Eco-Innovation and Sustainable Business Performance of SMEs in Portugal and the United Kingdom

The world's attention has increasingly turned towards environmental concerns, sparking widespread discussions. Yet, the environment still bears the brunt of our actions. The United Nations has pointed to the loss of biodiversity, the spread of deserts, and the ever-looming worsening of climate change, which affect people's lives. We've witnessed a rise in respiratory diseases linked to water and garbage pollution, a decline in city living conditions, and a surge in flooding, especially in vulnerable areas with precarious living conditions.

It's clear that our society's development should not come at the expense of our environment. This is where the concept of sustainable development comes into play. It suggests that we should meet our current needs without jeopardizing future generations' ability to meet their own. Sustainable development seeks to create a balanced and resilient future for both people and the planet. Achieving this goal requires a blend of innovation and environmental policies, as well as maintaining a delicate equilibrium between the environment, the economy, and society.

Preserving the environment is an essential part of this sustainable development process. Numerous studies emphasise that the harm caused by human activities to the environment is incompatible with sustainability and must be mitigated. However, the path to sustainability isn't one-size-fits-all; it must be tailored to each country's unique needs and challenges.

The challenge of sustainable development isn't confined to governments alone. Businesses also play a crucial role in achieving sustainability. Research has shown positive correlations between sustainability and business success. Companies have started incorporating environmental considerations into their strategies, investing in practices that reduce their ecological footprint, and building a positive image.

Corporate sustainability is increasingly valued by investors and consumers alike. Companies are expected not only to generate profits but also to contribute to social and environmental goals through responsible business practices. This involves forging better relationships with customers, suppliers, and employees, which, in turn, leads to increased investments in sustainable practices, reduced waste, and enhanced corporate reputation.

In light of these discussions, Professor Fernando Almeida (lead) and I conducted research aimed at exploring how eco-innovation practices impact the sustainable business performance of small- and medium-sized enterprises (SMEs). It focuses on two geographical scenarios: Portugal and the UK, where SMEs are integral to economic growth. The study adopts a multifaceted view of eco-innovation encompassing organisational, procedural, and product dimensions.

We contribute to our understanding of how eco-innovation dimensions influence the sustainable performance of SMEs. Previous research has explored aspects of eco-innovation and corporate social responsibility in SMEs but hasn't assessed their impact on sustainable business performance. We take a unique approach by focusing on SMEs and diversifying its analysis by comparing two European countries, enhancing its applicability. Our research results were based on 249 participants working as innovation officers or CEOs of SMEs in Portugal and the UK.

Small and medium-sized businesses (SMEs) are finding better ways to be eco-friendly and sustainable. They are using things like biodegradable materials and recycling to improve their products and processes. To do this, they create an eco-innovation plan that considers their type of business, how the market works, and what they are good at. This helps them stand out and compete by offering better products and materials.

Innovation that helps the environment also gives companies an advantage in the market. But it's not just what happens inside a company that matters; external factors like laws, competition, and customer preferences also play a big role. Companies that can adapt to changes and turn challenges into opportunities are the ones that survive and grow.

Companies that don't innovate risk falling behind. Being innovative is crucial for staying competitive in today's ever-changing world. Having a plan for eco-innovation is essential for developing new environmental technologies, making changes within a company, creating new eco-friendly products, and using green systems for innovation. SMEs are using sustainability to stand out from other businesses that haven't caught up yet.

In the world of sustainable development, eco-innovation has become a vital tool. It's all about finding new and smarter ways to do things while taking care of the environment. Small and medium-sized businesses, known as SMEs, are using their skills and knowledge to make their products better and more environmentally friendly. This helps them stand out and compete in the global market. But eco-innovation isn't just about making money; it's also about doing good for society and the environment. To truly succeed in sustainability, businesses need to think about three things: making money, protecting the environment, and being socially responsible.

We found that both things inside and outside a company influence how they innovate with the environment in mind. In Portugal, a country in Europe, businesses are influenced a lot by things outside their company, like what other businesses are doing and what the laws say. In both Portugal and the UK, creating an eco-innovation plan is crucial for developing new ways to help the environment. This plan helps companies come up with new ideas, improve existing products, and make green systems for innovation. But not all eco-innovation ideas are equally important for a business's success. Making new products or processes that are eco-friendly and having green innovation systems are the most crucial for success. On the other hand, things like environmental technology and changing how a company works internally don't seem to have as big of an impact on how well a business does in sustainability.

This research is important for making policies and decisions about the environment. People now see that eco-innovation can help the economy grow and fix environmental problems. This study is happening while countries in Europe are making plans to recover from problems like COVID-19 and become more resilient. The research tells small businesses which things are most important when they want to do eco-innovation. It also shows that Portuguese businesses really need to pay attention to what's happening outside their company to be successful in eco-innovation. This research helps businesses know where to put their efforts to succeed in sustainability.