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.     

Small business responsibility in developing countries: a threat or an opportunity?

Many developing country small and medium sized enterprises (SMEs) that are exporters see themselves facing a dilemma. They do not know how to respond to the rising social and environmental requirements of global buyers and supply chains and fear that were they to do so they would lose their competitive edge. However, they are aware that if they do not meet these requirements, they will not be able to access new foreign markets and may lose the contracts they already have. To investigate whether practical methods exist for resolving this dilemma, the United Nations Industrial Development Organization (UNIDO) carried out a one year project with 22 SMEs in four Asian countries. The results suggest that well targeted, enterprise‐specific efforts to meet corporate social responsibility (CSR) requirements can make a positive contribution to both short‐term profitability and longer‐term competitiveness. The ‘business case’ for CSR appears strongest in the environmental area, but measures in that area can act as a ‘starter motor’ for tackling more systemic ‘social’ problems. Furthermore, tackling social issues at the workplace can feed back positively to improve the sustainability of the environmental improvement measures. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

UK environmental policy and the small firm: broadening the focus

The poor environmental performance of small and medium‐sized enterprises (SMEs) in the UK has been attributed to a wide range of barriers, both internal and external to the firm. However, the debate has seldom considered the interplay of factors beyond ‘the firm’. In order for the debate to progress we emphasize the importance of situating the environmental practices of small firms within a context of national policy arrangements. A lack of institutional enfranchisement for SMEs in the UK is a key factor in understanding why environmental policies have yet to be successful in encouraging more environmentally proactive behaviour within this sector. Copyright © 2003 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.     

EM into SME won't go? Attitudes,awareness and practices in the London Borough of Croydon

This paper provides an account of a questionnaire-based survey of businesses (all except one being SMEs) in the London Borough of Croydon. The main findings reported are that (i) most managers profess a high level of environmental concern, but (ii) they have little knowledge of developments in the field of environmental management and (iii) they have not introduced formal practices to manage the environmental performance of their businesses. The research also indicates that market forces (as supply chain pressure) and intervention strategies (the provision of environmental management services) have, as yet, had little or no significant impact on SME behaviour. It is suggested that both of these potential ‘drivers’ are limited in the extent to which they are likely to influence future practice in SMEs. Following from this, it is also suggested that attempts to promote environmental management in SMEs are only likely to succeed if they are grounded in a thorough understanding of the heterogeneous natures of SMEs and the diverse socio-economic contexts within which they operate. Relating to this, a number of areas for further research are proposed. © 1998 John Wiley & Sons, Ltd and ERP Environment.     

The impact of operator involvement in pollution reduction: case studies in Canadian chemical companies

In contrast to most environmental engineering processes, the effectiveness of employee involvement in pollution reduction seems uncertain, ambiguous and far from being clearly established. For companies whose environmental policies have long rested on technical investments, this uncertainty raises several essential questions, namely ‘what is the true effectiveness of this approach?’, ‘to what degree does employee involvement, most specifically operator involvement, make it possible to significantly and measurably reduce environmental impacts?’ and ‘what type of change could this induce in company operations?’. This article proposes answers to these questions based on an empirical study of the preventive and behavioural aspects of environmental management in the Canadian chemical industry. Conducted in three chemical factories from the Montreal region, the case studies show that significant results, often exceeding managers' expectations, could be obtained through the operators' involvement. However, these results and the precise organizational changes that caused them were difficult to identify, measure and foresee. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

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.     

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.     

SMEs and the environment: evaluating dissemination routes and handholding levels

The Better Business Pack (BBP), a toolkit intended to enable SMEs to develop plans and activities that would lead to environmental and financial benefits, is evaluated. It is found that in spite of high user evaluation of the toolkit in terms of design, user‐friendliness, being up to date and recognition that little effort was required before returns could be achieved, actual financial and environmental achievements were patchy. The BBP was designed as a stand‐alone package that would stimulate SMEs to embark on this path without further support. However, the nature of the dissemination route and the presence of ‘handholding’ support significantly affected success levels. Furthermore the nature of this support was crucial. The most effective support came from pre‐existing networks and opportunities to learn from fellow users, rather than traditional consultancy and other external agency support. Awards for best practice were also found to be of importance. Copyright © 2002 John Wiley & Sons, Ltd and ERP Environment.     

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.     

The ‘win–win’ paradigm and stakeholder integration

Firms are under pressure to invest in environmental management systems (EMSs) to reduce the environmental impacts of their activities. Many advocates of EMS adoption promote the idea of ‘win–win’ gains, where improvements in environmental performance are accompanied by financial rewards. The empirical evidence on this is mixed and suggests that the' right' conditions must exist within the firm for genuine environmental performance gains to materialize. The paper uses a survey of 129 Spanish manufacturing firms to investigate managerial perceptions about what these right conditions might be. Results indicate that enhanced environmental performance following EMS adoption is linked to managers' belief in the win–win paradigm, and that managers who adhere to the win–win story also tend to integrate other stakeholder demands into their business strategies. Policy implications conclude the paper. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.     

Industrial ecology and some implications for rural SMEs

In a project at Western Norway Research Institute, the concept of industrial ecology (IE) is used as a framework for environmental performance of small- and medium sized enterprises (SMEs) in Norway. The main goal of the project ‘Green SMEs’ is to identify existing and future environmental challenges for rural SMEs. The focus is on external demands coming from the surroundings of the individual businesses. Examples of issues being dealt with are industrial wastes becoming sources of raw materials for other industries, design and material choice for disassembly and reuse, development of industrial ecosystems, and industrial metabolism. This paper presents actual examples of industrial ecosystems and also some cases illustrating the problems small remotely located firms meet when the principles of IE are to be applied. These problems include the inability to participate in efficient industrial ecosystems (webs) with exchange of wastes to raw materials. Larger companies, often being more centrally located, have greater chances at identifying and attracting other businesses which they can co‒operate with in finding usage for their wastes. The ‘cluster’‒properties of efficient industrial ecosystems can therefore be a limiting factor in the development of such systems in rural areas. Small companies also have less opportunities to be proactive in establishing industrial ecosystems also merely due to the smaller scale of their operations. © 1997 John Wiley & Sons, Ltd. and ERP Environment.     

