Environmental Performance, Competitiveness

Tijdschrift voor Economische en Sociale Geografie ndash 2005 Vol 96 No 5 pp 541ndash557copy 2005 by the Royal Dutch Geographical Society KNAGPublished by Blackwell Publishing Ltd 9600 Garsington Road Oxford OX4 2DQ UK and 350 Main Street Malden MA 02148 USA

ENVIRONMENTAL PERFORMANCE COMPETITIVENESS AND MANAGEMENT OF SMALL BUSINESSES IN EUROPE

DAVID HITCHENS SAMARTHIA THANKAPPAN

1

MARY TRAINOR JENS CLAUSEN amp BRUNA DE MARCHI

School of Management and Economics Queens University of Belfast BT 7 1NN United Kingdom E-mail dhitchensqubacuk mtrainorqubacukCentre for Business Relationships Accountability Sustainability and Society 55 Park Place Cardiff University CF10 3AT United Kingdom E-mail ThankappanscfacukBorderstep Institute for Innovation and Sustainability Hausmannstrasse 9ndash10 30159 Hannover Germany E-mail ClausenborderstepdeInstitute of International Sociology of Gorizia (ISIG) Via Mazzini 13 34170 Gorizia Italy E-mail Brunade-marchiliberoit

Received June 2004 revised June 2005

ABSTRACTIs it the case that more competitive SMEs have greater capacity to adopt environmental initiativesThe answer is no according to this study which tried to link small firm environmental performanceto factors such as profitability growth skills and research and development This study focuseson three interrelated propositions that are concerned with the impact of environmental initiativeson firm competitiveness the relevance of managementrsquos awareness to environment the availabilityof external information and expertise to aid management and the competitiveness of the firmThe firmrsquos competitive strengths measured variously as above average profitability firm growthand RampD skills and modernity of plant and equipment there was only scattered evidence tosuggest any of these was importantly associated with the firmrsquos environmental performanceThe study showed that firms with an average economic performance were just as likely to adoptenvironmental initiatives as their high-performing competitors Moreover regardless of managersvoicing personal concerns about the environment most small firms do relatively little about theenvironment in practice and are reluctant to seek advice about it

Key words Environmental performance environmental initiatives competitiveness compliance

firms compliance plus firms excellence firms

SME

s

AND THE ENVIRONMENT

Small and medium-sized enterprises (SMEs)are important to all European economies Theycreate jobs (Birch 1979) build effective net-works and make a positive contribution towardssocial inclusion They are a source of innovationand competition create a dynamic healthy

market economy and preserve a stable economicbase (Gray 2000 Morris amp Brennan 2000)Their work is strongly customer-oriented andthey are a source of innovation and entrepre-neurial spirit as they create competition andare the seed for future businesses (Hillary 2000p 140) SMEs represent a significant part of theEuropean industrial landscape accounting for

542

DAVID HITCHENS

ET AL

copy 2005 by the Royal Dutch Geographical Society KNAG

998 per cent of the total number of companiesin the European Union two thirds of employ-ment and 60 per cent of value added

SMEs are considered to be the backbone ofthe business economy accounting for morethan 99 per cent of all enterprises two thirdsof employment and more than half the valueadded generated in both the EU and the 10acceding countries (Eurostat 2004) The rela-tive contribution of SMEs to the total industrialenvironment impact though is unknown buttheir sheer numbers and contribution to valueadded may mean that their impact on the eco-system in many sectors could be substantialThe Marshall Report (1998) which originallyendorsed proposals for a climate change levyestimated that as much as 60 per cent carbondioxide emissions from businesses result fromthe activities of the SMEs The EnvironmentAgency (2003) estimates that 60 per cent of thecommercial waste and 80 per cent of the pollu-tion accidents result from SMEs in the UnitedKingdom Most research in this area though hasfocused on the large firms and their impact onthe environment the impact of small firms con-tinues to be an under-researched area (Noci ampVerganti 1999 Hillary 2000 p 141)

