The structural socio-economic changes introduced by the Industrial Revolution and two World Wars changed the way goods were extracted, produced, delivered, consumed and discarded (Womack et al., 1990). Those changes, named the “First Deep Transition” by Schot and Kanger (2016), had severe cumulative consequences for the global environ- ment, including climate change, degradation of ecosystems and deple- tion of natural capital. Even with significant environmental improve- ments, in developed and emerging economies alike, the prevailing global trends in manufacturing and consumption will continue to be a problem for current and future generations.
These issues have been addressed in technical and academic lit- erature since the 1960s in diverse ways. Initial works on the “economics of the coming spaceship earth” by Boulding (1966), Georgesçu-Roegen's (1971) "ecologial economics" or Stahel's work on the “performance economy” (Stahel, 1982, 1986; Stahel and Reday-Mulvey, 1981) have raised fundamental methodological and substantive questions re- garding linear economic dynamics in a context of limited availability, such as the resources of planet Earth. These intellectual traditions were brought together in a contribution by Pearce and Turner (1990) entitled Economics of Natural Resources and the Environment, particularly in the chapter titled “The circular economy”. The development of other con- cepts, such as “industrial ecology” and “industrial symbiosis”, high- lighted the potential efficiency of natural ecosystems in resource re- cycling, thus suggesting the application of this same principle to production systems (Ayres, 1994; Frosch, 1992; Frosch and Gallopoulos, 1989).
The CE came of age in the 2000s as a synthetic concept. It en- compasses diverse topics including: product-life extension activities (reuse, repair, recycling) and material efficiency (Rashid et al., 2013; Golini et al., 2014; Lund, 1985; Allwood, 2014; Lund and Skeels, 1983;
Conn, 1978); product-service systems (Stahel, 1982, 1997; Tukker, 2013); sustainable consumption and production interactions (OECD, 2008); waste management and networks of recovery (Greyson, 2007; Liu, 2009; Allwood, 2014; Liu and Bai, 2014; OECD, 1982); closed-loop supply chains (Gupta and Palsule-Desai, 2011; Ji et al., 2014; Mirhedayatian et al., 2014; Govindan et al., 2014; Ying and Li-jun, 2012); cleaner production (Geng et al., 2012; Li et al., 2013; Su et al., 2013); green/regenerative design (Bakker et al., 2014), and; “cradle to cradle” approaches (Braungart and McDonough, 2002). Most im- portantly, recent literature has presented the CE as an analytical tem- plate for a new mode of socio-technical organisation, where the en- vironment and the economy are rebalanced (George et al., 2015; Ghisellini et al., 2016).
Besides its academic penetration, the CE has been stressed as an overall strategic framework by international organisations such as the United Nations and the European Union, as well as by entities such as the World Economic Forum (WEF),1 and non-governmental organisa- tions such as the Ellen MacArthur Foundation2 (EMF). These organi- sations have actively produced “grey literature” highlighting the po- tential of a CE for creating an innovative and sustainable transition (EMF, 2012, 2013, 2014b; UNEP, 2006; EC, 2015a; EC, 2014a).
Drawing on existing literature, the CE can, therefore, be defined as a multidimensional, dynamic, integrative approach, promoting a reformed socio-technical template for carrying out economic development, in an en- vironmentally sustainable way, by re-matching, re-balancing and re-wiring industrial processes and consumption habits into a new usage-production closed-loop system. The drivers of, and barriers to, such transformative reform are, therefore, of policy interest.
2.2. Innovation for a Circular Economy
Transition is an inherently innovation-intensive process of re- configuration and adaptation. More than just “novelty introduction”, innovation is embedded in a wider social and economic structure, rooted in a specific historical and territorial context (Freeman, 1987). The connection between environmental challenges and the innovation agenda can be traced back at least to the early 1990s. In the first Handbook on innovation economics, management and policy, some significant attention was devoted to this connection under the heading of “Future challenges of innovation in a global perspective” (see Skea, 1994). More than two decades later, however, relevant literature, linking innovation and the environment, has still not been sufficiently developed. In a recent editorial in the Journal of Economic Surveys, in the context of a special issue concerning “Environmental economics and sustainability”, the organisers, two scholars from Chinese universities who specialise in institutional economics and urban development, at- tempt to summarise the research agenda:
“(...) environmental technological innovation may potentially lead to win-win situations in which improvements in environmental quality and economic growth coexist.” (Lin and Zheng, 2016, p. 400).
