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.     

Relational capital,environmental knowledge integration,and environmental performance of small and medium enterprises in emerging markets

Although several prior studies have examined associations between firm social capital and environmental sustainability, the links between relational resources (i.e., relational capital and ties strength), environmental knowledge integration, and environmental performance have yet to be well established at the micro-level. This study, therefore, aims to determine (1) how environmental knowledge integration serves as a mediating mechanism for the relationship between relational capital and environmental performance and (2) how this impact differs at different levels of ties strength. A quantitative approach has been adopted to examine the main hypotheses using a structural equation model (SEM) technique. Two groups of actors were surveyed, including chief executive officers (CEOs) and financial officers of small and medium-sized enterprises (SMEs) operating in Dubai, United Arab Emirates. In total, 216 survey responses were gathered, suggesting a response rate of 73.22%. Our findings suggest that environmental knowledge integration is a vital mediating mechanism for the relationship between relational capital and SMEs' environmental performance. Also, we find that ties strength moderates the indirect effect of relational capital on SMEs' environmental performance via environmental knowledge integration. Our empirical evidence provides recommendations for SMEs' managers and policymakers to promote environmental sustainability in the emerging market context.     

Evaluation of sustainability reporting practices in Poland

This paper examines voluntary sustainability reporting practices in Poland. The number of these types of reports published by companies from year to year increases however the form, content and quality of these reports varies. Disclosure of economic, social and environmental performance demonstrates social responsibility of a company and therefore, the author first has analysed in this paper the level of implementation of the corporate social responsibility (CSR) concept in Polish companies. Then the attention was focused on sustainability reports published in 2011. The questionnaire to evaluate the quality and type of the disclosed information in sustainability reports consisted of twenty three criteria grouped in five categories. The author discusses the overall results as well as results obtained in the particular categories. The analyses indicate that sustainability reporting is not widespread among companies in Poland. On the other hand, increasing demands/expectations from stakeholders in this direction are not observed. In 2011, 32 reports were published, 6 of them have been audited by independent organizations and 19 have been developed in accordance with the GRI guidelines (Global reporting initiative sustainability reporting guidelines). Corporate social responsibility in Poland is a relatively new concept and although all events suggestive of the development of this concept, it is still little known and rarely implemented among entrepreneurs. The results of the study indicate that sustainability reporting practices in Poland, despite a few good examples and valuable disclosures, are at its early stage of development.     

Contesting Sustainability: ‘SMART Growth’ and the Redevelopment of Austin's Eastside

The compatibility between an agenda for sustainable urban development and the neoliberal economic restructuring of urban space has been observed within cities in developed countries across the globe. From providing economic support to local ‘green’ industries to creating bike lanes, municipalities develop sustainability strategies that are designed to boost their competitive advantage. Moreover, municipalities are responding to demands from popular social movements and national governments that seek to reconfigure societal relationships with the natural environment in cities. Cities are increasingly understood not as part of the ecological crisis but as part of the solution, or as places where alternative patterns of sustainable consumption and new socially and ecologically responsible industries can be developed. Over the last decade in Austin, environmental sustainability has become an uncontested paradigm that has progressively shaped the city's urban space and policy. Two competing conceptualizations of the environment, so‐called ‘environmental’ and ‘just’ sustainability groups, are explored in this article. I demonstrate how the notion of environmental sustainability has been selectively incorporated into the hegemonic vision of Austin's strategic growth plan. I argue that the dominance of this conceptualization is best understood by asking what counts as the ‘environment’ for environmentalists, and understanding the unstated assumptions about the environment shared by the business community and environmentalists.     

Sustainability reporting,materiality, and accountability assessment in the airport industry

Air travel is, nowadays, recognized as being one of the most popular modes of transport. Air transport is among the most significant contributors to the world gross domestic product and is accountable for a great environmental and social impact. Driven by the well‐established sustainability discourse and the vital role businesses can play in disseminating the sustainable development concept, this paper attempted to map airport industry's most material operational aspects and assess airport operators' accountability level on disclosing corporate information regarding airports' economic, environmental, and social performance. In this context, 33 reports and 903 material issues representing 193 international airports were reviewed and assessed, and a methodology for benchmarking the accountability level of best reporting airport operators was developed, showcasing materiality assessment as a useful management tool for strengthening airport operators' business strategy and enhancing their corporate performance. The paper indicated that (a) customer focus (i.e., health, safety and satisfaction), economic viability, and business continuity and preparedness are operational aspects of high materiality and (b) the disclosure level, especially concerning specific performance indicators, is still moderate. In conclusion, this study has shown that materiality assessment gains ground as a management tool among airports' management teams and the completeness of Sustainability reports is positively correlated with the “level” of adherence as described by the Global Reporting Initiative.     

