Innovative SMEs’ circular economy practices amidst the COVID-19 crisis: A policy incentives focus

Specific interventions enabling innovative SMEs to access finance during crisis are of extreme relevance for their survival. Governments’ incentives related to SMEs during the pandemic have generally focused on grants, deferral of tax and debt payments, and the extension or simplification of the provision of loan guarantees to enable SMEs accessing credit (OECD, 2020). At the European level, policy response to crisis is routed towards the establishment of a Recovery plan for the years 2021-2027 that will prioritize specific funds for the transition to a green climate-neutral economy. Regarding the SMEs’ context, the transition toward sustainability has also been widely recommended by European Institutions due to their relevant environmental impact (Bontoux and Bengtsson, 2015). Thus, COVID-19 pandemic could represent an opportunity for SMEs to innovate their strategy around sustainability and survive the crisis (Pencarelli et al., 2020; IbnMohammed et al., 2021; Prieto-Sandoval et al., 2021). To the actual state of the art, the role of public policies to provide financial supports to sustainability innovation in time of COVID-19 crisis is under-investigated, especially when focusing on innovative SMEs. Based on this premise, and considering the Italian context, this study aims at analyzing how COVID19-related incentives issued through the Law 77/2020 (Recovery Decree) focused to innovative SMEs have supported circular economy (CE) as sustainability-oriented innovations.