An Evaluation of the Impact and Effectiveness of Environmental Legislation in Small and Medium‐Sized Enterprises: Experiences from the UK

With small‐ and medium‐sized enterprises (SMEs) accounting for 99.7% of the 4.7 million UK businesses, they can have a huge collective impact on the environment, which in turn is being increasingly regulated. This study investigated the impact and effectiveness of environmental legislation on UK SMEs as well as determining if ‘compliance’ results in improved environmental protection. Interviews were conducted with SME management, site staff, regulators, policy officials and support organisations. Forty‐four SMEs from the north‐west of England participated in the study, and overall a total of 99 individuals were interviewed. The study clearly indicates that the impact of environmental legislation on SMEs is overstated and impact increased commensurate with effort to comply and enforcement action. Only one of the SMEs studied had been prosecuted and only two had been inspected. Compliance issues identified in those SMEs subject to direct regulation did not correlate with previous compliance audits conducted. In general, SMEs had poor awareness of compliance issues; non‐compliance was only really recognised and acknowledged if identified by a regulator and only regarded as serious if prosecuted. Regulation of the environment is clearly only effective if complied with; understanding compliance levels can help measure the link between legislation and environmental protection. The effectiveness of environmental legislation can only be understood if SMEs are subject to regular regulatory contact. Recommendations to improve SME compliance control systems are provided. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.     

A cool response to the ICE Regulations? Employer and trade union approaches to the new legal framework for information and consultation

One year on from the introduction of the Information and Consultation of Employees Regulations, this article reviews the emerging patterns of implementation in the light of the legislation’s ‘reflexive’ design. The available evidence suggests considerable employer‐led activity in terms of reviewing, modifying and introducing information and consultation arrangements but a relative paucity of formal ‘pre‐existing agreements’, despite the protection they offer against the Regulations’ statutory procedures being invoked by employees. This picture is consistent with a ‘risk assessment’ rather than a ‘compliance’ approach by management, facilitated by union ambivalence towards the legislation and low use of its provisions by employees.     

Pragmatism and Compliance: Employer Responses to the Working Time Regulations

Analysis of Working Time Regulations data reveals three patterns of response that help to explain the lack of employers' post‐implementation protest: coincidence with current practice; easy ‘escape’ options; and non‐compliance. Whether this represents a failure of health and safety legislation or a pragmatic response to labour market conditions is discussed.     

Purchasing practices in small- to medium-sized enterprises: An examination of strategic purchasing adoption,supplier evaluation and supplier capabilities

The benefits that can be derived from effective purchasing have long been recognised in the management literature. Despite a growing body of research on purchasing practices in small- to medium-sized enterprises (SMEs), a number of key issues remain under-examined. We investigate SME purchasing practices in terms of (1) the degree to which purchasing is regarded as a ‘strategic’ activity by SMEs, (2) the use of supplier evaluation systems by SMEs and (3) the supplier capabilities emphasised by SME buyers. Through a survey of UK SME managers, we find that purchasing practices varied greatly across SMEs. Purchasing formality is generally low with limited evidence of purchasing being employed strategically and with many firms not undertaking formal supplier evaluations. In terms of supplier capabilities, we find that SMEs differ in the capabilities they prioritise, with three distinct groups evident. These groups are labelled ‘holistic’, ‘process’ and ‘logistics’ based on the supplier capabilities they emphasise. These three groups of firms also differed in terms of the emphasis they placed on strategic purchasing, supplier evaluation, technological focus and how they compete in their main markets, but not in terms of firm size or number of suppliers utilised. The implications of these findings are discussed and areas meriting future research are proposed.     

