The escalating global imperative for sustainable development has firmly established the circular economy (CE) as a transformative and increasingly vital paradigm for both businesses and societies worldwide. By championing the systemic reintegration of materials and energy derived from waste streams and industrial byproducts back into the productive economic cycle, CE offers a compelling and urgently needed departure from the inherently unsustainable linear "take-make-dispose" model. This fundamental shift directly confronts pressing global environmental crises, including the pervasive and damaging effects of pollution, the growing threat of resource depletion across critical sectors, and the overarching existential challenge of climate change [1]. Circular economy is a systemic approach aimed at minimising resource inputs and waste generation through closed-loop material flows, requiring coordinated changes in product design, business models, and regulatory frameworks [2]. Recent research emphasises that waste must be understood as a valuable resource within a broader systems perspective, rather than as an end-of-pipe burden, to advance circular economy transitions. Therefore, waste management is one of the downstream components within the circular economy framework, while CE focuses on preventing waste creation at its source and transforming production and consumption systems. Adopting a systemic CE approach can unlock new value streams, improve resource efficiency, and reshape organisational practices by re-integrating waste into productive cycles [3]. Comprehensive reviews show that CE transitions require coordinated systemic change across production, consumption, and governance domains [4]. Recognising this profound and multifaceted potential, the European Union (EU) has strategically positioned itself at the vanguard of this global transition. The EU keenly understands the inherent capacity of CE not only to mitigate environmental degradation but also to simultaneously stimulate robust economic growth and facilitate the achievement of ambitious, legally binding environmental targets [5]. This unwavering commitment is demonstrably evident through the adoption of landmark policy frameworks, most notably the 2015 Circular Economy Action Plan and its subsequent reinforcement and expansion in the comprehensive 2018 Circular Economy Package [6]. These pivotal initiatives underscore the EU's resolute dedication to establishing a robust and harmonised CE framework across its diverse member states, thereby significantly influencing prevailing business practices and proactively reshaping national and regional regulatory landscapes through a comprehensive suite of directives specifically targeting waste management protocols, the sustainable design of products [7], and the widespread implementation of extended producer responsibility schemes. This cohesive and forward-looking approach signals a clear, determined trajectory towards establishing a more resilient, resource-efficient, and ultimately sustainable circular economic model throughout the European continent.

Influential and widely cited studies, such as "Inward Growth: A Circular Economy Vision for a Competitive Europe" [8], project substantial, strategically important gains in overall resource productivity, alongside the realisation of significant potential economic advantages for the EU as a unified economic entity. Furthermore, detailed and insightful analyses of evolving labour market dynamics [9] indicate the potential for considerable, strategically important job creation across a diverse, yet interconnected range of sectors intrinsically linked to the principles and practices of a circular economy.

Against this backdrop of increasing global and, critically, European emphasis on the transformative power and multifaceted benefits of CE, this research strategically focuses its analytical lens on the specific context of Serbia. As a nation actively navigating the complexities and challenges of a period of significant economic transition and holding firmly to its aspirations for full membership in the European Union, Serbia presents a particularly relevant, nuanced, and potentially instructive case study [10]. Historically, the trajectory of Serbia's economic development has predominantly adhered to a linear model of production and consumption. This established pattern has, unfortunately, resulted in substantial quantities of waste and a range of interconnected, pressing environmental challenges [11]. The current state of waste management infrastructure and practices in Serbia is starkly characterised by a concerning prevalence of unregulated, environmentally damaging illegal landfills alongside alarmingly low rates of material recycling [12]. It highlights the urgent and compelling necessity for a fundamental paradigm shift towards the widespread adoption of CE principles and practices. However, Serbia's clearly articulated aspirations for accession to the European Union present a unique and timely opportunity to strategically leapfrog traditional, often environmentally damaging linear development pathways and, instead, establish a national economic system inherently aligned with the core tenets and principles of CE from its foundational stages [13]. This proactive, strategically informed transition holds significant promise of enhancing national resource resilience and security. It fosters the emergence of innovative and sustainable business opportunities across sectors, leading to tangible, lasting positive environmental and broader societal outcomes [14].

