Eco-innovation and Sustainable Business Performance: Perspectives of SMEs in Portugal and the UK

Purpose: Eco-innovation has been identified as a source of gaining a competitive advantage on a global scale. To build upon that, this study aims to deepen the understanding of eco-innovation in the context of small- and medium-sized enterprises (SMEs) and investigates the impact of having a clear eco-innovation strategy on a company's sustainability and performance. Design/methodology/approach: A sample of 249 SMEs located in Portugal and the UK participated and structural equation modelling (SEM) was applied to explore the relationship among the constructs. Findings: The findings reveal that both internal and external factors influence the design of an eco-innovation strategy. However, the relevance of external factors seemed to be more significant for Portuguese SMEs. This study concludes that product/process eco-innovations and green innovation systems are determinants for sustainable performance in SMEs. In contrast, the environmental technologies and organisational eco-innovation dimensions are not determinants. This is observed both in Portuguese and UK SMEs. Originality/value: Most studies in the field tend to explore the role of eco-innovation in large organisations. This study takes a different approach by exploring its impacts on the sustainable business performance of SMEs. Furthermore, it combines data from two countries, which constitutes a strength and gives the opportunity to explore this phenomenon empirically.