To Go or to Not Go Green for SMEs: Toward the Twinning Effect of Ecodesign Practices and Radical Innovativeness on SME Performance

Abstract

Despite the burgeoning literature on green innovation, the research on how it influences the business performance of small- and medium-sized enterprises (SMEs) is relatively scarce. For SMEs, environmental sustainability is becoming an increasingly crucial consideration in the design and conception of their business models. In this article, we explore the determinants of SME performance by investigating the relationship between the ecodesign practices and business performance of SMEs. To further explain and clarify their association, we propose a model for examining the mediating role of radical innovativeness, i.e., firms’ commercialization of an entirely novel idea, new to the firm and its markets. The data are obtained from a relatively heterogeneous sample of 370 SMEs cutting across many industries and regions in France. Structural equation modeling is then employed to analyze the collected data. By applying the concepts from resource-based view theory, we find that the relationship between ecodesign practices and business performance, as measured by financial and nonfinancial indicators, is better understood if the influence of radical innovativeness, as a mediating variable, is considered. By incorporating ecodesign practices and radical innovativeness into the analysis of SME performance, this study provides several important theoretical and practical implications for promoting green innovation for SMEs.