The previous literature has studied barriers to energy efficiency in firms. While there are several studies with some focus on the manufacturing sector in Europe, the corresponding literature in Asia is still nascent. Using a unique dataset that contains a large number of firms belonging to the service and manufacturing sectors in Japan, this study contributes to filling this gap in the literature. The uniqueness of the data set allows us to distinguish small firms from both medium-sized and large firms. We evaluated the implementation of environmental practices, focusing on barriers to energy efficiency, and found that in the implementation of energy-conserving practices, small firms lag far behind large firms. We also found positive impacts from staff assignment on this goal. By contrast, firms were less likely to implement these practices if senior executives were in charge of energy efficiency issues. The data analysis further revealed that a limited number of SMEs and of service sector firms assign dedicated staff to achieve energy efficiency. The estimation results suggest that a policy measure may stimulate the development of economically feasible energy-conserving practices within SMEs if it encourages them to develop their organisational capacity to assign staff dedicated to promoting energy efficiency.
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