The Invisible Force:
Why Circular Economy Starts with the Entrepreneur
Empirical findings from European SMEs reveal:
It is not regulation, market forces, or capital that determine the initiation of circular business models, but the internal coherence of the entrepreneur’s personality
Research by Thomas Keppler
WU Executive Academy Vienna | Tomorrow University Berlin
Executive Research Summary
The transition towards sustainable and circular business models represents one of the central challenges for European SMEs. Political initiatives, ESG regulations, and technological innovations have increased significantly in recent years.
However, the practical implementation of circular business models remains limited across many companies.
This empirical study addresses a fundamental question:
Why do some entrepreneurs initiate circular business models, while others hesitate—despite facing comparable external conditions?
The findings reveal a clear pattern:
Transformation is not primarily triggered by external factors.
The decisive mechanism lies within the internal structure of entrepreneurial decision-making.
The study introduces a new analytical concept: the Entrepreneur Coherence Index (ECoI).
This index measures the coherence across five psychological dimensions:
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Value orientations
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Purpose clarity
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Behavioral style
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Motivators
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Emotional intelligence
The central empirical finding of the study is:
No entrepreneur with low coherence initiated a circular business model.
No entrepreneur with high coherence remained a non-starter.
External pressure and resource availability act only as amplifiers of existing decision structures.
The implications are clear:
Transformation does not begin in the market, in technology, or in regulation.
It begins within the entrepreneur.
Academic Perspective
"In his study, Thomas Keppler succeeds in closing a critical gap between strategic transformation models and research on entrepreneurial leadership and decision-making logic.
Particularly noteworthy is the integrative approach, which systematically links psychological dimensions of entrepreneurial action with strategic transformation processes. With the concept of ‘entrepreneurial coherence,’ an analytical framework is established that goes beyond traditional structural explanatory approaches.
The work thus makes an important contribution to understanding the complexity of entrepreneurial decision-making, while at the same time opening up a new perspective on leadership capabilities as a prerequisite for profound transformation within organizations."
Prof. Dr. Kathrin Köster
Faculty Member, Executive Academy, Vienna University of Economics and Business & Tomorrow University of Applied Sciences Berlin
Research Context
The Overlooked Core Question of the Transformation Debate
The transition towards a circular economy is widely regarded as a central pillar of sustainable economic development. In Europe, a wide range of political initiatives, funding programs, and regulatory measures have been launched in recent years to encourage companies to develop circular business models.
Despite this momentum, practical implementation among SMEs remains limited. Many companies engage with the concept of circular economy, yet only a small proportion actually initiate corresponding business models.
This gap is often explained by structural factors—such as regulatory complexity, lack of resources, technological uncertainties, or insufficient market demand.
However, one key observation remains insufficiently explained:
Companies operating under comparable conditions often make fundamentally different transformation decisions. While some entrepreneurs actively develop circular business models, others hesitate—or reject such initiatives altogether—despite facing similar starting points.
Conventional transformation models primarily focus on external factors such as markets, regulation, or capital. Yet they often overlook the very place where strategic decisions actually originate:
the entrepreneur as an individual.
This study therefore explores a largely under-researched perspective on transformation:
the psychological decision architecture of entrepreneurial leadership.
Core Research Question
At the center of this study lies the question of how the internal structure of the entrepreneur’s personality influences strategic transformation decisions.
The study formulates the following central research question:
How does the internal coherence of the entrepreneur’s personality influence the decision to initiate a circular business model—and how does this coherence interact with external pressure and available resources?
To empirically investigate this question, an integrative analytical framework was developed:
the Entrepreneur Coherence Index (ECoI).
The central hypothesis of the study is:
It is not individual personality traits that determine entrepreneurial transformation, but their coherence.
The Entrepreneur Coherence Index (ECoI)
From Personality Traits to Decision Culture:
The Entrepreneur Coherence Index (ECoI)
To analyze this mechanism, the Entrepreneur Coherence Index (ECoI) was developed.
The index integrates five empirically grounded dimensions:
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Value orientations (Schwartz PVQ-21)
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Clarity of entrepreneurial purpose
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Behavioral style
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Motivational drivers
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Emotional intelligence
The ECoI does not measure moral attitudes or sustainability knowledge.
It measures structural coherence: The extent to which values, motivation, behavioral dispositions, and emotional regulation form a stable decision architecture.
Coherence means integration.
Where integration is present, clear directional decisions emerge.
Where integration is fragmented, ambivalence and delay prevail.
Research Design
The study follows a mixed-methods approach, combining quantitative personality diagnostics with qualitative in-depth interviews. This research design enables the analysis of both structural personality patterns and individual decision-making logics.
The quantitative data collection is based on the following established diagnostic instruments:
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PVQ-21 for the analysis of value orientations
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Purpose clarity – 9-item scale
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DISC model for assessing behavioral styles
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12 Driving Forces for analyzing motivational drivers
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An ability-based model of emotional intelligence
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These data were subsequently triangulated with qualitative interviews, in which entrepreneurs described their decision-making logic, their perception of external factors, and their strategic priorities.
The sample consists of entrepreneurs from small and medium-sized enterprises in Germany, Switzerland, and the United Kingdom.
For further analysis, two groups were defined:
Starters
Entrepreneurs who have already initiated a circular business model.
Non-starters
Entrepreneurs who, despite comparable external conditions, have not initiated such a model.
Key findings
The analysis reveals a remarkably consistent pattern:
The decisive difference between starters and non-starters does not lie in individual personality traits, but in their coherence.
The Entrepreneur Coherence Index clearly differentiates between the two groups.
No entrepreneur with a low ECoI initiated a circular business model.
No entrepreneur with a high ECoI remained a non-starter.