The business case for sustainability? An examination of small firms in the UK's construction and restaurant sectors

Studies show that despite a concerted attempt by UK policy‐makers to portray ‘eco‐efficiency’ measures as cost reducing, most owner‐managers of small firms view environmental measures as expensive to undertake. As a result, owner‐managers tend to be highly resistant to voluntarily improving their environmental performance. Given that SMEs are such a vast sector of the economy, this perceived discord between profits and environmental protection is clearly a major barrier to the ‘greening’ of industry. This ESRC‐funded study has sought to unearth the underlying motivations for why SME owner‐managers in the UK resist or accept the idea that there are business benefits for improving their environmental performance. The findings from 40 in‐depth interviews with SME owners in the UK's construction and restaurant sectors and 12 ‘key informants’ from industry and government are presented, followed by a discussion of SME perspectives on the ‘business case’ for sustainability and its implications for policy‐makers. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

The contours of employee voice in SMEs: the importance of context

This article develops a context‐sensitive approach to analyse how and why voice operates in small‐ to medium‐sized enterprises (SMEs), an area that remains under‐theorised and under‐researched. By building on a priori frameworks with proven ability to unpack complexity and take account of the wider context of SMEs, this article explores how resources (human and social capital) and constraints (product market, labour market and strategic orientation) interact to shape voice practices. The article finds significant differences between ‘reported’ compared with ‘actual’ practices in situ, and identifies different types of firms (‘strategic market regulation’, ‘strategic market‐led’ and ‘non‐strategic market‐led’) along with the factors that influence the form and practice of voice. Overall, the article argues that researchers should further pursue research that appreciates the layered nature of ontology and the role played by firm context to explain complex organisational phenomena, if we are to advance our understanding of voice practices in SMEs and beyond.     

The climate and culture of environmental compliance within SMEs

This paper reports some of the findings of an ESRC Global Environmental Change Programme project which considered the attitudes of individuals (management and non‐management) in small and medium‐sized enterprises (SMEs) to the environment and environmental compliance. The focus on individuals and an understanding of the relationship between attitudes and behaviour within businesses is essential to implementation of effective sustainable development and self‐regulation policies. The research revealed that the environment is important to individuals and that environmental compliance is regarded as ‘the right thing to do’. However, the influence of the regulatory domain on businesses is revealed as considerably more complex than suggested by some other surveys. In particular the positive culture amongst individuals in businesses to the importance of compliance appears to differ from the operational climate of many SMEs; i.e. their capacity and feasibility to act. The research suggests that SMEs in general are ‘vulnerably compliant’ due to a mismatch between climate and culture. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.     

Regulation,self-regulation and environmental consensus: lessons from the UK packaging waste experience

This paper uses the case study of UK packaging waste policy to illustrate the problems of developing environmental self-regulation. In July 1993, the UK Secretary of State for the Environment ‘challenged’ British business to organise and run a self-regulatory scheme to recover between 50 and 75 per cent of packaging waste by 2000. But the response was dogged by differences of opinion within business and a lack of political will from business and government. Consequently, the businesses approached to develop this scheme declared self-regulation unworkable and lobbied government to introduce national legislation. This case study suggests that self-regulation works best where it fits the status quo by formalising existing practices or encourages incremental change to those practices. Where major changes to the status quo are needed, self-regulation may founder because it fails to bind together diverse sectors and companies which are differentially threatened by those changes and thereby fails to ensure voluntary compliance. © 1997 John Wiley & Sons, Ltd and ERP Environment.     

Innovating in the local systems of small medium sized enterprises: the experience of Tuscany

Innovation policies addressed to SMEs in Tuscany (and in Italy as well) have given, so far, a very limited contribution to improving the SMEs performance in terms of competitiveness and technological enhancement. The interpretation the paper attempts to demonstrate is that innovation policies have been designed for a ‘generic’ SME, in a frame of traditional sectors, within administrative areas, whereas successful SMEs are not merely operating in a given sector or area; they are agglomerated in peculiar Spatial Systems of Small Enterprises (SESS). The productive, spacial, social models of functioning of a typical SESS are described in order to:

(i) identify the local mechanism of interdependencies (between firms, labour force and local government), which generates relevant flows of external economies;

(ii) prove that innovation policies have neglected the vital characteristic of the SMEs (their agglomertion in SESSs).

Finally, a new innovation policy for SMEs designed by the Regional Government of Tuscany is presented.     

