Integrating gold savings–based waste banks and baby diaper waste resin handicraft innovation for sustainable micro, small, and medium enterprise empowerment: An industrial systems perspective

Abstract

Background: community-based circular economy initiatives increasingly require the integration of financial mechanisms with waste management and micro, small, and medium enterprises (MSME) empowerment. This study examines how the integration of gold savings–based waste banks with resin handicraft production from baby diaper waste can enhance MSME capacity, stabilize community participation, and support system sustainability. The research is grounded in institutional and behavioral economic theories, highlighting the role of value-stabilizing incentives in shaping household and MSME decision-making. Methods: a mixed-methods approach was employed, including participant observation, structured interviews, and quantitative analysis of production, financial, and participation data. The study is grounded in circular economy principles and institutional incentive design theory, emphasizing long-term value mechanisms as drivers of system stability and effectiveness. Findings: the integration of gold savings stabilizes community participation, improves the quality and availability of raw materials, enhances MSME financial resilience, and reduces environmental impact by diverting baby diaper waste from landfills into productive cycles. Reinforcing feedback loops between economic incentives, social engagement, and environmental outcomes strengthen system durability and scalability. The framework acts as a critical alignment mechanism that coordinates behavioral, operational, and value flows across the community-based industrial system. Conclusion: institutionally supported, value-stabilized mechanisms such as gold savings–based waste banks provide a replicable pathway for sustainable community-based circular economy initiatives. The study offers novel insights into the integration of financial innovation, waste utilization, and MSME empowerment, providing a practical model for replication in emerging economies. Novelty/Originality of this article: this study provides an empirically grounded, replicable, and context-sensitive framework linking financial instruments directly to environmental and social impact while enhancing MSME sustainability. Unlike previous research, it demonstrates how institutionally supported long-term value mechanisms can simultaneously stabilize community participation, support inclusive economic empowerment, and promote circular economy practices in emerging economies.