Management for Sustainable Development and Its Impact on Firm Value in the SME Context: Does Size Matter?

With the increasing demands from society towards sustainable and social responsible business practices, management for sustainable development has become a cornerstone to understand the success of many firms in the current competitive context. This article investigates corporate social responsibility (CSR) and examines the links between CSR practices and business outcomes – both financial and non‐financial (i.e. image and corporate reputation) – for small‐to‐medium sized enterprises (SMEs). In addition, we also attempt to determine whether the impact of such relationships is moderated by firm size. To this end, we carry out a quantitative study using PLS techniques to analyze a sample of SME owners and managers, with a view to test the proposed model in the light of social capital theory. In this sense, our study is pioneering in that it aims to determine – from a quantitative viewpoint – the degree to which firm size has a moderating impact on a series of relevant CSR‐driven outcomes. The data suggest that, in SME contexts, CSR impacts corporate reputation, brand image and financial value of the company. Importantly, we find that the larger the firm, the greater the intensity of the relationships linking CSR and business outcomes. Hence, our findings have important implications for CSR implementation in SME contexts. Finally, we provide a series of guidelines aimed at maximizing the effectiveness of CSR‐based business practices. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

SME policy implementation as a relational challenge

The purpose of this paper is to study the relationship between actors, who implement the small- and medium-sized enterprise (SME) policy, and entrepreneurs, who are the targets of the policy, by focusing on the question who is serving whose interests. The paper presents a case study conducted in one of the sub-regions in Finland. The data include individual interviews with 10 policy implementers and 19 small business entrepreneurs and two group discussions. The data are approached from the perspectives of discourse analysis and positioning theory. The results are further interpreted in terms of agent–principal relations. The results indicate that one relational challenge faced in the implementation of the SME policy is the proxy agency, in which both policy implementers and entrepreneurs position themselves as the principal and the other party as their agent. The proxy agency can be viewed as an interactional pitfall caused by the incompatible discourses of entrepreneurs and policy actors and the actor positions constructed with these discourses. Besides addressing the relational problems enabled by certain individual discourses, the paper also demonstrates how there is also a need to address the potential conflict that stems from the collision between discourses.     

Accentuating the interconnection between business sustainability and organizational performance in the context of the circular economy: The moderating role of organizational competitiveness

Sustainability development has gained significant importance in the modern business environment. The primary objective is to conduct an explanatory and quantitative study of the impacts of the social, economic, and environmental dimensions on organizational performance, considering the moderating role of organizational competitiveness. Data were collected from Chinese, Italian, and Romanian small and medium enterprises (SMEs). The questionnaires were distributed by applying simple random sampling techniques. The study sample size consists of 320 SME employees. Hierarchical regression was used to investigate the moderating impacts of organizational competitiveness on the relationships of the social, economic, and environmental dimensions and organizational performance. The regression analysis shows a positive relationship between the study variables. Small and medium-sized enterprises are focusing more on sustainable business practices.     

价值管理与我国中小型企业发展

中小型企业是国民经济的重要组成部分,对经济发展和社会稳定起着举足轻重的促进作用。但由于其产出规模小、资本和技术构成较低、受传统体制和外部宏观经济影响大等因素,使得中小企业在财务管理方面存在着与自身发展和市场经济均不适应的情况。目前,新的商业环境使传统的会计衡量标准和旧的财务管理模式日趋落伍,包括经济增加值在内的新的经济管理手段和技能却显得越来越重要。     

Micro-foundations of environmental entrepreneurship resistance in SMEs

This article characterizes theoretical problems regarding the essence of environmental entrepreneurship resistance. The objective of the current research was to search for micro-foundations of environmental entrepreneurship resistance occurring in SME. We relate the concept of resistance in entrepreneurship with the idea of micro-foundations, thus creating new opportunities for analysis in two areas: conceptual view that interprets the phenomenon of resistance in relation to the organization's activities in the field of entrepreneurship, and cognitive supplementary knowledge of micro-foundations, which affect the entrepreneurial behavior of employees. Environmental entrepreneurship resistance in SMEs has been defined in our interpretation as targeted individual or collective daily activities, implemented from the perspective of various intentions, motivations and other internal and external premises, which are in opposition to commonly used pro-environmental activities constituting the CER component of small and medium business. In addition, we identified a group of 20 micro-foundations, which from the level of an individual or organization may constitute the initiation of entrepreneurial activities, focused on environmental protection in SME. The indicated group was examined on a sample of 122 employees of the SME sector in Poland. After performing qualitative and quantitative analyses, it turned out that eight elements could be considered as micro-foundations of environmental entrepreneurship resistance.