Many studies show that the circular economy is frequently misinterpreted by companies as waste management or recycling, even though CE represents a broader systemic approach centred on maintaining materials at their highest value and preventing waste generation [2]. The circular economy aims to keep products and materials in use for as long as possible by reusing, repairing, and redesigning them, thereby reducing waste. Waste management, on the other hand, focuses primarily on handling waste after it is generated, including collection, treatment, and disposal. Also, studies emphasise that CE includes upstream strategies such as redesign, reuse, remanufacturing, and energy-efficiency improvements, which clearly distinguish it from traditional end-of-pipe waste management practices [15]. Despite the widely acknowledged and increasingly understood potential benefits of the transition to a circular economy, the widespread and effective adoption of CE practices in Serbia faces a complex, interconnected web of persistent challenges [16]. These include inherent and often significant economic constraints, as well as a national regulatory framework that is still in a crucial phase of active evolution [17]. Alignment with EU standards and various organisational and operational hurdles that companies, particularly smaller enterprises, must navigate and overcome [18]. While recent years have indeed witnessed a growing level of awareness regarding the fundamental concepts of the CE and the implementation of initial, albeit limited, steps towards its broader integration within the national economic landscape [19], a comprehensive and in-depth understanding of the specific and often context-dependent barriers that are currently hindering its widespread and impactful implementation remains critically important. It is particularly and strategically true within the private sector, which constitutes a significant and vital component of the overall Serbian economy.

The private sector plays a central role in the transition to a circular economy because companies are the primary actors in designing products, managing resource flows, and determining how materials are used, reused, or discarded. Their investments, innovation capacity, and business models directly influence whether circular strategies such as redesign, reuse, repair, remanufacturing, and industrial symbiosis can be implemented at scale. Private companies also drive market demand for secondary materials and low-waste solutions, making them essential partners in reducing resource consumption and lowering environmental impacts. Without active engagement from the private sector, circular economy goals cannot be translated into practical, economically viable, and scalable solutions.

Current academic research focusing specifically on the nuanced barriers to effective CE implementation is still in a relatively early stage of development, with a noticeable and potentially limiting tendency to predominantly emphasise the theoretical advantages and potential benefits of the circular economy, rather than systematically and empirically analysing the specific obstacles and challenges that actively impede its practical adoption and widespread diffusion [20]. To directly address this identified and significant gap in the existing scholarly literature and to provide a more robust, empirically grounded, and policy-relevant analysis, this study strategically employs the Analytical Hierarchy Process (AHP). AHP represents a well-established, rigorously tested, and widely respected Multi-Criteria Decision-Making (MCDM) method [21]. AHP is renowned for its inherent capacity to systematically evaluate, structure, and prioritise complex sets of often interdependent factors. This fundamental capability makes the AHP particularly well-suited to gaining a deeper and more nuanced understanding of the relative significance of context-specific barriers currently hindering the widespread adoption of CE principles and practices [22].

The need for structured approaches to complex sustainability challenges has long been recognised, demonstrating how hierarchical planning methods can support systematic decision-making [23]. Recent applications of multi-criteria methodologies in environmental management show their effectiveness in addressing real-world sustainability and resource governance problems [24]. Importance of constructing meaningful and transparent environmental indices, emphasising the role of rigorous evaluation frameworks in guiding sustainable development strategies [25]. Given the unique socio-economic and regulatory context of Serbia and the specifically identified challenges encountered in the practical adoption of novel CE practices [26], Gaining a clear and empirically supported understanding of critical barriers represents a crucial and necessary initial step towards the evidence-based development of targeted strategies and the design of effective support mechanisms specifically tailored to accelerate Serbia's crucial transition towards a more resilient, resource-efficient, and ultimately sustainable circular economic future.

The objective of this paper is to rigorously identify and systematically classify the key barriers currently hindering the effective adoption and widespread implementation of CE practices within the private sector. For this, the study will use the AHP as its core methodological framework. This robust analytical approach will enable the determination of the relative priorities of these empirically identified barriers, thereby providing valuable, evidence-based, and actionable insights for policymakers, business leaders, and other relevant stakeholders who are actively seeking to advance the CE agenda within the specific and evolving context of a transition economy such as Serbia, ultimately contributing to a more sustainable and prosperous future for the nation.

This research adopted a mixed-methods approach, collecting empirical data and using a quantitative evaluation through the AHP to identify and prioritise the multifaceted barriers to the effective implementation of the CE within organisations.

The qualitative phase was based on insights obtained from this data/ collection, and the interview and the criteria and sub-criteria were defined, which led to the development of the final hierarchical structure and the formulation of the AHP questionnaire. This approach produced input for the quantitative evaluation.

The quantitative phase was conducted with a panel of 15 selected circular economy experts, who systematically performed pairwise comparisons of factors and subfactors to quantify the perceived importance of one element relative to another in hindering CE implementation within the Serbian private sector.

