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.