How flare-up of small and medium enterprises intensifies carbon emissions in Asian and European regions: a panel analysis

Abstract

SMEs (small and medium enterprises) contribute substantially to the global and national economies. So, their activities can significantly affect the ecosystem; however, environmental performance is primarily targeted at larger corporations. Therefore, this study measures the SMEs' impact on environmental quality through CO₂ emissions. For this purpose, data on twenty-five Asian and European economies from 2005 to 2020 is utilized, and the effect of SMEs on the environment is measured in the light of the EKC hypothesis. In order to validate and test the influence of SMEs on the environment, the pooled mean group (PMG) model with cointegration approaches is utilized. The results show that the flare-up of small and medium enterprises increases environmental pollution through high carbon emissions at micro levels. Thus, the study suggests that governments, SMEs, and other stakeholders have to create strategies and regulations targeted at SMEs to minimize their negative environmental impact.

Keywords: Carbon emissions; EKC hypothesis; Medium enterprises; PMG; Small enterprises.