Unveiling the Varied Impacts of Resource Efficiency Actions on SMEs’ Performance : A Sectoral Comparison between Manufacturing and Services

Abstract

This thesis investigates the differential impacts of resource efficiency actions on European SMEs’ performance across the manufacturing and services sectors, emphasizing the influence of sectoral conditions on eco-innovations’ outcomes. The paper employs the latest edition of the Flash Eurobarometer survey “SMEs, green markets, and resource efficiency” to explore the relationship between the adoption of eco-practices and SMEs’ performance, expressed in terms of production costs and turnover growth. The hypotheses are tested using three logistic regressions, capturing sectoral differences through the incorporation of interaction terms. The core idea underpinning the entire thesis is that the distinct business practices and patterns of resource use in the manufacturing and services sectors result in varying adoption rates of eco-measures, and ultimately shape the effects of these actions on firms’ performance. Previous papers have mainly concentrated on the first part of this proposition, analysing sectors as structural factors influencing the adoption of eco-innovations. This research instead focuses on how sectoral conditions moderate the effects of resource efficiency practices on SMEs’ performance.

The results reveal that the implementation of eco-actions impacts production costs and turnover growth differently across sectors, with manufacturing SMEs found to benefit relatively more from cost reductions than services enterprises. On the other hand, the empirical evidence modelled does not support the hypothesis that eco-investments have a stronger impact on turnover growth in the manufacturing sector than in the services sector. Other key control variables found to significantly influence the impacts of resource efficiency measures on companies’ performance include perceived barriers to eco-innovations, size, and age of firms.

The study’s main limitations are social desirability bias and endogeneity issues, which arise from potential reverse causality and omitted variables. Given the cross-sectional nature of the dataset employed, causality cannot be inferred. Notwithstanding these shortcomings, the thesis contributes to literature by providing evidence of sectoral variability in the effects of eco- innovations on SMEs’ performance. The emphasis on SMEs is especially relevant considering their pivotal role in the EU economy and their strategic importance in the sustainable transition, despite their uneven engagement in green practices.