Exploring the Impact of Complementary Assets on the Environmental Performance in Manufacturing SMEs

Abstract

As the impact of small and medium-sized enterprises (SMEs) on the environment increases, there is a need for effective environmental policies to sustain their development. Under this condition, SMEs implement innovation to meet environmental regulations and to achieve environmental competitiveness in sustainability. We examine the impact of environmental innovation on labor productivity in SME manufacturers. The literature shows that complementary assets help SMEs to increase their performance in environmental innovation. Therefore, we study the interactive effects of the SMEs' business-group affiliation and the listing status on the relationship between environmental innovation and labor productivity. We add these interaction terms to multivariate regressions by using the 2010 Korea Innovation Survey. The results show that SMEs are able to use environmental innovation as a business strategy for green growth with improved labor productivity. Also, the results highlight that the business-group affiliation and the listing status as the complementary assets positively moderate the performance of the environmental innovation of the SMEs.