Commitment to Sustainability in Small and Medium‐Sized Enterprises: The Influence of Strategic Orientations and Management Values

Ecosystem degradation and social sustainability have become important issues in the corporate sphere during the last few decades. However, research discussing corporate social responsibility and related concepts has often focused on larger companies, sometimes neglecting the specifics of small and medium‐sized enterprises (SMEs). The main purpose of this study is to examine the relationships between two common strategic orientations, market orientation (MO) and entrepreneurial orientation (EO), in relation to sustainability commitment, sustainability practices and management values in SMEs. Questionnaire responses from 450 Swedish SMEs were analyzed, confirming the influence of MO, EO and sustainability practices on commitment to sustainability, implying that firms committed to sustainability see both market and entrepreneurial advantages of sustainability. The results also show that different parts of MO and EO differ in importance for commitment to sustainability among SMEs. Implications concern the importance for firms and policymakers to work with sustainability issues using both internal and external perspectives. © 2015 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd     

Circular economy to enhance sustainability of small and medium‐sized enterprises

The circular economy (CE) represents a major paradigm shift of moving from the concepts of linear to circular supply chains across multiple industries. Although some aspects of CE adoption within industrial supply chains have been researched extensively (particularly addressing challenges of design, implementation, and operations), the research that relates CE practices with sustainability performance to reveal the current state of CE practices within small and medium‐sized enterprises (SMEs) is scant. The aim of this research was to facilitate SMEs to achieve greater sustainability through CE implementation. This research addresses three research questions—How are CE fields of action related to sustainability performance? What are the issues, challenges, and opportunities of adopting CE in SMEs? And what key strategies, resources, and competences facilitate effective implementation of CE in SMEs? This study adopts a mixed method approach (qualitative and quantitative) using survey research, focus group, and case studies; 130 randomly selected SMEs within the Midlands of the United Kingdom have been surveyed, and the responses are analysed using statistical tools along with findings from focus groups and case studies. The study reveals that all CE fields of action (take, make, distribute, use, and recover) of SMEs are correlated to economic performance, but only make and use are related to environmental and social performance. The study further derives strategies, resources, and competences for achieving sustainability across all the CE field of actions. Additionally, this research reveals the issues and challenges, strategies, resources, and competences required for implementing CE in SMEs.     

Corporate sustainability and innovation in SMEs: Evidence of themes and activities in practice

Recently, innovation processes towards sustainable development have received increasing attention in academic literature. This research introduces the combination of insights from innovation theory, sustainable development practice and small business characteristics to unlock new knowledge on factors that influence the translation of sustainable innovation within small and medium‐sized enterprises (SMEs) into practice. The sustainability themes and activities as described for large companies (i.e. in the sustainability reporting and management literature) were used as starting point in this study. It presents empiric results of the PRIMA Project conducted within the rubber and plastics industry (RPI) on sustainable innovation activities. It will show that many sustainable innovations are directed at the improvement of technological processes (eco‐efficiency) and to lower costs of production. These innovations can be seen as incremental. Companies with sustainability integrated in their orientation and innovation processes show value creation: the development of products new to the market (radical innovations) and cooperation with stakeholders. The PRIMA project shows that more insight in SME innovative characteristics and (e)valuation of sustainable innovation efforts provides opportunities to improve the sustainability performance of SMEs. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Could lean practices and process innovation enhance supply chain sustainability of small and medium‐sized enterprises?

Small and medium‐sized enterprises (SMEs) adopt lean practices (LP) to reduce waste across their organisational value chain, which helps achieve sustainability. Process innovation (PI) has also been applied through cleaner production, environmental management system, ecodesign, and so on to address both customers' needs and legislations by policymakers. Although prior studies reveal the effect of sustainable practices, LP, and PI on sustainable performance separately, less is known on the integrated effect of them on sustainability performance. Moreover, studies on mediating effect of LP and PI on sustainability performance are scant. This is significant as LP and PI are considered to be the enablers for achieving sustainability performance. This research addresses this knowledge gap. The research first theorises a model integrating these four major constructs (sustainability practices, LP, PI, and sustainability performance) through hypotheses development. Subsequently, using structural equation modelling, it is tested whether each of sustainability practices, LP, and PI effect sustainability performances. Additionally, mediating effect of LP and PI between sustainability practices and performances is derived. The study uses data from 119 SMEs within manufacturing industries in the Midlands, United Kingdom. Further, a few case studies have been undertaken to validate the findings from quantitative analysis. The overall results show that although sustainability practices, LP, and PI help achieve sustainability performance of SMEs supply chain through efficiency and responsiveness respectively, the mediating effect LP is more compared with PI. Moreover, SMEs adopt LP when they are economy focused and implement PI when they are pressurised by customers and/or policymakers.     

