Financial constraints and public funding of eco-innovation: empirical evidence from European SMEs

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractFinancial constraints have an important impact on the development of eco-innovations, but their effect varies according to the type of funds taken into account. This article studies the impact of the lack of funds on the development of eco-innovations, distinguishing between internal, external and public funds. In particular, we investigate the interaction between public funding, on the one hand, and internal and other external sources of funding. The empirical analysis is based upon a sample of European SMEs belonging to different sectors that are involved in products, processes and organizational eco-innovations. Our resultsshow that a lack of internal funding always decreases the probability to introduce ecoinnovations, while the lack of private external funds does not appear to hinder the development of eco-innovations. Interestingly, we find that access to public funds or incentives is effective in improving a firm's ability to introduce eco-innovations, but only when the firm is not short of funds (either from internal or external sources), thus suggesting that public funds are somewhat complementary to other funds. Further analysis shows that these effects are mostly relevant in small firms.

Financial Resources for the Circular Economy: A Perspective from Businesses

“…The results of this study also suggest that access to public funds and fiscal incentives may accelerate the development of eco-innovations, and that their effectiveness interacts, in particular, with firms' availability of external financing, in line with Cecere et al [68]. Empirical results regarding the effectiveness of subsidies (and tax incentives) to promote eco-innovation are not absolutely conclusive [135,136], although some authors show that public subsidies drive the development of eco-innovations [92,[137][138][139][140].…”

“…The results obtained in this study bear out the role of public funds and subsidies as drivers to the promotion of the CE [44,45]. The lack of financial resources is also considered as a barrier for eco-innovation [68]. Likewise, the availability of public funds (subsidies) to finance environmental R&D investments also affects the level of CE activities implemented by firms.…”

“…In the same line of enquiry, Cecere et al [68] identify access to public funds and tax incentives as elements that propel the development of eco-innovation. In the CE, Ormazabal et al [31] state that a lack of financial resources is a barrier that limits the implementation of the CE in companies and highlight the need to have public institutional support for Spanish SMEs that require different strategies, namely, financial stimulation and technological modernization, both of which are connected to the lack of financial resources.…”

“…In previous studies, other aspects related to financing, such as the level and structure of company debt, have been considered as explanatory variables of a company's eco-innovation behaviour through their relationship with financial performance [62][63][64][65][66]. It has also been demonstrated that the associated uncertainty implies a higher level of collateral for the granting of loans related to high risk investments [67,68] and reduces the flow of funds towards this type of investment [69]. Thus, the results obtained in the eco-innovation field were taken into account in this study to define how to measure the quantity of funds allocated to CE activities by companies.…”

Credit Line Models for Supply Chain Enterprises with Channel Background and Soft Information

“…Since SMEs are as innovative as large-scale businesses, their progress can promote technological innovation [3]. Moreover, SMEs make significant contributions to exports [4]. Given the indispensable role of SMEs, it is essential to serve their financial needs to promote their healthy and sustainable growth, thereby enhancing general economic success.…”