The Impact of Resource Efficiency Measures on the Performance of Small and Medium-Sized Enterprises

Abstract

The profitability of green investment is crucial for the diffusion of the resulting technologies but the knowledge about these performance effects is still limited. Positive performance effects may be based on cost savings stemming from the introduction of cleaner production processes connected with lower material and/or energy use. The present paper empirically analyzes the effects of environmentally active behavior on the performance of a firm. The analysis is based on the 2013 wave of the Eurobarometer data for small and medium-sized firms (SMEs). Looking at SMEs is particularly interesting since small firms might be especially affected by the financial burden of introducing resource efficiency measures, which are costly in the short run. The results of a bivariate probit model show that a high investment in resource efficiency measures increases the overall performance of a firm. A high self-perceived greenness of the firm and a high share of green employment are positively correlated to performance. In fact, not all measures for improving resource efficiency are connected with positive performance effects: An increased use of renewables leads to higher performance whereas measures to reduce water consumption are negatively correlated to turnover development.