Synergy in environmental compliance, innovation and export on SMEs’ growth

ABSTRACT

Although numerous studies examine the impacts of environmental compliance and innovation on a firm’s economic performance, the role of export activities in this nexus has remained unanswered. In this study, we revisit the Porter hypothesis by investigating synergy strategies of different environmental and economic practices (i.e. environmental compliance, product innovation, process innovation and having export activities) on total factor productivity (TFP) of Vietnamese manufacturing SMEs. Our results suggest that while encouraging either product or process innovation is also essential in the environment-promoting policy, joint implementation of these two practices should be carefully considered by managers. Moreover, entering export markets positively impacts firms’ productivity; complying with the domestic/local environmental standards could significantly increase the chances for SMEs to enter the export markets.

KEYWORDS:

• Environmental compliance
• export
• product innovation
• process innovation
• productivity
• SMEs

JEL CLASSIFICATION:

• L25
• M11
• O12
• Q55
• Q56

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data and code availability

The data and statistical codes (in R) used in this study are available from the authors upon request.

Notes

1 In Stata, command prodest allows the Wooldridge estimation for production function.