     

Influence of the capacities of top management on the internationalization of SMEs

International diversification strategies require managerial skills capable of positioning businesses efficiently within a complex international environment. Based on resources and capabilities theory, this study examines the relationship between top management characteristics (age, education, professional experience, and language knowledge) and the international diversification of a given business. It also follows on from Herrmann and Datta's work (2005) by analysing the relationship between these managerial characteristics and SME performance. The analysis is based on a sample of 219 SMEs with international diversification strategies from the La Rioja (northern Spanish region). Regression techniques were used and the results confirmed the existence of a material relationship between a number of managerial characteristics and geographical diversification strategies for SMEs. Empirical evidence was also obtained of the relationship between Spanish SME profitability and certain managerial attributes according to their level of international diversification. Finally, the potential implications of the results of this study for both researchers and real businesses are also discussed. Policy-makers and public agencies can benefit from these results: the development of certain attributes in TMTs strengthens the development of international diversification policies, thus allowing SMEs to improve risk diversification and protection against exchange rate fluctuations.     

Linking entrepreneurial and market orientation to the SME’s performance growth: the moderating role of entrepreneurial experience and networks

Entrepreneurial orientation and market orientation (EO and MO, respectively) have received extensive research attention in the past several decades. Although scholars widely agree that both MO and EO are critical to firms’ performances, a better understanding is still needed about how market and entrepreneurial orientation develop over time as well as their relative impact on the growth of the SME’s performance. This study does not consider MO and EO as generic resources that always positively influence firms’ performances; instead, it tries to explore contingent elements, such as social and business networks and accumulated entrepreneurial experience. The hypotheses were tested on 191 small and medium-sized electronic firms located in an Italian geographical cluster during two periods: 2005 and 2016. This study suggests that SMEs, which develop social networks, may enjoy considerable advantages from entrepreneurial and market orientation, improving their performance benefits. Moreover, our results show that previous entrepreneurial experience, when specific, can reinforce the impact of entrepreneurial and market orientation on firms’ performance growth. This analysis makes several important contributions to the management literature on the strategic orientation of firms, the entrepreneurial experience and network development.

     

Business owners’ network size and business growth in China: The role of comprehensive social competency

The authors present a model that explains how comprehensive social competency (made up of three components – social skills, proactive and elaborate social strategies, and relational perseverance) is related to business people's network development, and how social networks in turn are related to business growth. We conducted two studies with Chinese small business owners, – one in the capital city Beijing (N?=?133) and a second one in the less developed rural region of Xunyi (N?=?78). Comprehensive social competency was consistently related to network size and business growth. In addition, government network size was related to the business growth since start-up in both studies (employee growth in Study 1 and personal asset growth in Study 2), but business network size was not related to business growth. Government network size also functions as a partial mediator between comprehensive social competency and business growth since start-up. Some differences are found between the rural area and the urban centre.     

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.     

Failure factors in small and medium-sized enterprises: qualitative study from an attributional perspective

The objective of this study is to identify factors for poor performance and failure faced by small and medium-sized enterprises (SME) and to investigate a potential bias between real causes and attribution for stranding. In order to achieve this objective, we have adopted entrepreneurial personal story explorations in eight Portuguese SME. Our research reveals that the most important factors are limited access to finance, poor market conditions, inadequate staff, and lack of institutional support, as well as co-operation and networking. Hereby, at a first glance, external factors were more often cited, but qualitative analysis revealed that internal factors are imminent and not satisfactorily recognized. Even though some owner–managers showed a certain awareness regarding their internal weaknesses, many problems such as lacking strategy and vision, low educational levels, and inadequate social capital are not sufficiently recognized. Therewith, we found a strong attribution error when SME owner–managers judge the causes of their ventures’ unsuccessful performance and failure. Finally, we draw conclusions and suggestions for policymakers, small business owners, consultants, and researchers.     

Small & medium-sized enterprises and Corporate Social Responsibility: a systematic review of the literature

Most business management research to date has either failed to look at firm size as a factor or focused its attention on large companies. The fact is, however, that small and medium-sized enterprises (SMEs) are unique, making general assumptions applicable to other types of firms of little use. Corporate Social Responsibility (CSR) is no exception. Recent decades have seen a plethora of studies which debate definitions, consider content and scope, and study causal relationships with antecedents and implications of applying CSR. Yet only a small percentage of the literature has delved into SME realities. Through a systematic review of the literature, the present study aims to analyze the state of the question and identify the theoretical framework of reference, and CSR antecedents and consequences in SME contexts in order to provide a jumping off point for future empirical studies. Hence, after consulting a cross-section of internationally renowned experts and the SSCI/JCR Index, we have reviewed articles in the foremost management journals (Academy of Management Review, Academy of Management Journal, Journal of Management Studies, Journal of Management, Strategic Management Journal), SME management journals (Journal of Small Business Management, International Small Business Journal, Small Business Economics) and CSR-related journals (Business Ethics Quarterly, Corporate Governance: An International Review, Journal of Business Ethics, Business Ethics: an European Review and Business & Society). Our findings shed light on key themes including idiosyncrasies of CSR management, aspects such as terminology and language, the recommended theoretical framework, and antecedents, barriers and potential impact of CSR in the SME context.     

