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The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses

Year 2022, Volume: 22 Issue: 2, 183 - 194, 28.04.2022

Mustafa İncekara

https://doi.org/10.21121/eab.992423
Cited By: 1

Abstract

This paper aims to explain how different external financing factors influence SMEs’ adoption of eco-innovation. The effect of various external financial variables on adopting green operations of 5873 SMEs was examined using binary logistic regression. The findings indicate that traditional external financing approaches including standard bank loans and green loans positively affect renewable energy but have no significant impact on other circular eco-innovation applications. Established forms of public external financing, including EU funds and government grants, have a positive impact on the application of water re-design, renewable energy, and energy re-planning activities, but no influence on waste minimization and product re-design practices. The effects of newer forms of external funding are markedly different; the results reveal that crowdfunding has a significant favorable effect on the implementation of all green actions. Green banks can significantly impact the adoption of water re-planning and waste minimization practices. Peer-to-peer lending is positively correlated to the adoption of actions to minimize waste. Furthermore, business angels and the capital market positively influence product re-design related to green innovations. Risk or venture capital does not affect any form of circular eco-innovations. As a result, some important managerial implications for decision-makers are given.

Keywords

SME eco‐innovation entrepreneurial finance sustainability logistic regression

References

  • Allcott, H., & Greenstone, M. (2012). Is There an Energy Efficiency Gap? Journal of Economic Perspectives, 26(1), 3–28.
  • Álvarez Jaramillo, J., Zartha Sossa, J. W., & Orozco Mendoza, G. L. (2018). Barriers to sustainability for small and medium enterprises in the framework of sustainable development— Literature review. Business Strategy and the Environment. Advance online publication.
  • Aragón-Correa, J. A., Hurtado-Torres, N., Sharma, S., & García-Morales, V. J. (2008). Environmental strategy and performance in small firms: A resource-based perspective. Journal of Environmental Management, 86(1), 88–103.
  • Bianchi, R., & Noci, G. (1998). "Greening" SMEs' Competitiveness. Small Business Economics, 11(3), 269–281.
  • Bodas Freitas, I. M., & Tunzelmann, N. von (2008). Mapping public support for innovation: A comparison of policy alignment in the UK and France. Research Policy, 37(9), 1446–1464.
  • Bodas-Freitas, I.M., & Corrocher, N. (2019). The use of external support and the benefits of the adoption of resource efficiency practices: An empirical analysis of european SMEs. Energy Policy, 132, 75–82.
  • Caldera, H., Desha, C., & Dawes, L. (2019). Evaluating the enablers and barriers for successful implementation of sustainable business practice in ‘lean’ SMEs. Journal of Cleaner Production, 218, 575–590.
  • Calogirou, C., Sørensen, S. Y. Larsen, P. B., Petersen, K., Kristiansen, K. R., Mogensen, J. Alexopoulou, S., Papageorgiou, M. (2010). SMEs and the environment in the European Union. Retrieved from https://op.europa.eu/en/publication-detail/-/publication/aa507ab8-1a2a-4bf1-86de-5a60d14a3977
  • Criscuolo, C., & Menon, C. (2015). Environmental policies and risk finance in the green sector: Cross-country evidence. Energy Policy, 83, 38–56.
  • Czarnitzki, D., & Delanote, J. (2013). Young Innovative Companies: the new high-growth firms? Industrial and Corporate Change, 22(5), 1315–1340.
  • Demirel, P., & Danisman, G. O. (2019). Eco‐innovation and firm growth in the circular economy: Evidence from European small‐ and medium‐sized enterprises. Business Strategy and the Environment, 28(8), 1608–1618.
  • Doh, S., & Kim, B. (2014). Government support for SME innovations in the regional industries: The case of government financial support program in South Korea. Research Policy, 43(9), 1557–1569.
  • EEA (2014). Resource-efficient green economy and EU policies. EEA Report: 2/2014. Luxembourg: Publ. Office of the EU: Publ. Office of the EU.
  • Fleiter, T., Hirzel, S., & Worrell, E. (2012). The characteristics of energy-efficiency measures – a neglected dimension. Energy Policy, 51, 502–513.
  • Fleiter, T., Schleich, J., & Ravivanpong, P. (2012). Adoption of energy-efficiency measures in SMEs—An empirical analysis based on energy audit data from Germany. Energy Policy, 51, 863–875.
  • Gaddy, B. E., Sivaram, V., Jones, T. B., & Wayman, L. (2017). Venture Capital and Cleantech: The wrong model for energy innovation. Energy Policy, 102, 385–395.