Exploring external and internal pressures on the environmental behavior of paper enterprises in China: A qualitative study

As one of the typical high‐polluting and high‐energy‐consuming industries in China, the paper industry's environmental behavior has become the focus of a range of stakeholders, policy makers, and the whole society because the industry's business activities are a main source of environmental pollution and contribute to massive energy consumption. This study used a qualitative approach to examine the relative importance of external and internal pressures (EP and IP) in driving the environmental behavior of paper enterprises in China. Based on grounded theory, this study aimed to examine the EP and IP on the environmental behavior of paper enterprises to create a comprehensive theoretical model based on grounded theory code analysis. It was found that government pressure, economic pressure, social pressure, and IP have direct and significant positive effects on the corporate environmental behavior (CEB) of paper enterprises in China. Furthermore, government, economic, and social pressures have indirect and significant positive effects on CEB through other pressures. Finally, the paper concludes with a discussion of these four pressures and provides policy implications.     

Cultivating Ecological Knowledge for Corporate Sustainability: Barilla's Innovative Approach to Sustainable Farming

In this paper, we link three theoretical perspectives – organizational knowledge, ecological knowledge and social–ecological systems – to derive new conceptions of multi‐disciplinary, multi‐tier, sustainability‐oriented knowledge. Our study examines how collaboration between pasta‐producer Barilla, the farmers/smallholders supplying the firm and scientists generated sustainability practices in the agri‐food industry by creating transformative ecological, technical and scientific knowledge. In 2010, Barilla initiated a sustainable farming project to significantly reduce the environmental impact of cultivating durum wheat, its most important raw material. Core components included replacing monoculture with crop rotation, collectively creating innovative approaches that support farmers’ decision making and generating widely accessible guidelines for sustainability‐oriented cropping knowledge and practices. These collaborative efforts initiated profound transformations within and beyond the organization's boundaries via increased production yields, reduced environmental impacts and improved sustainability of farming practices, which generated economic, social and ecological benefits for farmers, surrounding communities and the firm. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Corporate governance and sustainability in water utilities. The effects of decorporatisation in the city of Naples,Italy

The recent economic literature has largely investigated sustainability in the provision of public utilities, highlighting the role of governance models in the determination of economic results. Little attention however has been devoted to the social and environmental dimensions of sustainability. In Italy, a long-lasting debate on governance structures in the water sector has been fuelled by scholars and policymakers for more than 30 years, whereas the first (and unique) experiment involving the return of full public management in water provision is taking place in the city of Naples. The present work analyses this peculiar case study, aiming to assess the effects of a major governance shift that occurred in the early 2010s—that is, decorporatisation—in terms of economic, social and environmental sustainability. We resort to a bundle of qualitative and quantitative techniques to address the research question and our exploratory results suggest that decorporatisation was overall beneficial: Although little changed in terms of economic sustainability, the social and environmental dimensions benefitted from the shift in governance.     

Do Board's Corporate Social Responsibility Strategy and Orientation Influence Environmental Sustainability Disclosure? UK Evidence

The environmental implications of corporate economic activities have led to growing demands for firms and their boards to adopt sustainable strategies and to disseminate more useful information about their activities and impacts on environment. This paper investigates the impact of board's corporate social responsibility (CSR) strategy and orientation on the quantity and quality of environmental sustainability disclosure in UK listed firms. We find that effective board CSR strategy and CSR‐oriented directors have a positive and significant impact on the quality of environmental sustainability disclosure, but not on the quantity. Our findings also suggest that the existence of a CSR committee and issuance of a stand‐alone CSR report are positively and significantly related to environmental sustainability disclosure. When we distinguish between firms with high and low environmental risk, we find that the board CSR/sustainability practices that affect the quantity (quality) of environmental sustainability disclosure appear to be driven more by highly (lowly) environmentally sensitive firms. These results suggest that the board CSR/sustainability practices play an important role in ensuring a firm's legitimacy and accountability towards stakeholders. Our findings shed new light on this under‐researched area and could be of interest to companies, policy‐makers and other stakeholders. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Competitive sustainability and stakeholder engagement: Exploring awareness,motivation, and capability

In adding to competitive dynamics and sustainability literature, this study examines the role of a supplier and consumer on a focal firm's sustainability competitiveness through the awareness, motivation, and capability (AMC) perspective and stakeholder engagement research. Regression analyses are performed utilizing secondary sustainability and financial data to test proposed environmental and social competitiveness hypotheses. A constraint factor model is also tested. This study finds that a focal firm's motivation is positively associated with its own sustainability competitiveness. The study also finds that awareness and capability are negatively associated with environmental and social competitiveness. Finally, whereas suppliers' AMC have no significant impact, customer awareness and capability do. The findings reflect both conformity and divergence from the AMC model when applying it to a supply chain context as well as enhance the managerial understanding of how a supply and customer base can impact their own sustainability competitiveness.     