Engaging Hong Kong businesses in environmental change: drivers and barriers

Hong Kong's businesses have been slow to embrace environmental management principles, particularly in the SME sector. This article analyses key barriers and incentives to engaging Hong Kong businesses with voluntary environmental initiatives and compares their relevance for companies of different sizes. As in other countries, SMEs show a much lower uptake of such activities than larger companies. Their approach towards environmental management is predominantly reactive, and legislation remains the key driver for engaging them with environmental change. Inadequate government policy and support, societal attitudes and corporate culture all contribute significantly to the comparatively poor development of corporate environmental management among Hong Kong companies. As long as most SMEs regard voluntary environmental activities as costly and unnecessary ‘extras’ that endanger their competitiveness and detract resources from their core business without offering any tangible benefits, fundamental improvements in their environmental performance will be difficult to achieve. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

The involvement of small- and medium-sized enterprises in public procurement: Impact of resource perceptions,electronic systems and enterprise size

The importance of small- and medium-sized enterprises (SMEs) as employers and suppliers is high, and there are studies that evaluate the benefits of having SMEs as suppliers. The challenges of SMEs as buyers have been explored, but there is little research on the obstacles that SMEs encounter as suppliers. This article focuses on the implications of perceived resources, electronic systems and enterprise size. It uses survey data to analyze what type of resources and characteristics in particular influence the involvement of SMEs in public procurement. The results of hypothesis testing show that perceived lack of resources especially in legal expertise and administration is associated with low SME involvement. By analyzing suppliers to municipalities and state organizations separately, it is found that lack of electronic systems in order processing and invoicing is related with low involvement of SMEs in state procurement. In short, this article contributes to the current knowledge on SMEs and public procurement by demonstrating the influence of resource perceptions and electronic systems on SME involvement and by pointing out the differences between the two levels of public sector actors (municipalities and state organizations).     

Small businesses and the environment: turning over a new leaf?

Previous studies on the environmental practices of small and medium‐sized enterprises (SMEs) in the UK and beyond have portrayed owner‐managers as laggards who underplay their firm's environmental impacts and resist environmental management due to its perceived cost. Yet a recent cross‐sector survey of 220 UK SMEs suggests that this intransigent stance may be slowly changing. Responses indicate a high percentage of owner‐managers actively involved in recycling, energy efficiency, responsible buying and selling, and efforts to reduce their carbon emissions. Owner‐managers saw it as their responsibility to help solve environmental problems and were reportedly willing to accept the costs of tougher environmental regulations and taxation. Business owners were motivated not just by the ‘push’ of legislation and environmental concern but by the ‘pull’ of potential cost savings, new customers, higher staff retention and good publicity for their firms. The survey also found that owner‐managers had resonance with the Stern Review's (2006) conclusions that the benefits of strong early action on climate change outweigh the costs, and that a transition to a low‐carbon economy will bring opportunities for business growth. This indicates that SMEs may be coming round to the idea that there is a business case for sustainability, although there is still some scepticism on the overall profitability of environmental action. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Information but not consultation: exploring employee involvement in SMEs

Most research on employee involvement (EI) has focused on large or ‘mainstream’ organizations. By adopting those schemes which ‘appear’ to work well in larger organizations, smaller firms assume there will be enhanced employee commitment beyond formal contractual requirements. The main question in this paper is whether EI schemes designed by management will suffice under the 2004 Information and Consultation of Employees (ICE) Regulations. The paper focuses on SMEs which tend to favour informal and direct EI, and it remains unclear how these methods will be played out under the new regulatory environment. Evidence from four case studies is presented here and it suggests that the ICE Regulations impose new challenges for smaller firms given their tendency to provide information rather than consult with employees. It also appears organizational factors, workplace relations history and the way processes are implemented at enterprise level may be far more important than size itself.     

How low can U go?