In the field of innovation studies there are several approaches re- lated to transition and sustainability. In the context of this paper, “eco- innovation” (EI) will be used as an operative definition of innovation with ecological and social concerns and effects (Boons et al., 2013; Carrillo-Hermosilla et al., 2009; Kunapatarawong and Martínez-Ros,
1 In a report of 2014 entitled Towards the Circular Economy, developed in collaboration with the Ellen MacArthur Foundation and McKinsey & Company, the WEF stressed the need to re-engineer global supply chains and regenerate natural assets.
2 The EMF initiated, for example, the “Circular Economy 100” programme to enable cooperation between companies (e.g. Desso, Michelin, Philips International, Unilever, Renault, Ricoh, Veolia, H & M, Nespresso among several others), regions (Danish Business Authority) and universities (University College London), and to assist in the development of circular commercial opportunities (EMF, 2014a).
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Table 1
Factors facilitating and constraining the transition towards a CE. Drivers
Barriers
Hard barriers Soft barriers
role of technological and non-technological factors in the creation of a new, circular, techno-economic paradigm. Such a diagnosis can support policy-making, by moving beyond the linear-industrial model.
Innovation is a splintered phenomenon. As Stoneman (2009, 2010) points out, economics typically focuses on hard types of innovation, such as R & D-driven products, or cost-cutting processes. Yet soft types of innovation, concerned with changes in cultural and organisational artefacts, such as symbols and conventions, are more widespread than previously thought (see Mendonça, 2014). The International Relations scholar Joseph Nye (1990) and (2006) has applied such hard/soft heuristics (probably deriving such terminology from the hardware/ software distinction). In this context, hard power refers to the ability to force change (through technical or economic means) while soft power is associated with the ability to bring about change by attracting others through values and institutional practices that shape their attitudes and preferences. This conceptualisation may, indeed, be applied to in- novation-related factors steering the current system in the direction of another, more sustainable one. Notwithstanding their complementary nature, and the obvious fact that they are not always easy to separate in practice, we apply the hard-soft dichotomy to the CE transition.
Table 1 applies this view as a “focusing device” for organising the relevant literature at the CE-EI intersection. It distinguishes between “harder” factors, more closely related to techno-economic trajectories, and “softer” ones, having to do with regulatory and cultural issues.
Based on existing literature, several broad factors driving and pre- venting the CE were identified in the corpus, in an iterative process, ranging from arguably the “hardest” (technical, economic) to the “softest” (social, institutional) factors (Table 2). The “drivers” are therefore factors that enable and encourage the transition to a CE, while the “barriers” are technical/financial impediments or regulatory/cul- tural bottlenecks that obstruct transitions towards a CE (Table 2). Ty- pically, there is not just one important driver or barrier, but rather a mixture of facilitating and constraining factors, deriving from particular local conditions. The categories, therefore, should not be understood as mutually exclusive.
From an analytical point of view, such a framework allows for an appreciation of both the dynamics and the inertia of the CE. From a policy point of view, the framework may be of service to tackle policy- managerial dilemmas. Thus, this analytical and strategic tool clarifies the conceptual issues involved, while addressing the need to re-discover the non-technological meanings of innovation (see Hobson and Lynch, 2016; and Wildschut, 2017) laying ground towards new, imaginative, working paths ahead (see Lowy and Hood, 2004; Granjou et al., 2017).
3. Methodological Approach
3.1. Research Design: Scope and Strategy of Study
This review uses a dual approach as to minimise biases that would be present if only a single one was in place. That is, it draws on both a corpus of articles from WoS and Scopus and a set of contrasting ex- amples of grey literature. Both academic literature and policy reports are used so as to make the study more complete, balanced, robust and meaningful. Fig. 1 presents the layout of the research.
3.2. The CE-EI Nexus in the Academic Corpus: Some Descriptive Statistics
A systematic review enables the analysis of the evolution of the knowledge regarding a specific topic, as well as the identification of trends and changes in a research field (Linnenluecke and Griffiths, 2013). Such an approach to the literature, guided by specific research questions, and using explicit protocols and criteria, has the added value of ensuring the replicability of the process, thus contributing to much needed cumulative work in this field (Patala et al., 2014).