The negative influence of the entrepreneur’s level of higher education on the attractiveness of European SMEs as alliance partners in Brazil: the role of practical experience and international entrepreneurial orientation

Notwithstanding the contemporary relevance of alliance strategies for SME internationalisation, especially in the case of uncertain business environments, few studies have investigated human resource issues in the context of SMEs prior to alliance formation. Even more scarce are studies looking at the impact of a manager/entrepreneur’s characteristics on pre-alliance formation, despite recognition of the expected crucial role of the entrepreneur in this context and of the strong connection between an entrepreneur and their SME. Drawing on international entrepreneurship theory and empirical observations from an exploratory study, we propose a post hoc conceptual model. The exploratory empirical part of our study employs a sample of entrepreneurs from biotechnology SMEs in the United Kingdom and Germany intending to ally in a large emerging market (i.e. Brazil). Our empirical observations suggest an anomalous (at first glance) negative association between the entrepreneur’s level of higher education (a construct at the individual level) and the attractiveness of the SME as a partner firm vis-à-vis alliance formation (a construct at the firm level). Our post hoc model emphasises the role of practical experience and the corresponding levels of international entrepreneurial orientation as theorised variables mediating the observed empirical relationship. We develop theoretical propositions, and suggest practical implications and future research directions.     

The Herning-Ikast textile industry: an industrial district in West Jutland

Notions of social inclusion and the need to combat social exclusion have become popular areas of attention in academic and policy circles. The importance of small firms and entrepreneurship as a means to raising inclusion has been emphasized in these new agendas. A priori, there are a number of reasons why small businesses may be regarded as providing opportunities for social inclusion. However, in this paper we argue that the recent expectations of the role of small firms and entrepreneurship in combating social exclusion are over optimistic. Some of the assumptions on which these expectations are based are questioned. Instead, we suggest that attention should start by a clearer understanding of the concept of social exclusion. Individual economic strategies, in the form of small business activity, can make some contribution but because of the complex multidimensional nature of social exclusion, over-inflated claims should be avoided. When these claims are not achieved there may be a danger of a policy backlash against the promotion of business ownership and disaffection amongst those who fail to realize their goals. This paper draws on secondary evidence and concludes with implications for policy and suggestions for further research.     

Determinants of the Size of the Small Business Sector: They Are Labor Productivity, Wage Rates and Capital Intensity

Abstract . Statistical analysis of a hitherto unpublished tabulation of the 1976 Annual Survey of Manufactures provides new evidence of the small business/ large business relationship in the U.S. economy. Small business (measured by employees) seems to have an advantage over large in that it has relatively lower wage costs. But the data prove it has a higher ratio of labor inputto unit output. Higher productivity in large firms make its wage/output relationship an advantage over small firms. Large firms pay appreciably higher wages than small where most production is by large firms. Highly skilled and hence higher paid workers may be a correlate of higher mechanization. Similarly, the role of capital intensity as an indicator of technology differences explains why capital productivity is no adequate explicator of firm industry share. These variables are closely related to profit margin. Relatively high book values in large firms are associated with low small business industry shares. Nor do large businesses have an advantage in lower prices for raw materials and parts. In the U.S. large business is centered in the capital intensive industries.     

The Effects of Auditor Social and Human Capital on Auditor Compensation: Evidence from the Italian Small Audit Firm Market

Abstract

This study examines whether social and human capital influence the compensation of individual auditors in the small audit firm market. We employ a sample of Italian auditors and use measures from the network and auditing literatures to capture their professional connections, representing social capital, and their industry expertise, representing human capital. Our findings show a positive and economically meaningful association between these individual attributes and auditor compensation. We run several tests to address potential endogeneity issues in our research design. Our results suggest that, in the small audit market, clients perceive as valuable those auditors with higher social and human capital, and as a result, are willing to pay a premium for these specific auditor attributes.     