• ? Although there is growing evidence that wage growth is building in response to low and falling unemployment in the advanced economies, there is scope for unemployment rates to fall further without triggering a pay surge.
• ? For a start, current unemployment rates in comparison to past cyclical troughs overstate the tightness of labour markets. Demographic trends associated with the ageing ‘baby boomer’ bulge have pushed down the headline unemployment rate – unemployment rates among older workers are lower than those of younger cohorts. And in a historical context, Europe still has a large pool of involuntary part‐timers.
• ? In addition, rising participation rates mean that demographics are less of a constraint on employment growth than widely assumed. In both 2017 and 2018, had it not been for increased activity rates (mainly for older cohorts), unemployment would have had to fall more sharply to accommodate the same employment increase. We expect rising participation rates to continue to act as a pressure valve for the labour market.
• ? Finally, unemployment rates were generally far lower during the 1950s and 1960s than now. If wages stay low relative to productivity, as was the case during that prior era, employment growth may remain strong, with unemployment falling further. In the post‐war era, low wages were partly a function of a grand bargain in which policy‐makers provided full employment in return for low wage growth.
• ? There is evidence to suggest that many post‐crisis workers have opted for the security of their existing full‐time job and its associated benefits despite lower wage growth, rather than change job and potentially earn more; the rise of the ‘gig economy’ has led some workers to value what they already have more. Put another way, the non‐accelerating inflation rate of unemployment (NAIRU) has fallen. So, the role of labour market tightness in pushing wage growth higher may continue to surprise to the downside.

     

Summer Budget: calculated risk or reckless gamble?

• The Chancellor had created the expectation that his Summer Budget would be radical and he did not disappoint. The ‘rabbit from the hat’ was a compulsory ‘living wage’, expected to reach £9 per hour in 2020, which Mr Osborne hopes will help to compensate the lower paid for the slashing of in‐work benefits. This has effectively transferred responsibility for supporting low‐income households from the government to employers. The OBR expects this to have a relatively muted impact on employment, but this view looks pretty optimistic and the policy represents a major gamble.
• The reduction in welfare spending, plus an easing of the near‐term fiscal squeeze, has helped to smooth the public spending ‘rollercoaster’. But with a plethora of giveaways failing to disguise a net increase in the tax burden, the Budget is likely to weigh on growth prospects, even if the Chancellor's big gamble pays off.
• Alongside the Budget the Chancellor announced a new fiscal mandate, which will require governments to run a budget surplus in “normal times”. But meeting this mandate will require a fiscal stance very far from the historical norm and it will also force other sectors to move into deficit to compensate. It will also mean a looser monetary policy than would otherwise be the case. So a policy presented as creating room for fiscal policy to respond to future economic shocks could potentially narrow the scope for the more potent weapon of interest rate cuts.

     

Could unemployment go back to the post‐war heyday?

• ? The current ‘low’ rate of unemployment looks less impressive when compared with the 2–3% rates averaged in the 1950s and 1960s. But both then and now share a common driver of low joblessness – pay growth falling unusually short of productivity gains. While the chances of this continuing look stretching, a return to genuine full employment is not completely implausible .
• ? Why was unemployment so low in the early post‐war period? Given the current uncertainty over how far joblessness can sustainably drop and how this affects monetary policy, our analysis provides useful insights for the situation today.
• ? Several explanations have been mooted. A political commitment to full employment is one, although aspiration alone cannot provide a cause. And demand management using fiscal policy is hard to square with the period's modest budget deficits. Meanwhile, booming post‐war investment and trade and shortages of labour fail to explain why low joblessness did not quickly trigger rapid rises in pay and inflation.
• ? The cause of very low unemployment appears to have sat with wage restraint relative to productivity gains. Unlike most of the last 70 years, real pay growth consistently fell short of productivity rises in the 1950s and part of the 1960s, cutting the cost of workers and ensuring a low ‘equilibrium’ rate of unemployment.
• ? This explanation has parallels with the present day. Since 2010, productivity growth has outstripped real pay rises to an extent not seen since the 1950s. We do not expect this pattern to continue – our forecasts show real pay running slightly ahead of productivity growth over the next five years. But if the factors holding back pay were to persist, alongside a catch‐up in UK productivity, a return to a 1950s/60s‐style jobless rate is possible, if the MPC did not take fright at further declines in unemployment.