Barriers to sustainability for small and medium enterprises in the framework of sustainable development—Literature review

The objective of this article is to analyze the barriers faced by small and medium enterprises (SMEs) when implementing initiatives for sustainable development. For this purpose, a search equation was designed, and the 50 highest cited articles from the search results in Scopus between years 2013 and 2017 were reviewed. The selected criteria for the article analysis were article name, article year, country, continent, journal, Scimago Journal Rank, Scimago Quartiles, Affiliated Universities, abstract, and keywords. Among the main results, 175 barriers to sustainability for SMEs were identified. The barriers that appeared most frequently were lack of resources, the high initial capital cost of implementing sustainability measures, and lack of expertise. At the end of the article, a proposal is included which shows the 175 identified barriers, classified by “sector,” “sustainability tool,” and “internal/external” which can aid in new qualitative and quantitative studies of barriers to sustainability in SMEs.     

An analysis of environmental sustainability in small & medium‐sized enterprises: Patterns and trends

One of the greatest challenges facing the world today is climate change. The need to consistently advance with environmentally sustainable practices in today's businesses is crucial, and businesses are demanded to be more environmentally sustainable every day. This study conducts an analysis of the literature on small and medium‐sized enterprises' (SMEs) environmental sustainability by carefully examining 122 studies from 58 journals published from 2013 to 2019. We investigate the trends in drivers and barriers of sustainability adoption to inform both SMEs managers and policymakers. Our results also classify the reviewed studies on the basis of their methodologies and show the distribution of studies across industry sectors and locations in order to set directions for future research on sustainability practices of SMEs.     

Sustainability performance analysis of small and medium sized enterprises: Criteria,methods and framework

Small and medium sized enterprises (SMEs) play an important role in any economy as they contribute to GDP and employment. However, sustainability (right combination of economic, environmental and social) of SMEs is a major concern as they prioritize economic performance over environmental and social to remain competitive. Majority of prior researches on SMEs' sustainability either look at the impact of a few limited enablers (e.g. lean, green, innovation etc.) on sustainability performance or the effect of pressures and barriers on the sustainability performance. There is a clear gap of a holistic and robust framework for sustainability performance analysis in order to measure and improve sustainability performance. This research bridges this knowledge gap by addressing two research questions – what practice and performance criteria are being considered for sustainability performance analysis in a broad environmental, economic and social context, how are they related, and what methods are being used to derive the relationship between sustainability practices and performance. These research questions are addressed through a systematic literature review of 58 papers, published between 2005 and 2018 in leading journals. First, an objective content analysis is undertaken in order to identify sustainability practices and performance criteria along with their frequency of usage in prior research. Second, the correlation among the variables is studied. Third, the methods for analyzing the relationships of the criteria are identified. Finally, a framework for analysing correlation of SMEs’ sustainability practices and performance in order to measure and improve performance using statistical modeling approach is proposed.     

