Consumer Engagement in SME-Based Circular Economy Practices: Evidence from a Plastic Upcycling Enterprise in Indonesia

Abstract

Circular economy practices depend not only on waste-processing technologies but also on consumer participation in sustaining material circulation and value creation. This study examines how consumers engage in circular economy practices and contribute to economic, social, and environmental value creation in Paste Lab Yogyakarta, a community-embedded plastic upcycling SME in Indonesia. Using a qualitative single-case design, the study collected data through seven semi-structured interviews with six consumer informants and one internal informant for triangulation, complemented by observation and documentation. The study analyzed the data thematically, guided by stakeholder theory and perspectives on value co-creation. The findings identify three recurring consumer roles: material contributors who supply post-consumer plastic, co-design collaborators who support product and application development, and advocates who extend sustainability narratives and stakeholder networks. These roles contribute to resource circulation, commercial opportunities, social legitimacy, and environmental value, although participation is constrained by limited consumer literacy, durability concerns, price sensitivity, and restricted design options. The study concludes that consumer engagement can support distributed value co-creation in SME-based circular economy practices by linking material recovery, application, and network diffusion within a local circular value chain.