## 5 Results
### PSM Results and Discussions  
In the PSM analysis, we depict the results for the nearest-neighboring matching, 3 NN, 5 NN, and kernel matching of all specifications. NN, 3 NN, and 5 NN are all further constrained by 0.1 std. dev. of the \(p\)-score. Table 5 demonstrates that after matching, the average treatment effect to the treated (ATT) for the outcome \"innovation with environmental benefits\" is positive and significant at a 99% level, ranging from 4.9% to 6.1% in different matching algorithms. Among the ten individual eco-innovation with different environmental benefits, five are estimated to be correlated positively with public procurement: ECOREC (recycled waste, water, or materials for own use or sale, 3.3-4.5%), ECOENU (reduced energy use or CO\({}_{2}\) footprint, 3.1-4.2%), ECOPOS (reduced air, water, noise, or soil pollution, 5.4-5.7%), ECOREA (facilitated recycling of product after use, 2.6-3.4%), and ECOEXT (extended product life through longer-lasting, more durable products, 2.9-3.4%). What is more, when enterprises have public contracts, they are more (4.1-5.6%) likely to perceive that their environmental benefits are due to product innovation, amidst the four categories of innovation (product, process, organizational, and marketing). All four innovations with environmental benefits obtained by the end user are estimated to be positively affected by public procurement, at a 99% level of significance. Moreover, ECOENO and ECOENU are both \"reduced energy use or CO\({}_{2}\) footprint\", but the former is for that within the enterprises and the latter for that obtained during the consumption or use of a good or service by the end user. There are no persuasive results for ECOENO, while there are significant coefficients for ECOENU. A similar comparison happens between ECOPOL and ECOPOS. It is indicated that public procurement can stimulate companies' eco-innovation during consumption and end use, more easily than that within the enterprises. Figure 3: Spatial diagrams of enterprise percentages introducing at least one kind of innovation for environmental benefits (**left**), and having public contracts (**right**), 2012–2014. Source: author’s elaboration. The data for Germany and Spain are missing. The unit for legend is “%”. Table 6 displays the PSM results when we match the firm size perfectly. For enterprises that have under 50 or above 250 employees, the average effects on the companies with a public contact are positive and significant (\(p\leq 0.01\) or \(p\leq 0.05\)) for all matching algorithms. For the small companies (under 50), those providing products or services to public authorities are 5.0-6.3% more likely to be environmentally innovative compared to the matched control group. For the large companies (250 and more), the estimated average effect is 7.5-10.6%. For the medium-sized enterprises, only one-to-one matching statistically supports the effect of public contracts (7.1%, \(p\leq 0.05\)). The literature has researched the drivers of innovation in small and medium-sized enterprises (SMEs) [22; 23] and the SMEs' innovation performance under PP policy [33; 67]. Support and preference for SMEs in economic incentive strategies, such as PP, is regular with an aim of equality and assistance. The sustainable considerations \"offer better opportunities to SMEs than to large firms because they have a more adaptable productive structure and major capacity to understand specialized and local markets\" [22]. The demand from the government can account for a larger part of SMEs' order of goods, and they are actively involved in PP [68]. The results of this paper further divided SMEs into small firms and medium-sized firms, and small firms can be encouraged more than the medium-sized group. Large firms also proved to be promoted by PP for innovation with environmental benefits, and the marginal effect is even larger than that on small firms. Large companies have more resources to commercialize the innovation and reap the value produced.