Drivers,adoption, and evaluation of sustainability practices in Italian wine SMEs

Based on a survey with 64 small and medium‐sized enterprises (SMEs) in two Italian wine regions, this study aims to (a) identify key drivers and barriers of the adoption of sustainability and (b) compare the adoption and evaluation (use, financial/labor investments, and satisfaction) of sustainability practices in four management domains (marketing, chain, operational, and innovation). Results show that internal drivers were considered to be more important than external drivers. Economic sustainability‐oriented drivers scored significantly lower than drivers related to other dimensions, such as environmental sustainability and heritage. Key barriers refer to labor and investments costs, as well as concerns about greenwashing. Although there are substantial differences in adoption and evaluation of sustainability practices within and between management domains, this study confirms their widespread adoption in wineries. Among users, satisfaction levels outweigh the perceived investments. Except for innovation management practices, financial investments are considered to be lower than labor investments. Positive correlations between use‐satisfaction (within each management domain) and between investments or satisfaction levels (between management domains) further lend support for producers' adoption of multiple practices. At sustainability dimension level, heritage is negatively correlated with the evaluation indicators, indicating that it may act as a potential barrier to some sustainability practices. Segmentation analysis identified a low (30%) and high sustainability clusters (70%), which differ significantly in terms of sustainability perceptions and drivers, adoption, and evaluation of practices, as well as company characteristics. Future research needs to validate the findings on SMEs, compare our measures with more objective evaluation indicators, future adoption rates, and multidimensional sustainability practices.     

Voluntary sustainability assurance in small and medium-sized entities: The role of country origin in Europe

The assurance of sustainability information by small and medium-sized entities (SMEs) has not attracted much research interest to date. To rectify this, we draw on a sample of European firms (from the EU, the United Kingdom and Norway) extracted from the Global Reporting Initiative (GRI) database and explore the disclosure variable in relation to country-specific factors. Assurance rates are found to be low among SMEs, and moreover, the level of disclosure is limited. The assurance market is dominated by accounting firms, above all by the Big Four. Legal origin is found to be a highly relevant factor, with Scandinavian countries presenting the highest percentage rates of sustainability report assurance. Among the cultural variables analysed, power distance, masculinity and uncertainty avoidance have a significant negative impact on the decision to assure sustainability information. Overall, the study serves to enhance understanding of SME practices in different countries of origin.     

The complementarity of IT and HRM capabilities for competitive performance: a configurational analysis of manufacturing and industrial service SMEs

ABSTRACT

Building on the resource-based view (RBV) perspective, we analyse the combined effects of two highly-valued organizational resources, namely information technology (IT) capabilities and human resource management (HRM) capabilities, on the competitive performance of small and medium-sized enterprises (SMEs). Three resource configurations are derived from data on 227 SMEs (121 from the manufacturing sector and 106 from the industrial services sector) through a cluster analysis. These resource configurations are labelled IT Capabilities-dominant Configuration (ITC), e-Business Capabilities-dominant Configuration (e-BC), and HRM Capabilities-dominant Configuration (HRC). This last configuration is the best-performing, followed by the e-BC, with the ITC as the worst-performing. The results also show that manufacturing and service firms are very unevenly distributed within HRC and ITC configurations, suggesting notable differences between the two sectors regarding their respective IT and non-IT capability-building. The fact that service SMEs are overwhelmingly represented (93%) in the worst-performing configuration and completely absent (0%) in the most effective configuration while displaying the strongest IT infrastructure capabilities confirms that the IT productivity paradox is aggravated in service SMEs and calls for further research on this issue.     

A quarter‐century review of HRM in small and medium‐sized enterprises: Capturing what we know,exploring where we need to go

Despite the proliferation of HRM research, only a small fraction explores the context of small and medium‐sized enterprises (SMEs). Where HRM in SMEs has received attention, the literature base remains fragmented and variable, comprising a plurality of definitions, explanations, and methods. To advance understanding, this paper uses a quarter‐century systematic review drawing on an evidence base of 137 peer‐reviewed articles. A cumulative framework is presented capturing key developments and synthesizing existing areas of research focus. Analysis of limitations and knowledge‐gaps finds a failure to differentiate across various types of SMEs, limited appreciation of SME characteristics and contextual conditions, and a dominance of managerial perspectives. An agenda for future research on HRM in SMEs is outlined with respect to definitional parameters, HR practices, HRM–performance, key determinants, and presenting issues. The paper concludes that SMEs offer a unique, fruitful, and timely context for investigations of HRM.     