  • Gershoff, A. D., & Irwin, J. R. (2012). Why not Choose Green? Consumer Decision Making for Environmentally Friendly Product. In P. Bansal & A. J. Hoffman (Eds.), The Oxford Handbook of Business and the Natural Environment (pp. 366–383). Oxford University Press.
  • Ghenta, M., & Matei, A. (2018). SMEs and the Circular Economy: From Policy to Difficulties Encountered During Implementation. Amfiteatru Economic, 20, 294–309.
  • Ghisetti, C., Mancinelli, S., Mazzanti, M., & Zoli, M. (2017). Financial barriers and environmental innovations: evidence from EU manufacturing firms. Climate Policy, 17(sup1), S131-S147.
  • Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (9 ed.). Andover: Cengage Learning: Cengage Learning.
  • Halme, M., & Laurila, J. (2009). Philanthropy, Integration or Innovation? Exploring the Financial and Societal Outcomes of Different Types of Corporate Responsibility. Journal of Business Ethics, 84(3), 325–339.
  • Hockerts, K., & Wüstenhagen, R. (2010). Greening Goliaths versus emerging Davids — Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship. Journal of Business Venturing, 25(5), 481–492.
  • Hoogendoorn, B., Guerra, D., & van der Zwan, P. (2015). What drives environmental practices of SMEs? Small Business Economics, 44(4), 759–781.
  • Jové-Llopis, E., & Segarra-Blasco, A. (2018). Eco-Efficiency Actions and Firm Growth in European SMEs. Sustainability, 10(2), 281.
  • Klewitz, J., Zeyen, A., & Hansen, E. G. (2012). Intermediaries driving eco‐innovation in SMEs: a qualitative investigation. European Journal of Innovation Management, 15(4), 442–467.
  • Kunapatarawong, R., & Martínez-Ros, E. (2016). Towards green growth: How does green innovation affect employment? Research Policy, 45(6), 1218–1232.
  • Migendt, M., Polzin, F., Schock, F., Täube, F. A., & Flotow, P. von (2017). Beyond venture capital: an exploratory study of the finance-innovation-policy nexus in cleantech. Industrial and Corporate Change, 26(6), 973–996.
  • Mrkajic, B., Murtinu, S., & Scalera, V. G. (2019). Is green the new gold? Venture capital and green entrepreneurship. Small Business Economics, 52(4), 929–950.
  • N. Berger, A., & F. Udell, G. (1998). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking & Finance, 22(6-8), 613–673.
  • Neubaum, D., Mitchell, M., & Schminke, M. (2004). Firm Newness, Entrepreneurial Orientation, and Ethical Climate. Journal of Business Ethics, 52(4), 335–347.
  • OECD (2012). OECD Science, Technology and Industry Outlook 2012. OECD: OECD.
  • Olmos, L., Ruester, S., & Liong, S.J. (2012). On the selection of financing instruments to push the development of new technologies: Application to clean energy technologies. Energy Policy, 43, 252–266.
  • Orsato, R. J. (2006). Competitive Environmental Strategies: When Does it Pay to Be Green? California Management Review, 48(2), 127–143.
  • Pacheco, D. F., Dean, T. J., & Payne, D. S. (2010). Escaping the green prison: Entrepreneurship and the creation of opportunities for sustainable development. Journal of Business Venturing, 25(5), 464–480.
  • Palm, J. (2018). Household installation of solar panels – Motives and barriers in a 10-year perspective. Energy Policy, 113, 1–8.
  • Palmer, K., Oates, W. E., & Portney, P. R. (1995). Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm? Journal of Economic Perspectives, 9(4), 119–132.
  • Perrini, F., Russo, A., & Tencati, A. (2007). CSR Strategies of SMEs and Large Firms. Evidence from Italy. Journal of Business Ethics, 74(3), 285–300.
  • Pimenova, P., & van der Vorst, R. (2004). The role of support programmes and policies in improving SMEs environmental performance in developed and transition economies. Journal of Cleaner Production, 12(6), 549–559.
  • Rennings, K. (2000). Redefining innovation — eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332.
  • Revest, V., & Sapio, A. (2012). Financing technology-based small firms in Europe: what do we know? Small Business Economics, 39(1), 179–205.
  • Rizos, V., Behrens, A., Kafyeke, T., Hirschnitz-Garbers, M., & Ioannou, A. (2015). The Circular Economy: Barriers and Opportunities for SMEs. Retrieved from https://www.ceps.eu/ceps-publications/circular-economy-barriers-and-opportunities-smes/
  • Roberts, S., Lawson, R., & Nicholls, J. (2006). Generating Regional-Scale Improvements in SME Corporate Responsibility Performance: Lessons from Responsibility Northwest. Journal of Business Ethics, 67(3), 275–286.
  • Trianni, A., Cagno, E., & Worrell, E. (2013). Innovation and adoption of energy efficient technologies: An exploratory analysis of Italian primary metal manufacturing SMEs. Energy Policy, 61, 430–440.
  • Uhlaner, L. M., Berent-Braun, M. M., Jeurissen, R. J. M., & Wit, G. de (2012). Beyond Size: Predicting Engagement in Environmental Management Practices of Dutch SMEs. Journal of Business Ethics, 109(4), 411–429.

