Do digital small and medium-sized enterprises drive green economic growth in the European Union?
Do digital small and medium-sized enterprises drive green economic growth in the European Union?

Summary/Abstract: Objective: The article aims to investigate whether digitalisation among small and medium-sized enterprises (SMEs) contributes to green economic growth (GEG) across European Union countries, focusing on environmental performance outcomes. Research Design & Methods: Using panel data from 25 European Union countries for the period 2010-2023, we applied fixed-effects, moderation, and panel threshold regression models. Digitalisation was proxied by the share of enterprises with e-commerce turnover above 1%, while GEG was measured via adjusted net savings. The analysis controlled for energy intensity and globalisation, and tests interactions with trade openness and R&D investment. Findings: The results revealed a robust, positive, and statistically significant relationship between SME digitalisation and GEG. Higher trade openness (interaction coefficient = 0.148) and R&D intensity (interaction coefficient = 0.058) amplified the impact. Implications & Recommendations: Policymakers should treat SME digitalisation as both an innovation and an environmental strategy. Support should focus on scaling digital capabilities in traditional sectors, improving access to R&D resources, and fostering enabling conditions like trade integration and green startup support. Investments in digital infrastructure, skills training, ESG metrics, and regional innovation hubs are essential for realising the synergistic benefits of the green-digital transition. Contribution & Value Added: This study shows that SME digitalisation is an important driver of environmental performance, but its impact depends on wider institutional and structural conditions. By combining fixed-effects, moderation, and threshold models, the study offers original evidence of a nonlinear digitalization-sustainability relationship, demonstrating that environmental gains intensify once SMEs reach higher levels of digital maturity. The study further identifies trade openness and R&D intensity as mechanisms that amplify these effects, contributing theoretically by clarifying how structural contexts shape the translation of digital capabilities into green economic outcomes.

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