Responsible Innovation Toward Sustainable Development in Small and Medium‐Sized Enterprises: a Resource Perspective

What resources do small enterprises need to develop responsible innovations that enhance sustainable development? Does lack of resources prevent innovation toward sustainability in small and medium‐sized enterprises (SMEs) or can innovations be created with scarce resources? This study investigates environmentally and socially responsible innovations of SMEs from a resource perspective, based on empirical data from 13 Nordic SMEs. The findings indicate that SMEs can create responsible innovations with very different resource combinations. The most common resource combination comprises equity, research and development cooperation, networks, industry knowledge and reputation. Except for financial capital in the form of equity, which appears a necessary condition for responsible innovation from SMEs, resource needs vary between technological and business model innovations. Creating business model innovations appears to be possible with scarce resources, at the very least with equity and social capital. Environmental technology innovations call for more abundant resource combinations. In particular industry knowledge appears to be a key resource for such innovations. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

Critical Areas and Entry Points for Sustainability‐Related Strategies in the Sugarcane‐Based Ethanol Industry of Brazil

This study reveals five critical areas that Brazil's sugarcane‐based ethanol industry could capitalize on to incorporate sustainability into their firms' strategies. The emergent theoretical framework represents a starting point for further investigations aimed at integrating the sustainability construct and strategies for the industry. A growing body of literature calls for strategic management to adapt to complex and ever‐changing environments and sustainability trends. For many firms in developing economies, sustainability remains isolated from mainstream strategy, resulting in reactive approaches on the part of management. A qualitative research method – grounded theory – was used to induct from data. Five themes emerged from the analysis providing guidance on where sustainability‐related strategies ought to begin. This research posits that existing sectoral innovation systems could be used to channel sustainability‐driven innovations. In addition, a combination of public and private efforts to foster innovations based on the emergent themes could increase the value of industry under study, while lessening its social and environmental footprint. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

Environmental management in Devon and Cornwall's small and medium sized enterprise sector

This paper suggests that environmental impacts can be reduced in the SME sector through more detailed, less generic model developments for each industrial sector based on best practices and not on strategic management systems. It also suggests simplification of environmental support organisations and advocates the development of the concept of Energy Performance Contracting to Environmental Performance Contracting. There are undoubtedly many ways in which SMEs can improve their environmental performance but it is questionable that within the present economic system environmental sustainability will ever be achieved. Increased environmental regulation would certainly level the playing field but would not change the fundamental attitudes towards the environment as a generator of maximum wealth for the sole purpose of short term consumption. Self regulation is certainly the ultimate goal, where individuals and businesses recognise and respect the environment on more of an holistic level and where other individual utilities are gained from work aside from financial gain. The argument is that this radical (used here in its true sense to mean from the root) change of economic priorities could be achieved through a fair trading system run on a bioregional level. However at the moment self regulation within the present economic system seems ineffective as the environment is simply not a priority for SMEs. Small scale environmental improvements may occur but results from this research suggest that commitment to the environment on a practical rather than theoretical level needs to exist for substantial change to take place. This commitment is unlikely to increase substantially within an economic system that does not attach higher value to the environment. The attainment of environmental sustainability would require a fresh analysis of the economic system and our own individual consciousness.     

Exploring the potential of SMEs to build individual,organizational, and community resilience through sustainability-oriented business practices

Small- and medium-sized enterprises (SMEs) can have significant resources, capacities, and influence in their communities, suggesting they have the potential to be agents for transformative sustainability. However, SMEs will need to move beyond firm-centered sustainable business practices towards strategic approaches that encompass and contribute to resilience-building processes. Amid the unfolding COVID-19 pandemic, we explored what types of sustainable business practices of SMEs can contribute to individual, organizational, and community resilience. We identified six clusters of practice that are important in this regard. The clusters are not solely technical or “environmental” but rather illustrative of deeper sustainable values shaped by organizational structure, culture, and behavior. This paper suggests that SMEs can pursue transformative approaches to sustainability that are more environmentally, socially, and economically sustainable and better able to withstand shocks like the COVID-19 pandemic and can be significant contributors to community resilience. We conclude with a series of future research priorities critical to examine a largely unexplored nexus in the private sector, the linkages and dynamics between sustainability practice, resilience building, and broader community pathways.     