Year 2022, Volume: 22 Issue: 2, 183 - 194, 28.04.2022

Mustafa İncekara

https://doi.org/10.21121/eab.992423
Cited By: 1

Abstract

References

  • Allcott, H., & Greenstone, M. (2012). Is There an Energy Efficiency Gap? Journal of Economic Perspectives, 26(1), 3–28.
  • Álvarez Jaramillo, J., Zartha Sossa, J. W., & Orozco Mendoza, G. L. (2018). Barriers to sustainability for small and medium enterprises in the framework of sustainable development— Literature review. Business Strategy and the Environment. Advance online publication.
  • Aragón-Correa, J. A., Hurtado-Torres, N., Sharma, S., & García-Morales, V. J. (2008). Environmental strategy and performance in small firms: A resource-based perspective. Journal of Environmental Management, 86(1), 88–103.
  • Bianchi, R., & Noci, G. (1998). "Greening" SMEs' Competitiveness. Small Business Economics, 11(3), 269–281.
  • Bodas Freitas, I. M., & Tunzelmann, N. von (2008). Mapping public support for innovation: A comparison of policy alignment in the UK and France. Research Policy, 37(9), 1446–1464.
  • Bodas-Freitas, I.M., & Corrocher, N. (2019). The use of external support and the benefits of the adoption of resource efficiency practices: An empirical analysis of european SMEs. Energy Policy, 132, 75–82.
  • Caldera, H., Desha, C., & Dawes, L. (2019). Evaluating the enablers and barriers for successful implementation of sustainable business practice in ‘lean’ SMEs. Journal of Cleaner Production, 218, 575–590.
  • Calogirou, C., Sørensen, S. Y. Larsen, P. B., Petersen, K., Kristiansen, K. R., Mogensen, J. Alexopoulou, S., Papageorgiou, M. (2010). SMEs and the environment in the European Union. Retrieved from https://op.europa.eu/en/publication-detail/-/publication/aa507ab8-1a2a-4bf1-86de-5a60d14a3977
  • Criscuolo, C., & Menon, C. (2015). Environmental policies and risk finance in the green sector: Cross-country evidence. Energy Policy, 83, 38–56.
  • Czarnitzki, D., & Delanote, J. (2013). Young Innovative Companies: the new high-growth firms? Industrial and Corporate Change, 22(5), 1315–1340.
  • Demirel, P., & Danisman, G. O. (2019). Eco‐innovation and firm growth in the circular economy: Evidence from European small‐ and medium‐sized enterprises. Business Strategy and the Environment, 28(8), 1608–1618.
  • Doh, S., & Kim, B. (2014). Government support for SME innovations in the regional industries: The case of government financial support program in South Korea. Research Policy, 43(9), 1557–1569.
  • EEA (2014). Resource-efficient green economy and EU policies. EEA Report: 2/2014. Luxembourg: Publ. Office of the EU: Publ. Office of the EU.
  • Fleiter, T., Hirzel, S., & Worrell, E. (2012). The characteristics of energy-efficiency measures – a neglected dimension. Energy Policy, 51, 502–513.
  • Fleiter, T., Schleich, J., & Ravivanpong, P. (2012). Adoption of energy-efficiency measures in SMEs—An empirical analysis based on energy audit data from Germany. Energy Policy, 51, 863–875.
  • Gaddy, B. E., Sivaram, V., Jones, T. B., & Wayman, L. (2017). Venture Capital and Cleantech: The wrong model for energy innovation. Energy Policy, 102, 385–395.
  • Gershoff, A. D., & Irwin, J. R. (2012). Why not Choose Green? Consumer Decision Making for Environmentally Friendly Product. In P. Bansal & A. J. Hoffman (Eds.), The Oxford Handbook of Business and the Natural Environment (pp. 366–383). Oxford University Press.
  • Ghenta, M., & Matei, A. (2018). SMEs and the Circular Economy: From Policy to Difficulties Encountered During Implementation. Amfiteatru Economic, 20, 294–309.
  • Ghisetti, C., Mancinelli, S., Mazzanti, M., & Zoli, M. (2017). Financial barriers and environmental innovations: evidence from EU manufacturing firms. Climate Policy, 17(sup1), S131-S147.
  • Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (9 ed.). Andover: Cengage Learning: Cengage Learning.
  • Halme, M., & Laurila, J. (2009). Philanthropy, Integration or Innovation? Exploring the Financial and Societal Outcomes of Different Types of Corporate Responsibility. Journal of Business Ethics, 84(3), 325–339.
