Enhancing Micro-enterprise Capacity through Circular Economy and Integrated Farming: Strategies for the Green Transition

Abstract

The transition to a green economy presents both significant opportunities and profound hurdles for micro-enterprises, which typically operate with highly constrained capital and limited technical business expertise. This study addresses the core problem of how agricultural micro-enterprises can financially and strategically sustain the adoption of Circular Economy (CE) and Integrated Farming (IF) practices in a highly competitive market. The primary purpose of this research is to formulate a comprehensive capacity-building strategy by integrating multidisciplinary perspectives from strategic marketing, financial management, taxation, and environmental accounting. An explanatory sequential mixed-methods design was employed, focusing exclusively on a purposive sample of exactly 40 agricultural micro-enterprises located in Magelang Regency, Central Java, Indonesia. Quantitative data regarding financial performance, Environmental Management Accounting (EMA) implementation, tax literacy, and market positioning were collected via structured questionnaires. This was followed by qualitative Focus Group Discussions (FGD) to deeply interpret the numerical findings and behavioral barriers. The results indicate that while the implementation of CE and IF successfully reduces operational costs by an average of 14.5% through effective waste valorization, the formal adoption of EMA remains at a moderate to low level. Furthermore, while strategic green marketing allowed digitally literate enterprises to capture a price premium, there is a critical vulnerability in taxation strategy, with the lowest overall awareness score recorded for green tax incentives. The study concludes that technical agricultural training alone is wholly insufficient. Micro-enterprises require an integrated capacity-building approach emphasizing sustainable cost accounting, proactive tax planning, and green value-proposition marketing to ensure long-term organizational resilience and inclusive economic growth.

Keywords:  Circular Economy, Environmental Accounting, Green Marketing, Integrated Farming, Mixed Methods