Focus and Standardization of Sustainability Reporting – A Comparative Study of the United Kingdom and Finland

Sustainability reporting has attracted significant attention from the business as well as the academic community in recent years. Not only has the latter frequently made recommendations on reporting, it has also extensively examined factors that have an influence on reporting. Several studies have noted differences in the extent and style of reporting across countries, but the influence of specific cultural and socio‐economic environments on reporting has only been given limited consideration so far. It is the goal of this paper to help fill this gap. For this purpose, we examine the sustainability reporting of the 100 largest companies in the United Kingdom and Finland, as both are highly developed countries in North‐Western Europe, but with significantly different cultural and socio‐economic systems. Aside from the extent of reporting and media used, we examine the reporting standards and guidelines applied. Moreover, the focus of disclosure (economic, social or environmental) was investigated, which also brings a new perspective to the academic literature. Our results suggest that the cultural and socio‐economic environment has an impact on the extent of reporting, but with regard to the focus of reporting and the application of standards the results are mixed. A stronger shareholder oriented culture does not lead to a more extensive inclusion of economic issues in sustainability reporting, while the extent of environmental reporting depends on the strength of environmentalism. The impact of cultural and socio‐economic factors on the application of standards, such as the Global Reporting Initiative, appears to be limited. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

Encouraging sustainable entrepreneurship in climate-threatened communities: a Samoan case study

South Pacific island states are at the forefront of climatic changes that have precipitated severe environmental events. These small countries also face economic and social challenges that require entrepreneurial solutions. We develop a model of how external factors and chance events impact on sustainable opportunity recognition and exploitation in this context. We assess the efficacy of this model in an in-depth study of Women in Business Development Incorporated, a non-governmental organization that helps women and families in Samoa to establish sustainable enterprises. Our findings make a significant contribution to the emerging literature on entrepreneurship, sustainability and resilience in at-risk communities by showing how key organizational capabilities are necessary for coping with exogenous shocks in this context. The findings have important implications for research, policy and practice.     

Analysing the importance of sustainability‐oriented service quality in competition environment

The logistics sector is one of the most important domains in the service sector in understanding the increasing scale of business activities along with globalization. Due to the nature of the service sector, where competition is increasingly concentrated, the main objective of firms is the creation of their strategy on competitive advantage in regard with knowing the level of quality of the services offered and the firm's image from the customers' point of view. Trying to adapt to the changing conditions of the market drives firms to integrate their competing areas into their sustainability dimensions (economic, social, and environmental) with the aim of increasing their perceived quality through differentiating their business to achieve a sustainable competitive advantage. The aim of this study is to examine the quality level perceived by logistics service providers in terms of triple bottom line approach and to determine the relationship between them for sustainable competition. In line with exploratory methods, factor analysis was used with the aim of finding out a new scale to the literature about the examination of the relationship between quality perception and corporate sustainability in the frame of competition. In this context, data of 120 logistics service providers were collected and analysed. According to the results, the content of the subject consists of nine factors and 29 interrelated subdimensions. As a result of the research, firms have emphasized on the importance of reaching the competition by expanding their quality perceptions within the scope of corporate sustainability in parallel with the increasing customer demands and expectations.     

Corporate sustainability,ecological modernization and the policy process in the South African automotive industry

In the past decade, the plea for corporate sustainability has gathered momentum and protecting the environment is one aspect for organizations to address if they are to conduct business in a sustainable manner. In this paper, we present the results of a questionnaire survey on the state of corporate sustainability within the South African automotive industry. The survey focused on the meaning and relevance of sustainability to South African automotive companies, and their use of different approaches to implement sustainability in corporate practice. On this score, the paper seeks to analyze and compare the levels of voluntary environmental initiatives between large and small and medium‐sized enterprises within the automotive milieu. Survey results reveal that a majority of automotive companies have sought to improve their environmental performance by integrating environmental considerations into their core activities. Although the majority of these companies have standardized EMSs, our analysis reveals considerable differences between companies' approaches to corporate sustainability. In particular, they varied in the extent to which procedures were formalized and documented behind the corporate rhetoric of a high commitment to sustainability. The paper concludes by prescribing a number of recommendations as to how to engage and promote more widely the South African automobile manufacturing companies in environmental change. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Generic strategic profiling of entrepreneurial SMEs – environmentalism as hygiene factor

