Template-Type: ReDIF-Paper 1.0 Author-Name: Grazia Cecere Author-X-Name-First: Grazia Author-X-Name-Last: Cecere Author-Name: Nicoletta Corrocher Author-X-Name-First: Nicoletta Author-X-Name-Last: Corrocher Author-Name: Maria Luisa Mancusi Author-X-Name-First: Maria Luisa Author-X-Name-Last: Mancusi Author-Email: MariaLuisa.Mancusi@unicatt.it Author-Workplace-Name: Università Cattolica del Sacro Cuore Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore Title: Financial constraints and public funding for eco-innovation: Empirical evidence on European SMEs Abstract: Financial constraints have an important impact on the development of eco-innovations, but their effect varies according to the type of funds taken into account. This article studies the impact of the lack of funds on the development of eco-innovations, distinguishing between internal, external and public funds. In particular, we investigate the interaction between public funding, on the one hand, and internal and other external sources of funding. The empirical analysis is based upon a sample of European SMEs belonging to different sectors that are involved in products, processes and organizational eco-innovations. Our results show that a lack of internal funding always decreases the probability to introduce eco-innovations, while the lack of private external funds does not appear to hinder the development of eco-innovations. Interestingly, we find that access to public funds or incentives is effective in improving a firm’s ability to introduce eco-innovations, but only when the firm is not short of funds (either from internal or external sources), thus suggesting that public funds are somewhat complementary to other funds. Further analysis shows that these effects are mostly relevant in small firms. Length: 32 Creation-Date: 2016-07 File-URL: http://dipartimenti.unicatt.it/economia-finanza-def046.pdf File-Format: Application/pdf File-Function: First version, 2016 Number: def046 Classification-JEL: O31, Q55, G38. Keywords: eco-innovations, public funding, financial constraints, SMEs. Handle: RePEc:ctc:serie1:def046