Academic journal article Journal of Small Business Strategy

Green Goals in Organizations: Do Small Businesses Engage in Environmentally Friendly Strategies?

Academic journal article Journal of Small Business Strategy

Green Goals in Organizations: Do Small Businesses Engage in Environmentally Friendly Strategies?

Article excerpt

ABSTRACT

"Green" environmental goals play a role in a firm's decision making and goal setting. Large firms typically consider being socially responsible or more environmentally oriented as part of their mission, but are these initiatives the same for small businesses? Surveying a U.S. small business sample, this exploratory study finds firm size and industry type are the two demographic variables related to the importance of environmental business issues in small business decision-making processes. Company "Expertise," an internal resource advantage, and the external factors of "Competitiveness" and 'Environmental Hostility," were found to influence small firms' environmental goals. When examining business outcomes and small firms' satisfaction with achievement of their environmental goals, all measures studied (cash flow, market share, sales, and earnings) were related to having such goals. This study extends the dearth of literature studying small firms and the role of environmentally friendly strategies in these ventures.

Keywords: corporate social responsibility, small business, strategic decisions, sustainability

INTRODUCTION

While large firms are often public corporations and must answer to shareholders and other invested stakeholders, small businesses are often privately held or are responsible to one or only a few shareholders. The owner's values drive many of the goals in small to midsized enterprise (SME) (Elizabeth, Martens, & Cho, 2010). When a small business stresses sustainable development, it is largely due to the small business owner personally having sustainable development as a business priority or a highly-motivated manager as a champion (Jenkins, 2006; Beaver, 2007). Kechiche and Soparnot (2012) believe the economic, social, and environmental impact of small business is significant given their number and size. Their study found a dearth of literature on the dynamic dimensions of corporate social responsibility (CSR) for SMEs, which limits understanding the evolution of life cycle stage of CSR-related practices.

In small businesses, CSR may take on a different character in that the small business owner's resources to act environmentally and socially responsible and the culture and pace of their business is vastly different from large corporations. For the purposes of this paper, CSR and the subcategory of "environmental" or "green" issues is the focus of our investigation. While the broader CSR framework is more inclusive, with the dearth of small company literature focusing exclusively on green issues, a review of small firm CSR at least provides some insight into the role of social consciousness in strategy among SMEs and smaller firms. Furthermore, Kechiche & Spoarnot (2012) note a lack of studies within the small business sector comparing implementation of CSR, and they confirm the lack of resources is an obstacle. Furthermore, they also recommend that tools are needed to measure the impact of campaigns and initiatives in CSR for SMEs.

Similarly, Vives (2006) found company practices and procedures for internal environmental and social responsibility were the most common in SMEs, while external social responsibility activities occur less frequently. Also, in their study covering 1,300 firms over eight Latin American countries, medium-sized firms were shown more socially responsible and involved in more activities than the smaller firms. Obstacles to CSR in the smaller companies included lack of resources, knowledge, and perceptions of environmental impact, but perhaps greater attention to social responsibility is part of the maturity process as small firms grow to medium size and gain in resources and knowledge.

SMEs too often have a very casual business culture and structure, and they may not use formal strategy tools to measure or audit effective sustainable development practices (Fassin, 2008; Jenkins, 2004). Small businesses may not have the budget or time to address sustainable development, which is often perceived as being outside of the core business activities (Walker & Preuss, 2008). …

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