Climate change, extreme weather phenomena, droughts, fires etc. are just few examples of man-induced impact, jeopardizing the future of mankind. Businesses are increasingly held responsible for and try to manage their environmental impact. Environmentalism and lately sustainability (manifesting an equal pursuit of environmental, social, and economic goals) guide strategic orientation. Whereas large corporations anchor environmentalism in their mission statements and strategic positioning, the strategic reflection of sustainability and especially environmentalism in the business models of small enterprises is less researched. Their entrepreneurship builds on exploiting environmental opportunities and is deemed characteristic for small enterprises, but a lower penetration of strategic instruments paired with a predominant opportunistic behaviour seem to characterize SME´s strategic environmentalism. In order to examine the entrepreneurial environmentalism and the strategic value for SMEs an empiric study leaned on population ecology. An online survey with 291 small enterprises explored environmentalism, strategic profiling, and performance impact in an agricultural and entrepreneurial industry. Study results manifest a positive performance impact of sustainability-oriented and thereby ecologic environmentalism. Ecologic environmental consciousness has been identified for all generic strategic groupings but it separates into two distinctive clusters, one with a process and one driven by market focus. Foremost, eco-centric strategic measures were identified as core levers to increase product quality – a promising finding that secures further strategic ecological environmentalism.

     

Corporate responsibility activities and economic performance: a theory of why and how they are connected

Whether a firm undertakes corporate responsibility (CR) activities for strategic or altruistic reasons, it is important to understand the relationship between such activities and economic performance. CR activities may be distinguished based on which combination of three possible outputs – learning, reputation and CR outcomes – they produce. This distinction matters not only for the ultimate environmental and social sustainability but also for the relationship between CR activities and economic performance. Taking advantage of this distinction, an integrative synthesis of knowledge of the relationship between CR activities and economic performance can be developed that presents the relationship in terms of a dynamic, case‐specific, inverted U‐shaped efficiency frontier and the vertical distance from this frontier. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.     

Exploring the effects of mergers and acquisitions on acquirers' sustainability orientation: Embedding,adding, or losing sustainability

Mergers and acquisitions (M&A) have been primarily investigated from a shareholder-centric perspective of economic value maximization. However, this type of strategic initiatives also carries relevant implications for companies' capacity to respond to increasing social and environmental concerns among their stakeholders. In this study, we explore the processes related to, and nonfinancial consequences of, acquisitions involving sustainability-oriented firms. Leveraging interviews with business decision makers and secondary data covering the pre- and post-acquisition phases, we find three main paths leading the acquiring firms to embed, add, or lose sustainability. Therefore, three possible post-acquisition outcomes emerge, associated with differences in acquirers' focus on sustainability infusing the deal rationale, their due diligence activity, and practices of stakeholder management and integration in the post-acquisition phase.     

Incorporating sustainability criteria into credit risk management

Does a commercial debtor's economic, environmental and social performance in terms of sustainability affect its credit risk rating? Does adding criteria aimed at assessing a lender's environmental, social or sustainability practices provide added value to traditional financial rating criteria? Many analyses have reported that a correlation exists between companies' environmental and their financial performance. We checked out the assertion that it ‘pays to be sustainable’ by analyzing the role that criteria pertaining to sustainability and environmental orientation play in the commercial credit risk management process. Our results show that sustainability criteria can be used to predict the financial performance of a debtor and improve the predictive validity of the credit rating process. We conclude that the sustainability a firm demonstrates influences its creditworthiness as part of its financial performance. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Measuring the Choice of Environmental Sustainability Strategies in Creating a Competitive Advantage

Environmental sustainability has often been claimed as a means to providing a competitive advantage by encouraging efficiencies, attracting customers and obtaining business. This work critically considers this idea in the context of the hotel industry by comparing the strategic intent and implementation of sustainability initiatives in hotels across North America. Environmental sustainability strategies can employ a low cost, a differentiated or a hybrid (a combination of the two) approach to creating a competitive advantage. Controlling for the type and age of hotel we find that the hotels sampled in this study used a combination of all three approaches but tended to rely on their need to create environmental sustainability legitimacy by placing an emphasis on differentiation through environmental sustainability branding. A lack of recognition by management of the contribution to their future economic success that low cost strategies can provide has implications for hotel owners. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment