Factors influencing Latvian small and medium enterprises towards eco-innovation

Abstract

Abstract. Although small and medium enterprises (SMEs) are the backbone of national economies, they face many barriers and constraints towards innovations, particularly eco-innovations. In the European Union (EU) eco-innovations had been recognized as an important contributor for sustainable and green growth. The aim of the study is two-fold: 1) to determine the main barriers of eco-innovations' development in Latvia; 2) to compare the state of the main identified barriers among the EU countries. The main barriers of eco-innovations are identified via statistical analysis of SMEs managers' attitudes, using the Eurobarometer survey questionnaire. Performing the statistical analysis two factors are extracted, which account 81.7 % of the common variance, and are indicated as the main barriers for eco-innovation. These factors are financial resources (72.3 % of total variance) and human resources (9.4 % of total variance). Latvia and Lithuania score similarly both factors, but Estonia rates the environment as the most important, leaving human resources on the second position. Using the factors as dimensions all EU countries show differences in the rates between the four clusters.Keywords: eco-innovations, factor analysis, barriers, SMEs, survey. IntroductionThe European Union (EU) strategy and policy, which is supported by legislation package, strongly turns the economic development towards sustainability. Sustainable growth is one of the priorities of the EU strategy; and is based on three pillars: economic, environmental and social. It contains initiatives supporting the green growth (e.g., circular economy), resource efficiency, zero waste programs, including the support of eco-innovations [1][2][3][4]. The resource-efficiency is a key strategy of eco-efficiency and considerably the main target of eco-innovations [5][6].At the same time, the measures related to the "green" development of small and medium size enterprises (SMEs), for instance "Green Action Plan for SMEs", are also created [4]. Furthermore, it is confirmed worldwide that SMEs are the economic backbone, as well as of the EU [7][8]. SMEs represent over 90 % of all EU businesses and account for two out of three jobs; and in 2014 accounted for 67 % of total employment and 58 % of total value added in the EU average (EU-28) non-financial business, but in Latvia -79 % of total employment and 69 % of total value added [9].Although, the common concept and definition of eco-innovation being still in the developing stage [10], the shortest and the latest version has been given by the Eco-Innovation Observatory as -"…any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole life-cycle" [6]. The Eco-innovation index, which represents ecoinnovation performance across the EU Member States, shows that the level of eco-innovation capacity of Latvian enterprises among the EU-28 is rather low, because Latvia is on the 20th position with the eco-innovation index 75 (EU average -100) [11].Despite eco-inno...

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