Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319901 
Year of Publication: 
2025
Series/Report no.: 
ZEW Discussion Papers No. 25-032
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Climate change can cause major challenges for Small and Medium-sized Enterprises (SMEs). Responding and adapting to such challenges is crucial, as SMEs are vital for driving economic growth and employment in most countries. Investing in R&D is a key way in which SMEs can build the capacities required for responding and adapting to climate change-related challenges. However, the extent to which such challenges affect SMEs' R&D activities remains a critical gap in existing knowledge. Using detailed firm-level data on 1,730 SMEs in Ireland, our study is the first to explore this issue. We achieve this, using information on SMEs' climate changerelated challenges, from a new module of the 2018-2020 wave of the Irish part of the Community Innovation Survey (CIS), the Innovation in Irish Enterprises Survey (IIE). By combining a matching approach with probit regression analysis, we find that climate changerelated challenges can increase the probability of SMEs investing in R&D. Such challenges can also increase the probability of SMEs engaging in continuous, as opposed to occasional R&D. Based on our findings, the above impacts are mainly driven by climate change, resulting in higher costs/input prices. Our study highlights the importance of R&D for SMEs to adapt and respond to climate change and provides critical insights for SMEs and policymakers alike.
Subjects: 
Climate change-related challenges
small and medium sized enterprises
research and development
climate change adaptation
climate change mitigation
JEL: 
Q54
Q55
O32
O33
Document Type: 
Working Paper

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