Realizing new regional core competencies: establishing a customer-oriented SME network

This paper explores the possibilities of combining the recently developed ‘value constellation’ concept and the literature about industrial districts. The advantages related to the geographical concentration of economic activities are insufficient in the competition with companies that are linked to each other within a value constellation - a customer-oriented inter-organizational strategy. This new type of competition forces traditionally operating SMEs in industrial districts to team up with each other in a customer-oriented network. However, these networking strategies are unlikely to emerge because SMEs are locked into their traditional competencies and they lack the financial and strategic resources to develop interactive strategies covering the entire value system. Business associations and local institutions may play a crucial role in changing and shaping the emerging network among the SMEs. However, local institutions are equally susceptible to being locked into traditional patterns of interaction. Their willingness to break away from the past is crucial for the learning capabilities of local SMEs. The difficulties in setting up a customer-oriented network are illustrated by the ‘construction and home furnishings’ business cluster in South West Flanders (Belgium).     

Qualitative growth and complementary technology: Beyond the technical fix

At present, improved environmental performance and corporate growth work hand in hand as part of a single business strategy. Growth enables the company to invest in environmental technology; environmental technology in turn enables it to grow while holding increases in environmental impact to a minimum. But this ‘Golden Age’ relationship could break down as the environmental benefits of technological advance are overwhelmed by growth in output. For this reason, there is already concern in some industries that the need to protect the environment may lead in due course to regulations designed to suppress further growth. However, any attempt to suppress growth would have extremely severe economic implications, and would require us to address the Growth Enigma: how are the needs of a stable economy and a stable environment to be met at the same time? The concept of ‘qualitative growth’, i.e. corporate strategy based on a reduced rate of growth, is examined with special reference to the airline industry and to Swissair, which has recently announced a qualitative growth strategy. It turns out that the company is not in fact implementing the strategy, but the declaration of intent itself reveals some valuable lessons which may help in a solution to the central problem of growth and the environment.     

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.     

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.     

Conceptualizing businesses as social actors: A framework for understanding sustainability actions in small‐ and medium‐sized enterprises

Small‐ and medium‐sized enterprises (SMEs) can play a crucial role in advancing environmental and social well‐being. Yet various—often conflicting—explanations have been offered to clarify why SMEs pursue sustainability. Some arguments foreground possibilities of profit maximization, whereas others emphasize individual values and convictions. Research supporting such contradicting explanations is often biased towards large enterprises or small, innovative frontrunners. In this article, we examine the underlying drivers of social and environmental interventions of SMEs by exploring empirical data from a survey of over 1,600 Canadian SMEs and complementary in‐depth interviews. We argue that sustainability actions of SMEs can be understood by viewing these firms as social actors—organizations that are shaped by individual values, internal and external interpersonal relationships, and are embedded in a social environment. This conceptualization directs attention to the full range of factors that shape sustainability engagement of SMEs and highlights frequently overlooked forms of sustainability‐oriented actions.     

Reinventing auditing,redefining consulting and independence

This paper deals with recent developments in auditing, taking KPMG's ‘business measurement process’ as its example. From this example it is discussed how and why auditing is currently being ‘reinvented’. The ‘reinvention’ of auditing, it is argued, represents a fundamental break with the established epistemological dualism between auditing and management advisory services,¹ that is central to most literature on auditor independence, including the European Commission's Green Paper. Consequently, it is not only auditing that is being reinvented, it is also consulting and independence, and the consequences of this rupture are finally discussed. The paper concludes that the auditor cannot be independent because auditing is no longer independent.     

Encouraging employees to co-operate: the effects of sponsored training and promotion practices on employees' willingness to work overtime

The ‘mutual-investment’ model argues that when employers invest more in the social exchange relationship between them and their employees, their employees will show more effort. In this paper we relate the ‘mutual-investment’ model to training and promotion (possibilities) and examine if these kinds of career-enhancing measures influence the willingness of employees within organizations to work overtime. To test this hypothesis, a vignette experiment was conducted in five organizations (N = 388; 1,531 vignettes). Multilevel analyses show that employees are more willing to work overtime when their employer has provided for training, when the employee recently was promoted, when the supervisor was supportive in the past and when co-workers approve of working overtime and behave similarly. But we did not find that future promotion chances affect willingness to work overtime.     

Firm resources and the development of environmental sustainability among small and medium‐sized enterprises: Evidence from the Australian wine industry

Scholars and industry professionals want clarification of the specific firm resources that influence the adoption and development of environmentally sustainable strategies. This paper, set in the context of the Australian wine industry, explores different firm resources that are beneficial for environmentally sustainable development and examines the role of management attitudes and norms in moderating this relationship. It establishes which resources small and medium‐sized enterprises (SMEs) should invest in to be more successful in following environmental principles. The findings of a survey of the owner‐managers of Australian wine‐producing SMEs are reported, and partial least squares structural equation modelling is utilized to analyze the data. Results clearly indicate that successful firms that manage their resources more effectively influence the application of environmental behaviour, with one distinct resource significantly influencing the disclosure of such behaviour. A moderating effect is established which supports the notion that pro‐environmental decision‐making in SMEs is heavily influenced by the attitudes and norms held by management.