Micro & Small Enterprises Orientation to ESG

There is much research available about ESG and related concepts that is often focused on larger companies, sometimes neglecting the specifics of small and medium-sized enterprises (SMEs). This article examines 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. Given that SMEs play an important role on the road towards a more sustainable development, understanding the underlying mechanisms of why some SMEs are more committed to sustainability than others is an important research topic.

Stewardship of Micro & Small Enterprises
From an SME perspective, one conclusion based on our study is the importance of dealing with sustainability issues in a proactive manner. That is, SMEs that voluntarily see sustainability challenges as business opportunities might be ahead of regulations and could draw benefits from this position, both MO and EO revolve around an (either external or internal) notion of how to conduct successful business. For policymakers and other actors interested in promoting sustainable business practices, it may thus be worthwhile to develop context specific tools to help companies spot sustainable business opportunities relevant to their operations. This could, for example, be done by focusing on issues such as potential sustainable future customer demand and how current environmental challenges may result in new regulations for customers, or by encouraging innovations and research and focusing on how sustainable business opportunities can be developed from such initiatives. It also becomes important to communicate these notions in the SME community, so that an awareness develops that taking sustainability challenges seriously does not have to be pitted against successful business operations or profitability. SMEs that are sustainability driven and policymakers both have a role to play in this communication effort. Another implication for SMEs and connected stakeholders such as SME organizations is that proactive insight into sustainability issues is important, forming relationships with both environmental organizations and regulators can deliver this insight and be a way for SMEs who take sustainability challenges seriously to outcompete sustainability laggards.

Developing Sustainability Values within Micro & Small Enterprises
Finally, our study shows a close correlation between sustainable practices and commitment to sustainability. While this relationship is expected, and it is difficult to evaluate causality, these results point to the importance of current practices for dealing with sustainability issues in a proactive manner among SMEs. Developing eco-innovations and sustainable products, recycling programs, environmental labeling and environmental management systems may thus, beside the immediate environmental gain, also trigger a more long term proactive stance towards environmental issues. Policymakers and other actors who want to push the heterogeneous group of SME companies towards increased sustainability may thus do well to encourage these practices. Thus, it might be that first enforcing sustainability practices, such as recycling, might pave the way for sustainability values to develop and spread within, as well as across, SMEs. Here, the dynamic tension between regulation, sustainability values and practices among SMEs, and the influence from other stakeholders in encouraging dealing with sustainability challenges.

ESGWATCH Insights     
Has been designed to provide information that is easy to understand about what is the most important theme of the decade. Whether your starting point is environmental, social or economics, in 2 minutes you will get invaluable information that you will not find anywhere else. We write about Environmental, Social and Governance what’s working now, trends, and opinions.

Contact us

Similar Posts