  • Hockerts, K., & Wüstenhagen, R. (2010). Greening Goliaths versus emerging Davids — Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship. Journal of Business Venturing, 25(5), 481–492.
  • Hoogendoorn, B., Guerra, D., & van der Zwan, P. (2015). What drives environmental practices of SMEs? Small Business Economics, 44(4), 759–781.
  • Jové-Llopis, E., & Segarra-Blasco, A. (2018). Eco-Efficiency Actions and Firm Growth in European SMEs. Sustainability, 10(2), 281.
  • Klewitz, J., Zeyen, A., & Hansen, E. G. (2012). Intermediaries driving eco‐innovation in SMEs: a qualitative investigation. European Journal of Innovation Management, 15(4), 442–467.
  • Kunapatarawong, R., & Martínez-Ros, E. (2016). Towards green growth: How does green innovation affect employment? Research Policy, 45(6), 1218–1232.
  • Migendt, M., Polzin, F., Schock, F., Täube, F. A., & Flotow, P. von (2017). Beyond venture capital: an exploratory study of the finance-innovation-policy nexus in cleantech. Industrial and Corporate Change, 26(6), 973–996.
  • Mrkajic, B., Murtinu, S., & Scalera, V. G. (2019). Is green the new gold? Venture capital and green entrepreneurship. Small Business Economics, 52(4), 929–950.
  • N. Berger, A., & F. Udell, G. (1998). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking & Finance, 22(6-8), 613–673.
  • Neubaum, D., Mitchell, M., & Schminke, M. (2004). Firm Newness, Entrepreneurial Orientation, and Ethical Climate. Journal of Business Ethics, 52(4), 335–347.
  • OECD (2012). OECD Science, Technology and Industry Outlook 2012. OECD: OECD.
  • Olmos, L., Ruester, S., & Liong, S.J. (2012). On the selection of financing instruments to push the development of new technologies: Application to clean energy technologies. Energy Policy, 43, 252–266.
  • Orsato, R. J. (2006). Competitive Environmental Strategies: When Does it Pay to Be Green? California Management Review, 48(2), 127–143.
  • Pacheco, D. F., Dean, T. J., & Payne, D. S. (2010). Escaping the green prison: Entrepreneurship and the creation of opportunities for sustainable development. Journal of Business Venturing, 25(5), 464–480.
  • Palm, J. (2018). Household installation of solar panels – Motives and barriers in a 10-year perspective. Energy Policy, 113, 1–8.
  • Palmer, K., Oates, W. E., & Portney, P. R. (1995). Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm? Journal of Economic Perspectives, 9(4), 119–132.
  • Perrini, F., Russo, A., & Tencati, A. (2007). CSR Strategies of SMEs and Large Firms. Evidence from Italy. Journal of Business Ethics, 74(3), 285–300.
  • Pimenova, P., & van der Vorst, R. (2004). The role of support programmes and policies in improving SMEs environmental performance in developed and transition economies. Journal of Cleaner Production, 12(6), 549–559.
  • Rennings, K. (2000). Redefining innovation — eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332.
  • Revest, V., & Sapio, A. (2012). Financing technology-based small firms in Europe: what do we know? Small Business Economics, 39(1), 179–205.
  • Rizos, V., Behrens, A., Kafyeke, T., Hirschnitz-Garbers, M., & Ioannou, A. (2015). The Circular Economy: Barriers and Opportunities for SMEs. Retrieved from https://www.ceps.eu/ceps-publications/circular-economy-barriers-and-opportunities-smes/
  • Roberts, S., Lawson, R., & Nicholls, J. (2006). Generating Regional-Scale Improvements in SME Corporate Responsibility Performance: Lessons from Responsibility Northwest. Journal of Business Ethics, 67(3), 275–286.
  • Trianni, A., Cagno, E., & Worrell, E. (2013). Innovation and adoption of energy efficient technologies: An exploratory analysis of Italian primary metal manufacturing SMEs. Energy Policy, 61, 430–440.
  • Uhlaner, L. M., Berent-Braun, M. M., Jeurissen, R. J. M., & Wit, G. de (2012). Beyond Size: Predicting Engagement in Environmental Management Practices of Dutch SMEs. Journal of Business Ethics, 109(4), 411–429.
There are 44 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Mustafa İncekara 0000-0003-0602-7987