Implementing sustainable purchasing and supply management (SPSM): A Delphi study on competences needed by purchasing and supply management (PSM) professionals

This research is about a Delphi study that was conducted in the context of the development of a competence model for sustainable purchasing and supply management (SPSM). Based on the findings of a systematic literature review (SLR), it addresses the research gap in this area with the aim to foster the integration of sustainability in purchasing and supply management (PSM) in higher education and in professional training approaches for PSM professionals. The qualitative study was conducted with 16 Delphi experts in the field of PSM and sustainability, applying the critical incident technique (CIT). Together with the findings of the SLR, it led to a specific set of SPSM competences. The theoretical background is based on PSM research, educational sciences and organizational psychology.     

Sustainability in shipper-logistics service provider relationships: A tentative taxonomy based on agency theory and stimulus-response analysis

The paper contributes to research on sustainability in dyadic buyer–supplier relationships of logistics services. It presents deeper knowledge on why and how suppliers choose to behave sustainably. The research analyzes how shippers stimulate their LSPs and how LSPs respond by conducting sustainability activities. Agency theory and the stimulus–organism–response model are applied as the theoretical foundations for an explorative case study analysis of three large and five small and medium-sized European logistics service providers (LSPs) active in road transport services. Significant differences are found between the sustainability efforts of SMEs and large LSPs and a tentative taxonomy of the sustainability response types of LSPs is derived. The taxonomy contributes to theory-guided research in sustainable supply chain management and procurement. Thereby, mismatches of stimuli and responses are identified and related agency problems in dyadic relationships in terms of sustainability are discussed. From a managerial point of view, the findings may serve as a starting point for purchasers of logistics services to develop adequate sustainability selection criteria and incentives.     

Assessing people-driven factors for circular economy practices in small and medium-sized enterprise supply chains: Business strategies and environmental perspectives

Globalisation and technological advancements have increased the pressure on small businesses to increase their productivity and to gain competitive advantages. That pressure has been placed on the resources available, resulting in increased environmental degradation as a result of the traditional linear model of make-use-dispose. Circular economy (CE) practices offer the opportunity for sustainable production based on the reuse-remanufacture and recycling of resources for small and medium-sized enterprises (SMEs) to increase their sustainability, resulting in enhanced performance levels in terms of business strategies and environmental perspectives. But in academic literature, the role of people-driven factors (PDFs) in the adoption of CE practices in the supply chains (SCs) of SMEs is limited. Therefore, to fill this literature gap, this research looks at analysing PDFs for the implementation of CE in the SMEs in developing countries in two phases. PDFs are identified from an extensive literature review; a DEMATEL technique is then employed to understand the significant influence of each factor in the adoption of CE practices in SCs by dividing them into cause–effect groups. The findings show that PDFs such as training and knowledge sharing, employee participation, leadership and management plus strategic alignment are considered to be the most important significant factors in the adoption. The findings of this study will help industrial managers to understand the significance of the role of PDFs for enhancing business strategies; these findings can reduce the negative environmental impact in the adoption of CE practices in the SCs of SMEs.     

Can adopting ambitious environmental sustainability initiatives lead to business failures? An analytical framework

Drawing on environmental sustainability orientation and business failure literature, we examined a thought‐provoking question: “Can adopting ambitious environmental sustainability initiatives lead to business failures and under what conditions is this more likely?” To address this question, we developed an analytical framework that provides new insights into how voluntary environmental initiatives affect the business environment and firm competitiveness. This paper also yields new insights on the features that emerge at adopting environmental initiatives–business failure nexus: from greening to growing, from greening to sustaining, from greening to constraining, and from greening to collapsing. Accordingly, the study accounts for the conditions under sustainability initiatives, and a variety of complex contextual factors are likely to culminate in closures of small and medium‐sized enterprises (SMEs). Although many top executives, entrepreneurs, and managers view implementation of environmental initiatives as tantamount to superior firm performance, the paper highlighted the effects of resource constraints and vulnerabilities of SMEs and new firms during the early stage of development, and therefore, pursuing aggressive green initiatives could minimize their life chances. Implications for scholars and practising managers are discussed.     

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.