance Austrian companies attribute to circular economy and whether they already initiate concrete steps in the transformation process. Additionally, the main part of the survey aims at identifying the major barriers that hinder Austrian manufacturing companies along their transformation to a circular economy.

Due to the different nature and type of these two research questions, different evaluation methods and diagrams were chosen for the presentation of the results.

In the initial stages of transformation, many companies prioritize the enhancement of intra-corporate processes that are not reliant on external stakeholders, as this represents the first step toward integrating the principles of the circular economy. Changes in the business models are rarely implemented up to now, because the prerequisites are not given (Chiarot et al., 2022). Austrian manufacturing companies try to eliminate inefficiencies in use of material and energy in production lines, and also close internal circular loops to avoid or reuse production waste (Schöggl et al., 2022). As the next strategic milestone, manufacturing companies should attempt to increase their know-how regarding circular economy as well as on the potential benefits that this concept brings for their individual products (Valusyte, 2021). Improving sustainability and profitability requires systems thinking at large combined with individually tailored solutions.

The strategic relevance of the circular economy and the will to implement these changes and take the necessary steps to achieve the strategic milestones, as underlined by the survey results, is integral to the long-term success of corporations. Responding to this question, only 2 of the 229 survey participants state that the circular economy is “not relevant” to the development of the company. Additionally, Figure 2 indicates a correlation between the strategic relevance attributed to the circular economy for the company’s success and the progress in implementing the circular economy in the respective company. The assessment shows that the higher the score of strategic relevance is, the further the progress of implementation.

In the discussion of barrier prioritization, the survey results indicate that companies primarily miss political support in the form of incentives and subsidies. This call for increased financial support indicates that a transformation to circularity goes hand in hand with significant investments, costs, and risks. In the following, one might ask what specific form of incentive system and subsidies are needed. The other main challenges of the company survey show that, for example, incentives for the use of sustainable and recyclable raw materials or for the use of secondary raw materials could be a potential solution. Another approach would be to subsidize product prices.

In addition to the missing incentives and subsidies, the survey shows that there are also key problem areas along the supply chain. The need for setting up and coordinating return logistics to close circular material loops poses major challenges to the manufacturing industry. The respondents face a lack of suitable infrastructure as well as a lack of suppliers. Furthermore, the high complexity and uncertainty of return rates make managing reverse logistics a major challenge. This culminates in the fact that the supply of recyclates on the market is also too low. The lack of pressure from the supply chain toward circular economy is also illustrated by the question about the drivers of circular economy. Only if supply chains are designed sustainably, can they promote circular economy.

Looking at barriers that were indicated to be of less significance, it becomes clear that companies do not believe that internal reservations and organizational structures present significant challenges on the way to circular economy. The survey participants also see few problems in rethinking to a long-term strategy and taking certain risks. So, although internal reservations and a long-term planning horizon are not obstacles for companies, at present, management pressure is hardly perceived as a driver of the circular economy. This, together with the fact that regulatory pressure and social and cultural pressure are perceived to be significantly higher than the internal managerial pressure, indicates that companies are currently dependent on external requirements, regulations, and incentives for the implementation of the circular economy. The compatibility of a circular business model with the corporate strategy which is considered a big issue in the literature is also seen as a minor problem (Agrawal et al., 2021; Pieroni et al., 2021). The only internal challenge category receiving a high ranking is “barriers in product material and design,” listed in first place. It includes the highly ranked barriers “replacement of problematic materials by sustainable materials” and “recyclable and demountable design.”

The comparison between barriers and drivers of the circular economy reveals a contradiction between market demand and perceived customer behavior: while the “customer request toward the circular economy” is seen as the most important driver of strategic relevance of the circular economy for business success, the lack in change in consumer behavior is one of the biggest barriers.

In addition to “satisfaction with current consumption patterns,” two more external market barriers related to the end customer are among the top-rated barriers. On the one hand, the participants consider the resulting increase in the price of a product as non-justifiable and on the other hand a lower value perception for remanufactured products is seen as a clear hurdle. In combination with slowly changing consumption habits, this poses an economic risk to companies (Bhandari et al., 2019; Hermann and Vetter, 2021).

In sum, the hurdles on the path to the circular economy are very complex, which leads to the last overarching challenge. Companies are confronted with complexity in the transformation to the circular economy, which arises from the holistic restructuring of functioning processes. They have to face a multitude of interdependent variables that need to be managed in a results-oriented manner and coordinated efficiently during a transformation: customer buying behavior, investments and costs, technological feasibility, employee skills, changes in the organizational model, cultural aspects of a transformation and many more (Sousa-Zomer et al., 2018; Agrawal et al., 2021). The participating companies attribute great importance to this totality of complex interwoven factors.

In the broader context of Austria’s economy-wide circularity efforts, this paper’s findings offer a nuanced understanding of the strategic changes required. The current Austrian circularity gap, which stands at 62.6% (Circle Economy and ARA, 2019), is a challenge that aligns with the barriers identified in the survey. The Circularity Gap Report emphasizes the importance of economic incentives, a taxation shift toward consumption and materials usage, and the necessity of influencing international value chains to deliver circular inputs (Circle Economy and ARA, 2019). These challenges corroborate the significant barriers identified by Austrian manufacturing companies. To mitigate this gap, a comprehensive national strategy is needed that addresses both the micro-level barriers identified in this paper and maintains a holistic approach. Consequently, this paper provides an additional perspective to inform a targeted roadmap for the promotion of the circular economy.

