The Impact of Resource Efficiency Actions on Firm Performance, Moderating Role of Eco-Investment and Production Cost

Abstract

The relationship of resource efficiency actions and firm performance has been analyzed by different researchers where the large firms have, all the times, been considered mostly however the small firms have been neglected generally. The prior studies concluded with no common consensus to comprehend the direction of this relationship. In this study, the primary intention is to examine the impact of resource efficiency actions on financial performance of SMEs. The cross section quantitative data of ninety firms has been gathered for the year 2019 by questionnaires. The dependent variable is firm performance and seven resource efficiency actions of saving water, saving energy, renewable energy, saving material, minimizing waste and selling scrap material to another company, are the independent variables whereas the eco-investment and production cost are the moderating variables. The correlation techniques and ordinal regression analysis have been implemented. This study concludes a negative and insignificant relationship between resource efficiency actions and financial performance of small firms for the short run. The eco-investment negatively but significantly whereas the production cost positively and significantly moderates the link of resource efficiency actions and firm performance. The results can vary if the subject matter is analyzed by accumulating the panel data and if other subdivisions of this sector are also included to extend the sample size.