An Exploratory Study of Factors Affecting ...

An Exploratory Study of Factors Affecting Sustainability Adoption in Small and Medium-Sized Enterprises Parisa Salimzadeh ([email protected]) Jerry Courvisanos Raveendranath Ravi Nayak

Introduction Respond to sustainability challenges

Successful Business

Customers evaluate a firm based on sustainability

Large Businesses

Small & Medium Sized Enterprises (SMEs) 6-12-2015

Majority of Global Pollution (up to 70%)

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Significant Role of SMEs in Sustainable Development 2

Introduction Strength of the Australia’s national economy and welfare Regional areas

Two thirds of Australia’s export earnings

SMEs are significant regional development agents 97% of all private sector businesses 49% of the private sector workforce employment A gap in the literature about the experiences of Regional Australian SMEs with sustainability 6-12-2015


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Literature Review SMEs

Relationships Modern Economies

Networks

Information Management Global Economy

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Literature Review Population of SMEs > Population of large businesses Total environmental impacts of SMEs > Total environmental impacts of large businesses Helping to solve the community problems (Frederick, 2006; Husted et al., 2008)

SMEs

Being careful of their environmental impacts (Aragon-Correa et al., 2008)

Supporting the community activities and programs (Pirsch et al., 2007; Shahin & Zairi, 2007) 6-12-2015


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Literature Review Knowledge

Perception

Commitment

Government

Adoption of Sustainability in SMEs

Attitudes

Suppliers Cost

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Customers


Employees

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Data Collection Ballarat is a good representative of a major regional city in Australia which has an economy with a large SME business population. Positivism A valid list of 1127 SMEs Questionnaire Survey Ethics Approval

Survey Instrument

Manta Website

1449 SMEs operating in Ballarat Census method on the Manta website

Cover Letter Support Letter from Committee for Ballarat Reply Paid Envelopes

First Response Rate (10.53%) Reminder Letter Final Response Rate (28.77%) ≈ 30%

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Results & Discussion Factors Impacting the Adoption of Sustainability 4

3.79

3.78 3.54

Average of Agreement

3.5

3.39

3.32 3.21 of3.2 3.19 3.14 Distribution of the Number Employees

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Number of Employees 0-19 (Small Businesses) 2 20-199 (Medium Businesses) 1.5 More than 200 (Large Businesses) 1 Total 2.5

Frequency 193 40 4 237

Percent 81.4 16.9 1.7 of Agreement Average 100

0.5 0

Factors

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Results & Discussion RoleRole of perception in the adoption of sustainability of cost in the of sustainability Role of knowledge in adoption the adoption of sustainability Item ItemStatements Statements

Strongly Strongly Strongly Disagree Disagree Disagree I realise that most of the electricity in Victoria is 0.9% My firm Being environmentally has low impactand on the socially local 20.2% 6.4% produced by burning highly polluting brown community friendly increases and environment my business costs coal Business My has poor cannot infrastructure be expected to 4.3% 3% I ambusiness awareowners of environmental protection 0.9% to help solve support some social activities recycling programs organised byissues the like government or external organisations Environmental My business willissues not benefit aren’t financially relevant 5.2% 9.4% Socially and environmentally responsible 1.3% to myenvironment-friendly from business activities businesses have the potential to break into new I’m not inmust Business the right spendindustry some money to make and 4.3% 4.3% markets or promote existing markets aSocially efforts difference for environmental to local community protection and and environmentally responsible 2.6% management businesses achieve cost savings from energy or other resource efficiencies Transition to a low-carbon economy will bring opportunities for business growth USE2015: Understanding Small Enterprises