Though some SMEs have taken the lead inmanaging their own environmental and socialimpacts in a well structured way a majority ofSMEs are still characterised by their lack ofawareness of their environmental and socialimpacts and the management of such issues(Biondi

et al

2000 de Bruijn amp Hofman 2000Freidman

et al

2000 Kassinis 2001)Gibbs (1996) and Gibbs amp Healey (1997)

argue that more research is needed into thesustainability implications For the benefit ofthe environment and the wider societal contextSMEs still need to be involved in the drivetowards sustainability They are an essential con-tributor to attaining reduction targets set by thelsquoKyoto Protocol to the United Nations Frame-work Convention on Climate Changersquo (see forexample Oberthur amp Ott 1999) or to reachingpolicy targets like lsquoFactor 410rsquo (Weizsacker

et al

1997 p 132)Despite considerable government efforts to

inform SMEs of the potential economic benefitsfrom positively managing their environmentalperformance and investing in clean technolo-gies most SMEs see no reason to address the

environmental aspects of their businesses Anyaction taken is often a response to legislativeand regulatory pressures rather than positivelyseeking new opportunities from environmentalmanagement (Gerstenfeld amp Roberts 2000 p 112Hutchinson amp Hutchinson 1997 p 16) This canpartly be explained by the fact that SMEs areunreceptive or unable to interpret the relevanceof the legislation to their business (Hutchinsonamp Chaston 1994 Hillary 1995 Gerstenfeld ampRoberts 2000 p 113) SMEs perceive that legis-lative compliance is expensive (Petts

et al

1999)and therefore regulation is resisted due to its impacton profits moreover owners of small businessestend to favour economic interests over social orenvironmental considerations (Tilley 2000)

SME owners feel limited responsibility towardsthe environment due to their belief that theircontribution towards environmental impactis negligible (Hillary 1995 Holland amp Gibbon1997 Rutherford amp Spence 1998 Smith ampKemp 1998) Furthermore small businesses lackthe time and money to investigate their envi-ronmental performance or access the high costconsultancy support network (Hillary 2000p 140) Research conducted by Tilley (2000)and Ludevid (2000 p 56) shows that SMEsresist voluntary initiatives that promote self-regulation due to fears of lsquofree ridersrsquo and a lackof a lsquolevel playing fieldrsquo

While this may describe the average positionof the environmental performance of SMEsthere are nevertheless cases where the use ofclean technologies and the environmentalperformance of firms are above the average ofSMEs in each industry (Gerrans amp Hutchinson1998 Merritt 1998 Ludevid 2000 p 58) Alarge number of researchers have noted theadoption of environmentally conscious manu-facturing practices (Porter amp Vander Linde 1995ab Florida 1996) similarly few other researchershave examined the factors associated with theadoption of these practices (Florida 1996 Atlasamp Florida 1997 pp 13 87 Hayter amp Le Heron2002 p 433)

This research relevant to Agenda 21 espe-cially in the recognition that governments alonecannot achieve the underlying principles pro-vides useful policy implications and emphasisesthat commitment of relevant groups andpeople is necessary in order to bring about theobjective of an integration of sustainability and

ENVIRONMENTAL PERFORMANCE COMPETITIVENESS AND MANAGEMENT

543


growth Central to the research is the testing ofa set of hypotheses which among other thingsrelate the adoption of cleaner technologies tocompetitiveness management culture and theimportance of the provision of informationThe study focuses on three interrelated hypo-theses which recur in the literature affectingthe adoption of clean technologies these areconcerned with

bull

Competitiveness

The relationship betweeninvestment in environmental initiativesand firm competitiveness is likely to involvepositive feedback in both directions (Porteramp Van der Linde 1995a Hitchens 1999Xepapadeas amp De Zeeuw 1999 Hitchens

et al

2000 p 15 Rennings

et al

2003Triebswetter amp Hitchens 2005)

bull

Management environmental awarenessculture

The role of management and the culture ofthe business organisation are important to thetake up of environmental initiatives (See forexample Hutchinson amp Chaston 1994 Winteramp Ledgerwood 1994 Christie

et al

1995 Sinclair-Desgagneacute amp Gabel 1997 Annandale 2000Gonzaacutelez-Benito amp Gonzaacutelez-Benito 2005)

bull

External information sources and relationshipsand linkages to the firm

Imperfect informationis inherent to the process of technologicalchange and markets for information arenotorious for being imperfect (See for exampleStoneman 2001 p 82 Rowe amp Hollingworth1996 Rowe amp Enticott 1998 Angel

et al

1999Turok amp Raco 1999 Hooper

et al

2000Schulz 2002 p 135)

The research more specifically focused onEuropean SMEs (In this study taken as employ-ing less than 500 persons

2

) Variations withinthe EU with respect to environmental regu-lation are exemplified by a study of firms acrossfour member states Germany Italy Republic ofIreland and the United Kingdom The justifica-tion for this set of sample countries is providedby the extent to which they vary with respect toboth environmental performance and compet-itiveness (Hitchens

et al

2000 p 4 Triebswetteramp Hitchens 2005) Simultaneously these coun-tries represented variations in environmentalregulatory stringency and enforcement (Hitchens

et al

2001) and economic performance of thesectors studied The UK (including NorthernIreland) and Irish data (UKROI) were aggre-

gated since there was insufficient variation ineconomic and environmental requirements tojustify treating them as separate jurisdictions(Hitchens 1999)

