From Green Start-up to Green Scale-up: Why Digitally Enabled Circular Business Models Fail at the Scaling Stage in Uzbekistan

Abstract

Owing to the rapid advancement of digital technologies within circular business models, understanding the problems of the scaling process is of considerable importance, since green start-ups must develop in line with market conditions. This transition constitutes a critical stage on the path towards sustainable growth and is regarded as one of the most effective and readily implementable business approaches. The study analyses digitally enabled circular business models, their scaling barriers, as well as the failure factors and institutional conditions that substantially affect green scaling performance. Such factors include resource constraints, market uncertainty, the ways in which business expansion is pursued through digital tools, and financial constraints. The aim of this study is to develop an empirically grounded framework for analysing the scaling failures of green start-ups, thereby identifying significant factors and explaining their mechanisms of influence, as well as supporting decision-making processes for sustainable business development and creating opportunities for improving enterprise strategies. The research methodology first involves constructing a comparative database in order to determine scaling outcomes, after which Propensity Score Matching is applied to estimate causal effects for green enterprises with the aim of obtaining reliable empirical evidence through a statistical model. In addition, regression analysis was carried out in this study, and the results showed that digital capabilities exert a substantial influence at the business scaling stage and, particularly during the transition to scaling, have a stronger effect than conventional growth factors. The results of the empirical analysis (including the results obtained through regression analysis based on a comparison of matched treated firms and control-group firms), the assessment of scaling barriers, and the comparison of successful and unsuccessful models confirm that digital circular business models make it possible to fill the existing research gap associated with the need to understand failures in the green scaling process. The findings indicate that the availability of digital capabilities in the period close to the scaling stage is of considerable importance, and that this does not require a complete transformation of the business model or the organisational structure. At the same time, it is important for enterprises to maintain their digital readiness and the adaptive potential of their business models on an ongoing basis. The analytical method developed supports decision-making processes; however, given the variability of market conditions, it may also serve as a useful tool for business managers planning to undertake scaling through digital technologies. This approach contributes to the effective use of circular innovation and sustainable growth opportunities.