IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v34y2025i3p3194-3208.html

Greener Pathways, Strategy, and Economic Performance: A Cross‐National Study on European Service SMEs

Author

Listed:
  • Emidia Vagnoni
  • Caterina Cavicchi
  • Michela Borghesi
  • Edoardo Trincanato
  • Stefano Bonnini

Abstract

Research into how environmental management practices impact firm performance has largely overlooked the service sector's small and medium‐sized enterprises (SMEs). Drawing on industry, resource, and institution‐based strategy perspectives, this study investigates how adopting resource efficiency (RE) practices within the framework of a circular economy (CE) supports European service SMEs in achieving carbon neutrality (CN) and reducing production costs (PCs). The study also examines difficulties in adapting to environmental regulations among adopters, their associated impact on performance, and the importance of having a CN strategy. A combined permutation test conducted on 681 European service SMEs from 35 countries revealed––after controlling for sectoral differences––that SMEs without RE practices within the CE framework faced higher PCs, a critical factor for firm performance. Additionally, transportation and storage SMEs with a CN strategy demonstrated greater adoption of RE practices. Implications for theory, practice, and future research are discussed.

Suggested Citation

  • Emidia Vagnoni & Caterina Cavicchi & Michela Borghesi & Edoardo Trincanato & Stefano Bonnini, 2025. "Greener Pathways, Strategy, and Economic Performance: A Cross‐National Study on European Service SMEs," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3194-3208, March.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:3:p:3194-3208
    DOI: 10.1002/bse.4135
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.4135
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.4135?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Violetta Giada Cannas & Federica Ciccullo & Margherita Pero & Roberto Cigolini, 2020. "Sustainable innovation in the dairy supply chain: enabling factors for intermodal transportation," International Journal of Production Research, Taylor & Francis Journals, vol. 58(24), pages 7314-7333, December.
    2. Singh, Rajesh Kumar & Kumar, Anil & Garza-Reyes, Jose Arturo & de Sá, Marcelo M., 2020. "Managing operations for circular economy in the mining sector: An analysis of barriers intensity," Resources Policy, Elsevier, vol. 69(C).
    3. Bodas-Freitas, Isabel-Maria & Corrocher, Nicoletta, 2019. "The use of external support and the benefits of the adoption of resource efficiency practices: An empirical analysis of european SMEs," Energy Policy, Elsevier, vol. 132(C), pages 75-82.
    4. Sebastian Losacker & Hendrik Hansmeier & Jens Horbach & Ingo Liefner, 2023. "The geography of environmental innovation: a critical review and agenda for future research," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(2), pages 291-316, August.
    5. Peter Oberhofer & Maria Dieplinger, 2014. "Sustainability in the Transport and Logistics Sector: Lacking Environmental Measures," Business Strategy and the Environment, Wiley Blackwell, vol. 23(4), pages 236-253, May.
    6. Wang, Yun & Sun, Xiaohua & Guo, Xu, 2019. "Environmental regulation and green productivity growth: Empirical evidence on the Porter Hypothesis from OECD industrial sectors," Energy Policy, Elsevier, vol. 132(C), pages 611-619.
    7. Jens Horbach & Christian Rammer, 2020. "Circular economy innovations, growth and employment at the firm level: Empirical evidence from Germany," Journal of Industrial Ecology, Yale University, vol. 24(3), pages 615-625, June.
    8. Mengli Zhao & Jinxin Liu & Chengli Shu, 2021. "Pursuing sustainable development through green entrepreneurship: An institutional perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4281-4296, December.
    9. Chamila H. Dasanayaka & Nuwan Gunarathne & David F. Murphy & Padmi Nagirikandalage, 2022. "Triggers for and barriers to the adoption of environmental management practices by small and medium‐sized enterprises: A critical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 749-764, July.