SMEs commonly dominate resource andemission intensive trades such as metal finish-ing textile manufacturing printing and dyeingfood processing and chemical production etc(Hobbs 2000 p 152) The three manufacturingsectors considered in this study (furnituretextile finishing and fruit and vegetable process-ing) have environmental characteristics thatcut across the majority of areas where environ-mental protection is relevant They were alsoindustries where SMEs are important and indus-tries which have a significant EU presence ineach of the chosen countries

It is worthwhile considering the environmen-tal performance and competitiveness relation-ship particularly across a range of countriesand industrial sectors can be used to illustratea variety of regulatory regimes and contrastsin the industrial competitive performance(see for example Hitchens

et al

2000 p 3)The sampled countries do not just have varyingenvironmental standards but the relative sizeand comparative productivity performance ofthe sample sectors and hence the importanceof considering environmental performancecompetitiveness relationship in these sectors

Moreover in the EU around 80000 com-panies mostly SMEs operate in the furnitureindustry These firms employ 850000 peopleand have a turnover in excess of

$

80 billion TheEU furniture industry accounts for about halfof the worlds furniture production Germany isthe largest producing country in the EU fol-lowed by Italy France and the UK The Textilesector is an important part of European manu-facturing industry with a turnover in 2002 ofover

$

200 billion produced in roughly 177000enterprises employing more than 2 millionpeople ndash a figure which increases to 27 millionafter EU enlargement in May 2004 Textiles andclothing account for around four per cent oftotal manufacturing value added and seven percent of manufacturing employment in the EU-15 The food sector accounts for 12 per cent ofEU25 manufacturing value added The manu-facture of food beverages and tobacco is thesecond largest manufacturing sector in theEU economy after the manufacture of metal

544

DAVID HITCHENS

ET AL


products Food generated around

$

185 billionin 2001 or 12 per cent of total EU25 manufac-turing value added It was also the second larg-est employer in manufacturing with around 45million persons employed (Eurostat 2003)

This paper focuses on the characteristics andexperience of those above average environmen-tal performers in comparison with the averageperformers in the industry and more specifi-cally it seeks to test the above hypotheses toexplain an above average take up of environ-mental initiatives

METHODOLOGY

There were four focal points that the empiricalwork examined

1 A short postal questionnaire

3

(PQ) was sentto firms in each sector that consisted of aseries of questions on economic characteristicsand performance of the firm the environ-mental strategy and environmental initiatives

4

adopted For the environmental initiativesfirms were asked to record the driverseconomic effects obstacles and facilitators toadoption See Table 1 for survey responses

2 With the managers of the manufacturingfirms face-to-face (FTF) interviews were heldusing a semi-structured questionnaire Ineach country and each sector 33 firms were

targeted (see Table 1 for survey responses)The questionnaire sought information oneconomic characteristics and performanceof the firm and on the adoption of environ-mental initiatives This aspect was coveredin some detail and included questions onenvironmental management the use ofenvironmental management systems andthe take up of a range of environmentalinitiatives including investment and runningcosts required environmental impactseffects on labour skills etc Constraints onthe take up of initiatives and the importanceof different sources of advice as well ascultural attitudes were also addressed

3 Interviews were held with providers of adviceincluding consultants suppliers customersand public institutions Advisors interviewedwere either specialists in the particular industryor generalists serving a range of industrialsectors Advisors were asked to consider atypical advisory input and the impact onthe client firm of this input how well thefirm collaborated the drivers for use of theservice barriers to adoption of service andso on

4 Managers of the companies that participatedin the face-to-face interviews were asked tocomplete a culture questionnaire whichincluded a series of questions to evaluatemanagementrsquos attitude to issues such asenvironmental concerns government policytowards the environment and the effect ofenvironmental policy on the individual firm

5

Standard sources of information such as tradeand telephone directories business informa-tion publications and the Internet were used toidentify the samples in each sector for the dis-tribution of the postal questionnaire The selec-tion of firms for the face-to-face interviews wasmade by careful consideration of the type ofproduct manufactured the number of employ-ees and the extent to which on the basis ofinformation available the firm could be catego-rised as compliance only or beyond compliancein terms of its environmental performanceFirms were then matched between complianceonly compliance plus and excellence Compli-ance only firms strictly carried out initiativesthat was a legal minimum (all firms were com-pliant) Compliance plus firms carried out

