Investigating environmental prioritization: role of financial resources and female entrepreneurship in the Mediterranean region

PurposeIn this study, we aim to define a new ecological financial pecking order. We examine how SMEs' adherence to the environment in the Mediterranean region is impacted by their financial resources and how women Entrepreneurship could play a moderating role in this relationship.Design/methodology/approachOur data are pooled cross-sectional firm level data across 14 Mediterranean countries, with a total of 5,949 observations over the period from 2018 to 2020. We look into the moderating influence of SMEs’ female ownership on the financial sources-environmental engagement link using GLS estimations. To reach our aim we focus on seven funding sources and develop a green engagement construct using JCA. Besides, we distinguish between the least and most environmentally engaged companies in the EU and its neighborhood and compare the different interactions and possible moderations.FindingsResults show that government subsidies foster environmental engagement, followed by supplier credits with a less significant positive impact. The bank credits have the least significant beneficial influence, while non-bank financial institutions have a non-significant effect. We underline that environmental engagements are hindered by the other funds, issued bonds and internal funds.Research limitations/implicationsSMEs in the Mediterranean region, particularly the less environmentally conscious, require strong legal frameworks to enforce environmental responsibility and raise awareness. Integrating less environmentally committed EU SMEs into state subsidy strategies is a chance to improve environmental responsibility in the region.Originality/valueTo our knowledge, there are no prior studies that present a detailed financial structure and environmental management investigation for SMEs within the Mediterranean region while considering the moderating effect of women's entrepreneurship.