Companies initiated the process of identifying potential directions for CE development by interviewing their representatives. In some cases, multiple options were considered, but the final selection was narrowed down to one, primarily based on financial projections. Key factors affecting the decision to launch CE initiatives included the availability of subsidies or other incentives, the existence of a market for secondary raw materials and products derived from them, and the recognition of CE as a sustainable business model at the national level, see Table 4.

Implementing the principles of the CE faces numerous challenges, both internal and external to companies. In this research, stakeholders from companies analysed various barriers affecting the implementation of the circular economy. Notably, almost all mentioned barriers were perceived as having a moderate to high impact, see Table 5.

Company employees indicated that social barriers are the most significant obstacle. Specifically, an underdeveloped consumer culture, a lack of awareness and sense of urgency regarding the CE within society, and resistance from powerful social actors seeking to maintain the status quo were identified as the two most substantial barriers. Other significant barriers include deeply ingrained linear production technologies, the absence or low level of subsidies for companies engaging in the circular economy, and the substantial initial investment required to adopt CE principles. Similar CE barriers related to organisational capacities, institutional conditions, and economic constraints have been reported in transition-economy studies [36].

A portion of the respondents also expressed uncertainty about where to seek advisory, financial, or technological support for CE implementation. Furthermore, most companies lacked dedicated personnel or external consultants responsible for CE initiatives. Regarding specific activities related to resource and energy efficiency, most companies were in the initial planning and consideration stages. A pivotal finding emerging from the mixed-methods approach is the pronounced discrepancy in the prioritisation of CE barriers between the qualitative phase (company audits) and the quantitative phase (AHP expert assessment).

The initial qualitative audit, based on interviews with company managers and engineers, revealed that the most frequently cited obstacles were centred on social factors and immediate operational and investment constraints. Specifically, an underdeveloped consumer culture, a lack of societal awareness regarding the CE, and political resistance to systemic change were identified as highly significant. These responses are characteristic of the 'bottom-up' perspective, reflecting the daily difficulties in marketising circular solutions and securing initial, unknown investments in a transition context.

Based on the subjective opinions of company representatives, problems and challenges were categorised into four main factors (financial, institutional, technological, and social) and their respective sub-factors. These four factors were ranked by experts in order of importance for CE implementation using the AHP.

Research on the CE in the private sector in Serbia was conducted to provide a more detailed insight into the level of business awareness of the circular economy concept, and to identify the actual needs for transitioning from linear to circular production. Additionally, the research sought to determine the level of information among companies regarding available sources of advisory, financial, and technological support, the perception of the economic viability of the circular model, and the awareness of the necessity of introducing the CE in the context of the changing business environment and relevant European Union legislation, including standards related to the carbon footprint of products upon export to the EU starting in 2026.

The Serbian case provides a relevant example for other transition countries because it reflects common conditions such as evolving regulatory frameworks, limited financial incentives, low CE awareness, and strong dependence on the private sector all of which characterise many emerging economies worldwide. The mixed-method approach used in this study, combining company-level CE audits with expert-based AHP prioritisation, offers a replicable framework that can be applied in countries facing similar institutional and economic constraints. It allows for quantitative ranking of CE barriers, going beyond descriptive studies that list obstacles without assessing their relative importance.

The study also reveals differences between companies and expert perceptions, providing new insight into gaps in CE readiness and communication across key stakeholder groups. Overall, the research contributes existing knowledge by offering an evidence-based decision-support tool to guide targeted CE interventions in Serbia and other transition economies. Those findings reflect real market conditions rather than a narrow segment of the economy. As a result, the study offers broader insights that can support tailored CE interventions for companies of different sizes.

The mixed-method approach utilised in this paper, combining qualitative company audits with quantitative AHP prioritisation, offers a replicable, evidence-based framework for assessing CE readiness in transition economies. The quantitative ranking of CE barriers, moving beyond descriptive cataloguing of obstacles, unequivocally demonstrates that the Financial and Institutional factors represent the most significant systemic impediments to CE adoption in the Serbian private sector. Crucially, the research reveals a no difference in perception, wherein companies emphasise social and operational barriers, while the expert panel prioritises macro-level financial and institutional constraints. Consequently, a successful transition towards a CE mandates a comprehensive approach that prioritises the establishment of robust, accessible financial instruments and the strengthening of the institutional and legal frameworks, concurrently with intensified educational activities and awareness-raising campaigns aimed at citizens as a crucial segment.