Does It Pay for SMEs in Developing Countries to Go Green? Evidence from Vietnam

Abstract

Recent environmental crises in developing countries indicated the importance of improving businesses’ environmental performance. Is it profitable for firms in developing countries to go green? This paper studies the link between the adoption of environmentally friendly practice and the financial performance of small and medium enterprises (SMEs) in developing countries. Specifically, propensity matching is used to evaluate the profitability of sustainability adopters and non-adopters among Vietnamese SMEs between 2011 and 2015. The results suggest a heterogenous impact of sustainability adoption on profitability across industries and firm types, which has important policy implications for the sustainable business development in developing countries