Circular economy startups and digital entrepreneurial ecosystems

Abstract Circular economy (CE) is the way forward to protect an endangered environment, promote social justice, and advance sustainable and balanced regional economic development. The proliferation of the CE concept and the circular startup (CSU) boom coincides with digital transformation, a socioeconomic change propelled by the widespread adoption of digital technologies. This paper uses a systems theory perspective to study the digital entrepreneurial ecosystem's (DEE) role in CSU formation. Fuzzy‐set qualitative comparative analysis (fsQCA) is used to empirically explore the configurational recipes for the presence and absence of a high CSU formation rate. The results reveal that for a high CSU formation, DEE elements, such as digital protection and access, act as critical drivers, while other DEE elements take on a supportive role. The findings also show the complementarity effects, substitution effects, and neutral permutations of DEE elements among the configurations.