Business Incubation as a Support Mechanism for the Circular Transition: Evidence from Italy

Circular start-ups play a central role in the transition toward a Circular Economy (CE), due to their capacity to generate innovative solutions for resource recovery, waste minimisation, and regenerative value creation. However, their development is hindered by several constraints, such as limited access to financial and human resources, weak managerial skills, fragile market legitimacy, fragmented value chains, and complex regulatory environments. Within this context, business incubators (BIs) are expected to act as key enablers of entrepreneurial development, although their specific role in fostering circular entrepreneurship remains under-researched and not yet fully understood. To fill this gap, this study, based on a case analysis of a public certified Italian BI, explores how a CE-oriented incubation model supports the formation and development of circular business models, as well as the main constraints affecting its effectiveness. Primary data were collected through an interview with a BI manager and questionnaires administered to the incubated start-ups. The results show that circular incubation extends beyond traditional support mechanisms for start-ups, requiring highly customised and specialised services designed to address the specific challenges of circular start-ups. In particular, the analysed BI provides a combination of physical infrastructure, tailored business development support (especially mentoring and coaching focused on business model design and validation), financial capability enhancement, facilitation of investor relations, internationalisation support, and structured networking activities that promote industrial symbiosis and access to complementary capabilities within the ecosystem. Moreover, the findings highlight that the development of a CE-oriented incubation model has required substantial organisational and infrastructural investments, particularly to reinforce advanced mentoring competences and to upgrade physical and technical facilities suitable for experimentation and prototyping. The study advances the growing body of research on CE-focused incubation by offering empirical insights into how these models function in real-world settings. It goes beyond purely conceptual perspectives, developing a more operational understanding of how incubation processes are adapted to foster regenerative business approaches.