    10. Naoum Tsolakis & Dimitris Zissis & Spiros Papaefthimiou & Nikolaos Korfiatis, 2022. "Towards AI driven environmental sustainability: an application of automated logistics in container port terminals," International Journal of Production Research, Taylor & Francis Journals, vol. 60(14), pages 4508-4528, July.
    11. Solaymani, Saeed, 2019. "CO2 emissions patterns in 7 top carbon emitter economies: The case of transport sector," Energy, Elsevier, vol. 168(C), pages 989-1001.
    12. Ayon Chakraborty & Andrew Barton & Andrew O’Loughlin & Harpreet S. Kandra, 2023. "Exploratory Survey of Australian SMEs: an Investigation into the Barriers and Opportunities Associated with Circular Economy," Circular Economy and Sustainability, Springer, vol. 3(3), pages 1275-1297, September.
    13. Ren, Qiuzhen & Albrecht, Johan, 2023. "Toward circular economy: The impact of policy instruments on circular economy innovation for European small medium enterprises," Ecological Economics, Elsevier, vol. 207(C).
    14. Rodríguez-Espíndola, Oscar & Cuevas-Romo, Ana & Chowdhury, Soumyadeb & Díaz-Acevedo, Natalie & Albores, Pavel & Despoudi, Stella & Malesios, Chrisovalantis & Dey, Prasanta, 2022. "The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs," International Journal of Production Economics, Elsevier, vol. 248(C).
    15. Kirchherr, Julian & Piscicelli, Laura & Bour, Ruben & Kostense-Smit, Erica & Muller, Jennifer & Huibrechtse-Truijens, Anne & Hekkert, Marko, 2018. "Barriers to the Circular Economy: Evidence From the European Union (EU)," Ecological Economics, Elsevier, vol. 150(C), pages 264-272.
    16. Andrea Revell & David Stokes & Hsin Chen, 2010. "Small businesses and the environment: turning over a new leaf?," Business Strategy and the Environment, Wiley Blackwell, vol. 19(5), pages 273-288, July.
    17. Stefano Bonnini & Michela Borghesi, 2022. "Relationship between Mental Health and Socio-Economic, Demographic and Environmental Factors in the COVID-19 Lockdown Period—A Multivariate Regression Analysis," Mathematics, MDPI, vol. 10(18), pages 1-15, September.
    18. Long, Dede & West, Grant H. & Nayga, Rodolfo M., 2021. "Consumer willingness-to-pay for restaurant surcharges to reduce carbon emissions: default and information effects," Agricultural and Resource Economics Review, Cambridge University Press, vol. 50(2), pages 338-366, August.
    19. Perryman, Michael & Besco, Laurel & Suleiman, Carina & Lucato, Lindsay, 2022. "Ready for take off: Airline engagement with the United Nations Sustainable Development Goals," Journal of Air Transport Management, Elsevier, vol. 103(C).
    20. Johan Brändström & Amer Jazairy & Erik Roos Lindgreen, 2024. "Barriers to adopting circular business models: A cross‐sectoral analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4331-4350, July.
    21. Johan Wiklund & DEAN Shepherd, 2003. "Knowledge‐based resources, entrepreneurial orientation, and the performance of small and medium‐sized businesses," Strategic Management Journal, Wiley Blackwell, vol. 24(13), pages 1307-1314, December.
    22. Christine Oliver, 1997. "Sustainable competitive advantage: combining institutional and resource‐based views," Strategic Management Journal, Wiley Blackwell, vol. 18(9), pages 697-713, October.
    23. Alan Murray & Keith Skene & Kathryn Haynes, 2017. "The Circular Economy: An Interdisciplinary Exploration of the Concept and Application in a Global Context," Journal of Business Ethics, Springer, vol. 140(3), pages 369-380, February.
    24. Marie‐Josée Roy & François Thérin, 2008. "Knowledge acquisition and environmental commitment in SMEs," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 15(5), pages 249-259, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iordanis Eleftheriadis & Evgenia Anagnostopoulou, 2024. "Developing a Tool for Calculating the Carbon Footprint in SMEs," Sustainability, MDPI, vol. 16(5), pages 1-23, February.
    2. Rodríguez-Espíndola, Oscar & Cuevas-Romo, Ana & Chowdhury, Soumyadeb & Díaz-Acevedo, Natalie & Albores, Pavel & Despoudi, Stella & Malesios, Chrisovalantis & Dey, Prasanta, 2022. "The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs," International Journal of Production Economics, Elsevier, vol. 248(C).
    3. Osei, Vivian & Bai, Chunguang & Asante-Darko, Disraeli & Quayson, Matthew, 2023. "Evaluating the barriers and drivers of adopting circular economy for improving sustainability in the mining industry," Resources Policy, Elsevier, vol. 86(PB).