Three central mechanisms can be derived from the findings:
1. Coherence Determines the Direction of Decision-Making
Entrepreneurs with high coherence exhibit a consistent alignment between values, purpose, behavior, and motivation. This alignment enables clear prioritization and increases the ability to act under uncertainty.
In contrast, entrepreneurs with low coherence display fragmented or contradictory decision structures. This often leads to ambivalence and delayed decision-making.
2. External Pressure Amplifies—It Does Not Initiate
Regulatory or societal pressures do not automatically trigger transformation. Instead, they act as amplifiers of pre-existing internal structures.
In cases of high coherence, external pressure accelerates transformation processes.
In cases of low coherence, it reinforces uncertainty and delays decision-making.
3. Resources Define the Depth of Execution—Not the Start
Capital, time, or infrastructure influence the scale and depth of implementation, but not the initiation decision itself.
The study shows:
There was not a single case in which a lack of resources prevented a coherent entrepreneur from initiating a circular business model.
And not a single case in which abundant resources triggered transformation in incoherent profiles.
Five Decision Types
Five Recurring Decision Logics in SMEs
The study identifies five structural patterns of entrepreneurial decision-making:
Intrinsic Catalysts
Entrepreneurs with high internal coherence and stable intrinsic motivation. Circular economy principles are strategically embedded based on internal conviction—independent of external impulses.
Opportunity Accelerators
Entrepreneurs with high internal coherence and strong strategic awareness. They are able to translate external impulses into decisions and leverage external signals as accelerators of their transformation strategy.
Market-Driven Actors
Entrepreneurs with relatively low coherence who perceive strong external pressure, yet do not reach a clear initiation decision.
Dormant Potentials
Entrepreneurs in whom neither internal coherence nor external pressure generates sufficient momentum for transformation.
Value-Gap Traditionalists
Entrepreneurs whose values emphasize sustainability, but whose decisions are not consistently derived from these values.
Important:
These typologies do not assess competence.
They describe decision architecture.
Strategic Implications
Strategic Implications for Entrepreneurs and Decision-Makers
The findings of this study suggest that the initiation of circular business models in SMEs is not primarily determined by external factors. Rather, the decisive factor appears to be the internal coherence of the entrepreneur’s personality.
Four central implications can be derived from the empirical results:
1. Coherence Is the Primary Lever of Transformation
The Entrepreneur Coherence Index (ECoI) emerges as the strongest single predictor for the initiation of circular business models.
It is not individual personality traits that matter, but the alignment between:
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Value orientations
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Purpose clarity
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Behavioral style
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Motivators
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Emotional intelligence
Entrepreneurs with high coherence make consistent decisions even under uncertainty and are able to translate external signals into a clear strategic direction.
Transformation therefore does not begin with action plans—but with the reflection of one’s own decision structure.
2. Purpose Functions as a Strategic Decision System
The study shows that purpose clarity represents the most distinct differentiator between starters and non-starters.
Among the observed starters, purpose does not function as a communicative statement, but as an operational decision system.
It structures priorities, reduces ambiguity, and enables entrepreneurs to translate external demands into a coherent logic of action.
Where purpose remains diffuse or is not aligned with behavior and motivation, decision delays and inconsistent transformation initiatives frequently occur.
3. External Pressure Reinforces Existing Decision Structures
Regulatory requirements, market signals, or societal expectations do not automatically trigger transformation.
The study shows:
External pressure acts as an interpretative amplifier.
In cases of high coherence, it accelerates ongoing transformation processes.
In cases of low coherence, it reinforces uncertainty and ambivalence.
Political and regulatory measures can therefore support transformation—but cannot substitute for the internal decision structure of entrepreneurial leadership.
4. Resources Influence Execution—Not Initiation
A common narrative in the transformation debate suggests that a lack of resources is the primary barrier to sustainable innovation. The empirical findings of this study challenge this assumption.
Resources determine the operational depth of transformation—such as speed or scope of implementation—but do not explain the initiation decision.
Within the sample, there was no case in which a lack of resources prevented a coherent entrepreneur from initiating transformation. Likewise, there was no case in which abundant resources triggered transformation in incoherent profiles.
5. Overall Implication
The findings shift the focus of the transformation debate in SMEs.
The decisive lever does not primarily lie in technology, funding programs, market pressure, or regulation. It lies in the nature of entrepreneurial leadership.
Circular business models emerge where entrepreneurs are able to establish a coherent connection between the five dimensions of the ECoI and their strategic decisions.
Or put differently:
The circular economy does not begin in the market, in technology, or in regulation.
It begins within the entrepreneur.
Available Downloads
Gain direct access to the core insights of the study:
1. Full Whitepaper
A comprehensive deep dive into the research, including:
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Full empirical analysis
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Development of the Entrepreneur Coherence Index (ECoI)
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Typology of entrepreneurial decision patterns
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Strategic implications for leadership and governance in SMEs
2. Research Brief
A concise overview of the key findings and core concepts.
3. Whitepaper Summary (6 pages)
A compact version of the study, ideal for a quick yet structured understanding.
Akademic Context
This research was conducted within the academic framework of the WU Executive Academy Vienna and Tomorrow University Berlin as part of a master’s research program.
The study is based on a mixed-methods design, combining psychometric diagnostics with semi-structured qualitative interviews conducted with small and medium-sized enterprises in Germany, Switzerland, and the United Kingdom.
It contributes to the growing body of research at the intersection of leadership psychology and sustainable transformation.
About the Author
Thomas Keppler conducted this empirical study after more than twenty years in senior leadership roles, including serving as CEO. During this time, he took entrepreneurial responsibility for the transformation of companies and business models in dynamic market environments.
His research examines the structural drivers of sustainable decision-making processes in SMEs and introduces entrepreneurial coherence as a central leadership capability in transformation contexts.