Policies to enhance social development through the promotion of SME and social entrepreneurship: a study in the Colombian construction industry

Abstract

The intent of this research is to propose and analyse a set of policies in the construction industry to enhance social development. First, the paper shows the connections between the development of small and medium enterprises (SMEs) and social entrepreneurship (SE), the reduction of the leakage, and then the generation of social value (SV) for sustainable regional development. For that, the article analyses briefly the literatures on SE and leakage, and focuses on the relevance of SME and social entrepreneurs as promoters of SV creation and development. Second, the paper proposes a framework and proposes a set of 20 policies aimed to reduce leakage, reinforce SMEs and entrepreneurship and also to promote SE behaviour by the diverse economic agents in the construction industry, in order to increase the generation of SV and sustainable development. Then, the paper analyses the acceptability, feasibility and viability of these proposed polices, which can be useful for academics and practitioners. For that, the study uses the Delphi methodology, applied to an expert-group of 23 professionals (representatives of the private and public sector) belonging to the Colombian construction industry. The results emphasize the relevance of the development of local incumbents and the social focus of firms to increase the generation of SV. Oppositely, policies interfering economic freedom and free trade receive the lowest rates in the three criteria considered.     

Refugee-entrepreneurship: a social capital perspective

Abstract

This paper seeks to identify the characteristics of refugee-entrepreneurial startups, which distinguish them from other immigrant entrepreneurial ventures. The author employed a single case analysis as a means of qualitative research into the phenomenon under study, from the perspective of social capital theory. A typical case of a refugee entrepreneur was selected based on his propensity to tell his story in a way that transparently reveals the various peculiarities of his entrepreneurial behavior. The case study involved the use of interviews with key individuals, the review of printed materials, and member checking. The findings revealed five distinctive attributes that characterized that startup and which corresponded to the three dimensions of social capital. Those attributes were: a ‘one-way-ahead’ attitude, a pseudo family business perception, collective bootstrapping, a distinct network structure, and opportunity-seizing proliferation, thereby depicting how social capital is used by refugee-entrepreneurs to maximize the pool of opportunities in their host nations.     

Compliance with Producer Responsibility Legislation: Experiences from UK Small and Medium‐sized Enterprises

This study investigated the legal performance of UK small and medium‐sized enterprises (SMEs) with producer responsibility legislation. The research incorporated legislation controlling packaging and packaging waste, waste electrical and electronic equipment and the restriction of the use of certain hazardous substances in electrical and electronic equipment. Compliance audits and interviews were conducted with SMEs, regulators, government officials and SME support organisations. A total of 44 SMEs from the north‐west of England were audited between April and September 2008. The study's findings suggest:

• low levels of ‘letter of the law’ and ‘spirit of the law’ compliance;
• enforcement activity and surveillance of SME compliance was generally low; there has not been any formal enforcement action taken under the WEEE Regulations or the RoHS Regulations and enforcement under the PER Regulations is extremely low.

Recommendations on how to improve SME compliance control systems are provided. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

Rethinking organizational resilience and strategic renewal in SMEs

ABSTRACT

Building on work that associates organizational resilience with crisis recovery and strategic renewal, I examine how small- and medium-sized enterprises (SMEs) vary in the formalisation of activities intended to achieve strategic growth and activities to enhance resilience against acute operational interruptions. Drawing on data from 265 SMEs in the United Kingdom, the main argument of this paper is that variations in formalisation activities reflect differences in firm location, personal networks, the influence of external crisis events, and entrepreneurs’ attitudes towards the prevention of crises. The resulting typology identifies four clusters: Attentive Interventionists, Light Planners, Rooted Strategists and Reliant Neighbours. These findings contrast with prior theorizations of firms as either resilient or vulnerable and further illuminate our understanding of SME resilience and how this is shaped by historical, developmental and strategic factors. The study further develops associations between resilience and social capital, examines how locational choices generate a proximity premium, and develops a growth-survival-maturity perspective on SME resilience. Data reveals an interplay between an ensemble of entrepreneurial activities and decisions about planning, networks, learning, and location. Thus, the study offers a rethinking of prior theorizations about organizational resilience and strategic renewal.     

The Role of Public Information in Corporate Social Responsibility

Many of the attributes that make a good “socially responsible” (SR) are credence attributes that cannot be learned by consumers either through search or experience. Consumers, then, use for their purchasing decisions “noisy” information about these attributes obtained from potentially contradictory channels (media, advertisement, NGOs). In this paper we model such informational framework and show the positive relationship between the accuracy of the information transmitted to consumers and corporate social responsibility. We also show that a firm may be tempted to add noise to the information channel (through lobbying of the media), which might reduce the supply of the SR attributes and even harm the firm itself (with lower profits). It might then be profitable to the firm to commit ex ante to not manipulate the information regarding the firm's business practices (e.g., with a partnership with an NGO). Finally, we extend our model to a competition framework endogenizing the number of firms active in the SR segment. We show both that in more transparent markets a larger number of firms will be SR, and that in a market with more intense competition, a higher degree of transparency is required in order to sustain a given number of SR firms.