Abstract

Why do national and regional economies dominated by small firms differ so sharply in their capacity to absorb clean and energy-efficient technologies, even when subsidies, equipment prices, and decarbonization targets are broadly harmonized across borders? This paper shifts the level of analysis from the individual enterprise to the institutional learning system in which small and medium-sized enterprises (SMEs) are embedded. It argues that the green-technology transition of a small-firm economy is not the arithmetic sum of individual investment decisions but an emergent property of institutional learning capacity-the mutually reinforcing fit among certification and standards regimes, applied-skills formation, patient and blended finance, and the administrative quality of environmental regulation. Drawing on the varieties-of-capitalism tradition, evolutionary and institutional economics, and the absorptive-capacity view of the firm, the paper develops a learning-absorption framework and applies it comparatively to emerging and peripheral European economies (Poland, Romania, Bulgaria, Greece, Portugal, and the Western Balkans). It contends that where learning-supporting institutions co-evolve, individual firm-level absorptive constraints are relaxed at the population level; where they do not, public subsidy of any single instrument yields disappointing returns because the binding constraint lies elsewhere. The paper contributes to sustainability and development studies by reframing the "green divide" between peripheral economies as an absorptive-capacity gap, and it closes with implications for sequencing transition policy and an agenda for comparative empirical research.

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