Resource efficiency investments and firm performance: Evidence from European SMEs

The primary purpose of this paper is to test the hypothesis that investments that boost resource efficiency will increase the growth performances of Small and Medium-Sized Enterprises (SMEs). To test the hypothesis, we focus on SMEs operating in energy-intensive sectors in European countries. Implementing Propensity Score Matching (PSM) estimations, we find a positive and statistically significant (at the 1% level) effect of resource efficiency investments on SMEs' growth performance. These findings have significant policy implications for actions and measures to be taken by domestic and international policymakers regarding cleaner production investments by companies. The results imply that if governments want to boost green growth, a key policy they could adopt is to give subsidies for resource efficiency investments of the SMEs operating in energy-intensive sectors. (C) 2019 Elsevier Ltd. All rights reserved.