The study therefore began by gathering data using a keyword Boolean search of articles in the Web of Science (WoS) Core Collection
  Technical and economic factors Institutional and social factors
Hard drivers Soft drivers
 2016; Rennings, 2000). EI is understood as more than just green tech- nology (i.e. devices that provide environmentally beneficial effects, such as end-of-line interventions - e.g. fume exhaust catalysers), but rather as a strategic enabler of entire value-chain transformations (Andersen, 2008; Kemp, 2010). As Clark et al. (2016) point out, a full notion of innovation under sustainability constraints implies recircula- tion of resources in loops of reuse (through refurbishment and re- manufacturing), recycling (reconstructing inputs and reshaping out- puts) and renewal (using clean energy and eliminating waste). Such pathways can even have a positive effect on employment (Kunapatarawong and Martínez-Ros, 2016). EI that is pro-CE thereby improves “(...) environmental performance and resilience across the economy, being at the same time cost-effective and good for business and society as a whole.” (EC, 2011, p. 3).
For the purposes of this paper the following definition of EI is used: new or improved socio-technical solutions that preserve resources, mitigate environmental degradation and/or allow recovery of value from substances already in use in the economy. EI is understood as a systemic problem-solving tool for enabling a holistic and transformative departure from the current unsustainable state-of-play. By combining the neo-Schumpeterian systems view with the emerging “transforma- tion turn” in innovation studies we aim to bring an explicit (dynamic) conceptual backdrop to the discussion of CE.
2.3. Focusing on the Drivers of, and Barriers to, a Circular Economy
Considerable research exists regarding progress towards a CE in countries, sectors and firms (Böttcher and Müller, 2013; Cuerva et al., 2014; Geng et al., 2009; Ilić and Nikolić, 2016; Zhu and Geng, 2013). Specifically concerning barriers to implementing the CE, a report for Chatham House (Preston, 2012) identified the following: high up-front costs; complex international supply chains; resource-intensive infra- structure lock-in; failures in company cooperation; lack of consumer enthusiasm, and; limited dissemination of innovation, across both emerging economies and developed countries. In other reports, con- cerning the potential of the CE, and policy options, Vanner et al. (2014) surveyed the available literature and analysed the fourteen most re- levant studies. They identified a number of factors: insufficient invest- ment in technology; economic signals that do not encourage efficient resource use, pollution mitigation or innovation; minor consumer and business acceptance; lack of awareness and information, and; limited sustainable public incentives. Concerning the CE in SME's, Rizos et al. (2015) also used a literature review3 and explored two case studies.4 He listed six main barriers for the development of a CE, namely: environ- mental culture; financial barriers; limited government support; lack of effective legislation; information deficits; administrative burdens, and; relatively low technical skills.
In spite of increasing efforts, there is still a need for a thorough identification of the conditions required for a CE, especially when the concept intersects with EI (EIO, 2016). To advance the research agenda on the CE, this paper carries out a systematic exploration of both drivers and barriers, recycling multiple sources of literature input. Likewise, an innovation perspective on CE mechanisms is advanced, by analysing the
3 It lacks information, however, regarding the methodological choices in the identifi- cation of that literature.
4 Also unclear are the motivations regarding the choice of two particular cases from a pool of 52 collected by the EU-funded project The GreenEcoNet.
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Ecological Economics 145 (2018) 75–89
Table 2
Typology and definition of drivers of, and barriers to, a CE. Drivers
Barriers
Inappropriate technology, lag between design and
diffusion, lack of technical support and training
Large capital requirements, significant transaction costs, high initial costs, asymmetric information, uncertain return and profit
Misaligned incentives, lacking of a conducive legal system, deficient institutional framework
Rigidity of consumer behaviour and businesses routines
Fig. 1. Research design.
  “Harder” factors
“Softer” factors
Technical
Economic/Financial/ Market
Institutional/ Regulatory Social/Cultural
Availability of technologies that facilitate resource optimisation, re- manufacturing and re-generation of by-products as input to other processes, development of sharing solutions with superior consumer experience and convenience
Related to demand-side trends (rising resource demand and consequent pressures resource depletion) and supply-side trends (resource cost increases and volatility, leading to incentives towards solutions for cost reduction and stability)
Associated with increasing environmental legislation, environmental standards and waste management directives
Connected to social awareness, environmental literacy and shifting consumer preferences (e.g. from ownership of assets to services models)