ECOEFFICIENCY AND FIRM PROFITABILITY NEXUS: THE CASE OF SERBIA.

To achieve sustainable development, eco-efficiency can be used as the main tool that will enable firms to create more by using fewer resources resulting with less waste and pollution. In that aspect, this paper aims to investigate the relationship between eco-efficiency and firm profitability from 2011 to 2020 in Serbia as a high fossil fuel-reliant economy. To test the relationship between eco-efficiency and firm profitability, we used the panel technique, and we applied the Generalized Method of Moments (GMM) for estimation. The analysis showed that the highest eco-efficiency indicator in Serbia was recorded in 2015, which means that Serbia had the highest overall air emissions that year. Our main results show that the eco-efficiency variable impacts the profitability of Serbian polluting firms. Additionally, our model suggests that the size variable has a significant negative impact on firms' profitability; the investment level variable influences profitability positively, but the capital intensity variable has no impact on firms' profitability. [ABSTRACT FROM AUTHOR]