Institute of the Environment and Sustainability

In this paper we analyze the factors that drive the adoption of resource efficiency practices in constrained economic times. We uncover the ‘paradox’ of lower investments in resource efficiency practices in a downturn market and identify the characteristics of firms that seek the opportunity to invest more in such conditions. We argue that even though the attractiveness of resource efficiency practices should increase in downturn market conditions, such practices require complementary capabilities, strategies and organizational structure for their successful adoption. We test our framework using data from a French survey with responses from5, 877firms. Our results show that only 6% of the firms in our sample invest in resource efficiency practices in downturn markets, and that those firms are more likely to be vertically integrated, and to have a main focus on cost leadership strategies, have adopted environmental standards and conduct their research internally. We provide recommendations to encourage more widespread adoption of such models of frugal strategies.