This study contributes to substantiating and expanding the existing literature regarding the most significant barriers to business. The results of this study show partial similarities with comparable studies from other regions and industries while also providing new insights. The highest ranking of the barrier “Insufficient political support in the form of incentives or subsidies” corresponds with the importance assigned to barriers concerning policies and governmental regulations identified in the literature (Ormazabal et al., 2018; Caldera et al., 2019; Kumar et al., 2019). Specifically, Kumar et al. identified the “lack of governmental incentives” and “inadequate policies and legislations” as big barriers (Kumar et al., 2019). Caldera et al. pointed to the “lack of effective legislation” and a “weak regulatory environment” as significant barriers (Caldera et al., 2019). Ormazabal et al. highlighted the “lack of support from public organizations” as a major barrier (Ormazabal et al., 2018). In terms of supply chain issues, our survey points out the significance of “Limited availability of suppliers,” which is consistent with the high relevance of infrastructural and resource barriers identified in the literature (Masi et al., 2018; Kumar et al., 2019). Kumar et al. identified the “lack of appropriate partners in supply chains” as a key barrier (Kumar et al., 2019). Masi et al. noted the “limited availability and quality of recycling material” as a significant issue (Masi et al., 2018). In the context of barriers in product material and design, which is the highest-ranked barrier cluster according to the results of the underlying study, the importance is confirmed by the major barrier identified in another survey conducted in the UK by Masi et al. “limited attention to the end-of-life phase in current product design,” thus underscoring the need for greater consideration of this aspect in design processes. In the context of barriers in the transformation process to a circular economy, our findings highlight the major hurdle of a lack of expertise identified in the literature. The present study found that a lack of expertise hinders the transformation to a circular business model, a conclusion supported by the findings of (Ormazabal et al., 2018; Agyemang et al., 2019; Kumar et al., 2019). Kumar et al. identified a “lack of personnel with expertise on the circular economy” as a significant barrier. Agyemang et al. noted a broad “lack of expertise,” and Ormazabal et al. cited both a “lack of leaders’ commitment” and a “lack of qualified people” as contributing factors. These results underline the importance of expertise in successfully adopting a circular economy.

Our study results provide differentiated insights into the financial and management-related barriers in the context of the circular economy. While high initial investment costs have been identified as a significant or even the most significant barrier in the literature (Masi et al., 2018; Ormazabal et al., 2018; Agyemang et al., 2019; Caldera et al., 2019; Kumar et al., 2019), even though our survey results showed that financial barriers are ranked as the fourth most important cluster, it is not so much the direct investment costs that companies find challenging. Instead, the financing options for these investments and the unpredictability of long-term returns are the key issues. Our study results help to paint a more detailed picture of the challenges and barriers to implementing a circular economy.

The circular economy is a practical response to challenges such as resource scarcity and climate change. Despite broad recognition of its benefits, implementation is slow. R-strategies, circular business models, and product life extension measures are rarely applied. The result is a circularity gap, which indicates a lack of circular loops in different processes. When efforts do occur, they tend to focus on short-term, immediately feasible actions rather than transformative, structural changes. To further understand these limitations, the study investigates the specific barriers hindering the transition to a circular economy within Austria’s manufacturing industry. A literature review identified 57 key barriers, categorized into 10 clusters to capture their complexity. These were subsequently prioritized and assessed within the Austrian manufacturing context.

The results of the corresponding survey present that the main barriers are external challenges, which cannot be handled by the companies by themselves, the biggest barriers are a lack of support and financial incentives from governments and policymakers. In Austria, this stagnation is accentuated by a policy focus on recycling, neglecting other facets of the circular economy. Accordingly, closing the circularity gap requires increased policy support that supports the full range of circular strategies, not just a focus on waste management and recycling. The participants of the survey indicate that an internal willingness for a change in the direction of sustainability is given, but there is a need for incentives and subsidies from the political side to enable or accelerate the transformation process. According to the survey, this financial support should be used to restructure the supply chains to implement return logistics. There are also major barriers in product design and in the selection of materials. The sustainable design of products would often be technically possible but leads to an increase in the price of the product, which customers are not willing to pay.

The major barriers to the Austrian manufacturing industry can be summed up with 5 key points. Companies are facing a lack of financial support; a restructuring of the supply chain is needed; the product design process must be geared toward sustainability and market-side barriers must be handled. These barriers lead to the fifth overlapping challenge. Companies are confronted with complexity in the transformation toward a circular economy, which arises from the holistic restructuring of functioning processes.

The strategic relevance of the circular economy for long-term corporate success, underscored by the survey results, suggests its importance, despite the identified barriers, the survey shows that many companies have circular economy initiatives on their agenda, with several projects either under implementation or already completed. A detailed analysis of the literature as well as the survey results show that barriers to the implementation of the circular economy are as various as the chances and benefits of implementing a circular approach. These findings offer valuable insights for stakeholders and lay the groundwork for future research in the dynamic arena of the circular economy.

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. Written informed consent from the participants was not required to participate in this study in accordance with the national legislation and the institutional requirements.

FH was the initiator of the study. He accompanied the implementation from start to finish, conducted expert interviews, helped to draw up the interview guide, evaluated the results and largely wrote the paper as well as incorporated the comments of the reviewers. GK co-initiated the study, helped develop the interview guide and analysed the results. MB conducted expert interviews, created the interview guide, sought contact with the companies, analysed results and wrote a good part of the paper. SF and PO co-developed the interview guide and analysed the results. SS provided scientific support for the study and gave input on all steps of the procedure. All participants contributed to the writing of the paper. The interpretations from the results of the study were largely prepared by the consortium. All authors contributed to the article and approved the submitted version.