     

Brexit – Customs borders will impose costs and delays

• ? The UK's decision to leave the EU customs union is likely to see physical customs borders being introduced, including in Ireland. This will impose administrative costs and delays, with our modelling suggesting that introducing customs checks would reduce the level of UK GDP in 2030 by between 0.7–1.3%. But there are opportunities for the two sides to limit the damage through cooperation and the UK could also mitigate the costs by agreeing free‐trade agreements (FTA) with third countries.
• ? The UK can take as ‘light‐touch’ an approach to customs checks on imports from the EU as it desires. But it is likely that the EU will introduce customs checks on goods imported from the UK, even if the two sides agree an FTA, to ensure regulatory compliance and that ‘rules of origin’ have been satisfied – this will be particularly important if the UK agrees FTA with countries the EU does not have deals with.
• ? Introducing customs borders would pose some logistical problems, particularly in the Dover Strait where existing infrastructure is limited and there are space constraints. A potential fivefold increase in customs declarations will also pose challenges on the IT front. If the UK and EU are unable to agree transitional arrangements, then the additional infrastructure would need to be up and running in a very short period of time. This risks a period of substantial disruption.
• ? Traders will have to complete additional paperwork – such as export licences and import declarations – but much of this can be dealt with electronically, which should help to limit costs and delays. In addition, if the two sides were to share information then this could help to limit the extent to which risk‐based inspections caused delays.
• ? The Government is effectively calculating that the benefits from agreeing FTA with other countries will outweigh the costs of customs controls on the UK‐EU border. This judgement looks doubtful and, at best, would take many years to bear fruit.

     

An Eastern and SME version of expatriate management: an empirical study of small and medium enterprises in Taiwan

This study, different from previous ‘individual level’ research, explored ‘company-level’ expatriate training, expatriation policies and the perceived willingness on the part of expatriates to take on an enhanced role in organizational performance. Based on data from 254 Taiwanese SMEs with foreign investments, an Eastern and SME version of expatriate management is presented. The most significant predictors of expatriate premature return and company sales are the ‘number of expatriates’ and ‘ratio of expatriates with managerial positions’. Companies that have a greater percentage of expatriates with spousal accompaniment experience more premature return while insufficient training explains lower company sales. Insights regarding regional expatriate differences and methodological implications are also elaborated.     

The MPC is on the verge,but a hike would be a mistake

• ? In light of the MPC's recent signalling, we now think that November's meeting will deliver a 25 basis points rise in Bank Rate. But the case for tighter monetary policy is weak even by the Committee's own criteria. This article sets out six reasons why we think that the MPC is on the verge of making an error.
• ? A chorus of hawkish comments from MPC members suggests that the Committee's next meeting on 2 November will announce a rise in Bank Rate, a 10‐year first. Granted, the MPC has ‘cried wolf’ before. But this time around the rhetoric has been much stronger. And the Committee has set the bar for a hike very low. Moreover, with inflation likely to peak soon and then decline through 2018, November would offer a good opportunity, presentationally at least, to go for a hike.
• ? But caution should temper the Committee. The MPC cites “a continued erosion of slack and a gradual rise in underlying inflationary pressure ” in support of its view. However, while the unemployment rate has fallen below the Bank's ‘equilibrium’ estimate, the Bank has history in being compelled to progressively cut that estimate. With the jobless rate still well above post‐war lows and worker power cowed, joblessness could fall further without threatening inflation.
• ? Meanwhile, the rise in underlying inflationary pressure that should follow from diminishing slack is absent. The MPC's claim that pay growth is picking up is tenuous and conflicts with recent survey evidence from the Bank's own regional Agents. In any case, the idea that faster pay growth threatens higher inflation has surprisingly weak foundations.
• ? Admittedly, a small rate rise, in itself, would slow growth only modestly. But the message sent by such an action risks pushing the economy further into a low growth expectations trap. And the Bank has alternative tools for dealing with the adverse side‐effects of ultra‐low rates. A rate rise in November would be a mistake.

     

Why SMEs invest in environmental measures: sustainability evidence from small and medium‐sized printing firms

Why do SMEs invest in environmental measures? From the literature we know that most SMEs are rather slow in adopting these sustainable measures, but then the following question arises: why are other SMEs fast in this respect? From our research, it becomes clear that improving the working conditions is the most important reason why these fast‐going SMEs invest in environmental measures, as this probably improves their employees' motivation and performance. This explanation connects ‘planet’ and ‘people’ with each other, and does not exclude ‘profit’, which completes the traditional sustainability circle. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.