The performance and productivity effects of environmental measures are more and more in the focus because a growing number of studies show positive effects contrary to the “traditional” view that environmental activities only raise production costs. The profitability of green investment is crucial for the diffusion of the resulting technologies but the knowledge about positive profitability 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. Following the Porter hypothesis (Porter, van der Linde 1995), regulation-induced early introduction of environmental products may lead to first-mover advantages and to an improvement of a firm´s competitiveness thus leading to a better performance.
The research project 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 (SME's). The results of a bivariate probit model show that a high amount in investment in resource efficiency measures triggers the overall performance of the 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 in improving resource efficiency are connected with positive performance effects: An increased use of renewables leads to a higher performance whereas measures to reduce water consumption are negatively correlated to turnover development.
- Horbach, Jens (2016): The Impact of Resource Efficiency Measures on Performance in Small and Medium-sized Enterprises. Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr Economic Papers #643, Essen, http://www.rwi-essen.de/publikationen/ruhr-economic-papers/800/
- Presentation of the paper at the Eurkind GCW 2016 Conference in Valencia, June 22-24 2016