Harnessing green knowledge in small and medium enterprises

Green technologies play a crucial role in fostering regional comparative advantages during the sustainability transition. Despite their importance, the extent to which knowledge spillovers from these technologies impact a broad spectrum of firms remains underexplored. This study provides pioneering evidence on the independent and combined effects of green knowledge relatedness and green knowledge complexity on firm-level productivity of small and medium-sized enterprises (SMEs). Utilising data from Orbis Intellectual Property and Orbis Balance Sheet, encompassing 17,736 UK manufacturing firms from 2013 to 2020, we employ multilevel modelling estimations. Fine-grained analyses are conducted by splitting the regions into different groups, comparing the effects between regions with high and low levels of green knowledge relatedness and complexity. Our findings underscore the importance of both green knowledge relatedness and complexity, as well as their interaction, in enhancing SMEs’ productivity. The paper concludes by providing a practical framework for SMEs in the green transition for the UK.