Driving the circular economy through public environmental and energy R&D: Evidence from SMEs in the European Union

• Published in: Ecological economics 2021-04, Vol.182, p.106884, Article 106884
• Main Authors: Garrido-Prada, Pablo, Lenihan, Helena, Doran, Justin, Rammer, Christian, Perez-Alaniz, Mauricio
• Format: Article
• Language: English
• Subjects: Circular economy; Environmental and energy R&D; European Union; Flash Eurobarometer; Multilevel modelling; SMEs
• ISSN: 0921-8009; 1873-6106
• DOI: 10.1016/j.ecolecon.2020.106884

Governments at the EU and the member state level are placing increased emphasis on public research and development (R&D) for energy and the environment to advance a circular economy (CE). To achieve CE goals, it is critical to engage SMEs as they represent the vast majority of enterprises in the EU. To date, there is a lack of evidence regarding the impact of these public R&D investments on SMEs' CE activities. We address this gap by analysing the impact of public environmental and energy R&D on CE implementation and investment by SMEs. The study draws from a multi-level database of 10,618 SMEs across 28 EU member states for the period 2013–2015 from the Flash Eurobarometer 441 survey and country-level data from other EU sources. Employing a mixed-level probit regression, we find that the knowledge generated by public environmental and energy R&D, defined as country-level investments in this activity from 2004 to 2015, positively affects SMEs' implementation of CE activities. Additionally, the study finds that public environmental and energy R&D affects the level of SMEs' investment in CE activities negatively, suggesting that more public R&D can substitute for the financial efforts that SMEs have to take when implementing CE activities.