When circular economy barriers stir emotions: how SME leaders respond

Emotions shape how small and medium-sized enterprise (SME) leaders respond to barriers in the transition to a circular economy (CE); however, the emotional dimension of CE leadership remains under-explored. To understand how SME leaders engaged in CE appraise and cope with barriers that hinder the adoption of circular business models, this study explores emotions in organisational behaviour. A qualitative hermeneutic phenomenological approach is adopted, drawing on 17 in-depth semi-structured interviews with Spanish SME leaders. The interview data are analysed via interpretative phenomenological analysis to capture the links between leaders’ cognitive appraisals, emotions and subsequent coping actions when they face salient CE-related barriers. The findings show that leaders experience emotions such as anger, frustration, fear, powerlessness, sorrow and vicarious embarrassment. These emotions are associated with three response patterns: inspiration, deliberation, and no coping; the first two are active coping strategies, whereas the latter reflects withdrawal or inaction. Inspiration reflects an approach-oriented strategy in which negative emotions are channelled into purpose-driven and creative efforts to overcome barriers. Deliberation involves a reflective pause and calculated decision-making in response to emotionally charged situations. No coping captures withdrawal or inaction, particularly when emotions such as sorrow and vicarious embarrassment are triggered. By clarifying how specific emotional appraisals shape leaders’ capacity to engage with CE barriers, this study advances the understanding of CE leadership at the micro level. The findings also offer practical implications for policy design, support mechanisms, and training and coaching programmes aimed at helping SME leaders recognise, regulate, and more effectively channel emotions during the circular transition.