    4. João M. Lopes & Sofia Gomes & Elisabete Nogueira, 2025. "Pathways to Circularity: Engagement Patterns of European SMEs in the Circular Economy," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3848-3864, March.
    5. Jacob Hörisch & Matthew P. Johnson & Stefan Schaltegger, 2015. "Implementation of Sustainability Management and Company Size: A Knowledge‐Based View," Business Strategy and the Environment, Wiley Blackwell, vol. 24(8), pages 765-779, December.
    6. Qiuzhen Ren, 2025. "Toward Circular Economy: Digital‐Enabled Circular Economy Practices Enhancing the European Enterprise's Performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(5), pages 7294-7313, October.
    7. Manoj Kumar Mishra & Arun Mittal & Nirmal Singh & D. D. Chaturvedi & Ankita Srivastava, 2026. "Overcoming Barriers to Sustainable Production: A Fuzzy DEMATEL Approach to Circular Economy Challenges," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-18, April.
    8. Elisa Chioatto, 2025. "What do circular innovator firms look like in Emilia- Romagna? A cluster analysis of firms innovating in the circular economy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 42(2), pages 405-440, July.
    9. Gnekpe, Christian & Plantec, Quentin, 2023. "Regulatory push-pull and technological knowledge dynamics of circular economy innovation," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    10. Corinna Vera Hedwig Schmidt & Bastian Kindermann & Cassian Felix Behlau & Tessa Christina Flatten, 2021. "Understanding the effect of market orientation on circular economy practices: The mediating role of closed‐loop orientation in German SMEs," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4171-4187, December.
    11. Durán-Romero, Gemma & López, Ana M. & Beliaeva, Tatiana & Ferasso, Marcos & Garonne, Christophe & Jones, Paul, 2020. "Bridging the gap between circular economy and climate change mitigation policies through eco-innovations and Quintuple Helix Model," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    12. Naila Erum & Kazi Musa & Saira Tufail & Jamaliah Said & Nor Balkish Zakaria, 2025. "Impact of the circular economy on human development: evidence from Germany," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(12), pages 30385-30410, December.
    13. Patricia van Loon & Luk N. Van Wassenhove & Ales Mihelic, 2022. "Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1030-1041, March.
    14. Kalinic, Igor & Brouthers, Keith D., 2022. "Entrepreneurial orientation, export channel selection, and export performance of SMEs," International Business Review, Elsevier, vol. 31(1).
    15. Jeff Mangers & Meysam Minoufekr & Peter Plapper & Sri Kolla, 2021. "An Innovative Strategy Allowing a Holistic System Change towards Circular Economy within Supply-Chains," Energies, MDPI, vol. 14(14), pages 1-17, July.
    16. Ahmad, Farhan & Bask, Anu & Laari, Sini & Robinson, Craig V., 2023. "Business management perspectives on the circular economy: Present state and future directions," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    17. Syed Abdul Rehman Khan & Arsalan Zahid Piprani & Zhang Yu, 2022. "Digital technology and circular economy practices: future of supply chains," Operations Management Research, Springer, vol. 15(3), pages 676-688, December.
    18. Tariq Javed & Fareyha Said & Dalilawati Zainal & Azlina Abdul Jalil, 2024. "Circular Economy Implementation Status of Selected ASEAN Countries," SAGE Open, , vol. 14(1), pages 21582440231, March.
    19. Concepción Garcés-Ayerbe & Pilar Rivera-Torres & Inés Suárez-Perales & Dante I. Leyva-de la Hiz, 2019. "Is It Possible to Change from a Linear to a Circular Economy? An Overview of Opportunities and Barriers for European Small and Medium-Sized Enterprise Companies," IJERPH, MDPI, vol. 16(5), pages 1-15, March.
    20. Chembessi Chedrak & Gohoungodji Paulin & Juste Rajaonson, 2023. "“A fine wine, better with age”: Circular economy historical roots and influential publications: A bibliometric analysis using Reference Publication Year Spectroscopy (RPYS)," Journal of Industrial Ecology, Yale University, vol. 27(6), pages 1593-1612, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:34:y:2025:i:3:p:3194-3208. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.