Publication Date April 28, 2022
Acceptance Date December 21, 2021
Published in Issue Year 2022 Volume: 22 Issue: 2

Cite

APA İncekara, M. (2022). The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses. Ege Academic Review, 22(2), 183-194. https://doi.org/10.21121/eab.992423
AMA İncekara M. The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses. ear. April 2022;22(2):183-194. doi:10.21121/eab.992423
Chicago İncekara, Mustafa. “The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses”. Ege Academic Review 22, no. 2 (April 2022): 183-94. https://doi.org/10.21121/eab.992423.
EndNote İncekara M (April 1, 2022) The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses. Ege Academic Review 22 2 183–194.
IEEE M. İncekara, “The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses”, ear, vol. 22, no. 2, pp. 183–194, 2022, doi: 10.21121/eab.992423.
ISNAD İncekara, Mustafa. “The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses”. Ege Academic Review 22/2 (April 2022), 183-194. https://doi.org/10.21121/eab.992423.
JAMA İncekara M. The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses. ear. 2022;22:183–194.
MLA İncekara, Mustafa. “The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses”. Ege Academic Review, vol. 22, no. 2, 2022, pp. 183-94, doi:10.21121/eab.992423.
Vancouver İncekara M. The Impact of External Financial Factors on the Eco-Innovation Practices of Small and Medium-Sized Businesses. ear. 2022;22(2):183-94.

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