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6.4%

Disagree Neutral Neutral Disagree Neutral

36.1% 33%

7.7%

25.3% 15.5%

23.6%

26.2% 21.5%

Strongly Strongly Strongly Agree Agree 21.9% 9.0% 6.9%

16.3% 15.9%

16.3% 23.6% 26.2%

47.6% 45.1% 48.1%

16.7% 10.7% 9.0%

11.2% 25.3%

22.7% 18.5%

31.3% 48.1%

11.2% 17.2%

38.2%

40.3%

6.9%

26.6% 20.6%

46.4% 41.6%

17.6% 9.4%

12.9%

32.2%

44.2%

8.2%

18.0%

40.3%

25.8%

9.4%

13.3%

15.9% 13.3%

Agree Agree Agree 45.9%

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Results & Discussion Role attitude in in thethe adoption of of sustainability Role of of commitment adoption sustainability Role of employees in the adoption of sustainability Item Statements Item Statements

Strongly Strongly Disagree DisagreeNeutral Neutral Agree Agree Strongly Disagree Neutral Agree Disagree Disagree Disagree Contributing Business should to protecting regulate itself to improve 1.3% 1.7% 3.9% 7.3% 17.6% 19.3% 55.4% 53.2% Socially and environmentally 6.4% 10.3% 42.9% 31.8% environment and environmental practices supporting the local responsible businesses are able to community Small firms gives should meensure personal the pride health and 0.0% 2.1% 5.6% 44.2% attract and retain staff and enjoyment safety of its employees Staff and employees should put 10.7% 19.7% 35.6% 27.5% Preserving Small firmsthe should environment ensure the and health and 0.9% 0.4% 3.4% 8.2% 7.3% 18.0% 58.4% 44.2% pressure on businesses to be socially respecting safety of itslocal community community is simply and environmentally friendly theisright It the responsibility thing to do of every business 2.6% 13.7% 20.2% 49.8% owner/manager to have policies that help improve society

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Strongly Strongly Strongly Agree Agree Agree 21.9% 18.5% 8.6% 48.1% 6.4% 30% 29.2% 13.7%

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Results & Discussion Role theadoption adoptionofofsustainability sustainability Roleofofgovernment customers ininthe Item Statements Strongly Disagree Neutral Agree Strongly Item Statements Role of suppliers in the adoption Strongly Neutral Agree Strongly Disagree ofDisagree Agree sustainability Disagree Agree Government should offer some form of 0.00% 5.6% 15.5% 56.2% 22.7% Item Statements Strongly Strongly3.4% Businesses with sound environmental 5.6% Disagree 16.7% Neutral 42.5%Agree31.8% recognition of businesses that have good Agree management are well supported by Disagree environmentalpractices management practices environmentally responsible 3.4% 7.7% 47.6%30.9% 9.4% 3.0% customers It isSocially not theand individual responsibility of 12.4% 27.9% 31.8%25.8% businesses minimise risk of force Pressure fromcan existing customers could 6.4% 16.7% 30.5% 41.6% 4.7% business owner/managers tothe solve damage to to preserve their ownthe reputation businesses natural by dealing environmental problems with socially responsible suppliers environment National and local environmental laws and 4.7% 12.0% 30.9% 42.5% 9.9% Suppliers and trade bodiesdemand should for put 8.6% 17.2% There is an should increased 4.3% 10.7% 32.2% 28.8%36.9%48.1%5.2% 8.2% regulations be public strictly enforced in the pressure on businesses to be socially and ethical products and services business context environmentally friendly Being socially andshould environmentally 7.7% 17.6% 33.5% 7.7% Small businesses leave the government 5.6% 24.9% 27.5% 33.5% 35.6% 6.4% responsible attracts newissues customers to tackle environmental It’s better that government enforces 13.7% 29.2% 37.3% 16.7% 3.0% environmental taxes for businesses 6-12-2015


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Conclusion International variation in defining SMEs. Any generalisations are limited to the population of Ballarat SMEs. Findings are limited by the extent to which the respondents were honest, careful, and without bias in responding to the survey instrument. Most effective factors appear to originate inside SMEs rather than outside. Owners/managers of SMEs play a critical role in the adoption of sustainable practices. Government and legislation are not effective in the adoption of sustainability in Ballarat area. Hence, there is no need to enhance the enforcement of existing laws.

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