Table 1 Survey responses by country and sector

Methodsector UKROI

Germany Italy Total

Face-to-faceFurniture 32 33 33 98Textile 33 33 33 99Fruit and vegetables 33 34 30 97Total 98 100 96 294PostalFurniture 105 93 100 298Textile 78 73 100 251Fruit and vegetables 87 108 100 295Total 270 274 300 844AdvisoryFurniture 22 36 24 82Textile 18 44 32 94Fruit and vegetables 22 21 52 95General 38 11 ndash 49Total 100 112 108 320


545


more technical initiatives in addition to thosethat were a legal requirement while Excellencecarried out more activities that required moretechnical expertise and finally reached a levelwhere management initiatives were consideredto be as important as the basic activities So forexample they had installed clean technologyahead of regulation or had developed environ-mental management systems that were notlegally required

The key variables used to measure the com-petitive performance of firms included outputmeasures of performance profitability produc-tivity labour growth destination of sales bothexports and national penetration and inputmeasures of performance corresponding to theinput side of efficiency and competitivenessfor example physical and human capital RampDcapability and age of machinery

6

There are various approaches to measuringenvironmental performance (Welford 1994Ditz amp Ranganathan 1997 Bennett amp James1998 Wehrmeyer amp Tyteca 1998) and in thisstudy it was initially intended to base the meas-urement of firm environmental performanceon both input and output indicators Howeverit proved difficult for the respondents to quan-tify these output indicators thus the environ-mental performance measures used are basedon environmental inputs and environmentalmanagement and procedures

Taking into account that controlling proce-dures in SMEs are rarely sophisticated andenvironmental performance indicators such asthose proposed by ISO 14031 (environmentalperformance evaluation) cannot be expectedto be readily available in the average SME a setof questions was identified which revealed com-prehensive and comparable responses in mostof the interviews (see for example Hitchens1999 Hitchens

et al

2000 p 21 Hitchens

et al

2003 p 12) The aim of constructing a set ofenvironmental performance measures was firstto evaluate the effort behind environmentalmanagement systems second to evaluate thenumber and quality of process-orientedenvironmental protection activities and to takeinto account to what degree the firm is awareof their success and third to evaluate the rangeand quality of product-oriented environmentalprotection activities and the related activities ofmarketing and market communication

Firms were divided according to their environ-mental performance between those which(a) comply with regulation (b) go beyond com-pliance (

compliance +

) and (c) achieve

excellence

(Roome 1994 see Table 2) Roome (1994)characterises a compliance+ strategy as amove towards the establishment of integratedsystems for environmental management withenvironmental techniques embedded It involvesa management information system to inform

Table 2 Example of different approaches to environmental initiatives by firms

Compliance Compliance plus Excellence

Widespread use of end of pipe technology

Increasing focus on waste minimisation and process changes

Some very well developed eco management strategies

High awareness of regulatory demands

High use of energy management systems

Some examples of corporate commitment to long term shift in values and activities

Increasing use of eco audit tools within the firm

Some examples of company wide strategies for eco awareness at all levels and across all function

Awareness of cost savings and benefit for company imageLimited use of eco audit tools beyond boundary of the firmAwareness training of managers widespreadAwareness of long term benefits

Source Roome (1994) reproduced from Christie et al (1995) p 214

546

DAVID HITCHENS

ET AL


management He stresses the shift from com-pliance to

compliance+

as involving a need toreform lsquothe culture of the organisationrsquo Excel-lence takes this a stage further and Roome likensthe difference between

compliance+

and

excellence

as between quality assurance and the achievementof total quality Each of these environmentalperformance levels was defined at an initialstage of the research (this involved a number ofdimensions including reading each companyrsquosenvironmental statement) Researches conductedsince have evolved and have considered envi-ronmental performance levels of businesses ina much greater continuum for example Huntamp Auster (1990) Carpenter amp Meehan (2002)

Responses to the three main environmentalactivities questions were used to allocate scores(eco-points) by counting and weighting theinitiatives undertaken by the firms Eco-pointswere obtained for environmental managementactivities (9ndash10 eco-points) environmental pro-cess control (12ndash15 eco-points) and activitiesconcerning environmental raw material andproducts (6ndash8 eco-points) see Tables 3ndash6 formore details For the FTF survey on the basisof the sum of eco-points three environmentalperformance groups were established lsquocompli-ance onlyrsquo lsquocompliance plusrsquo and lsquoexcellentrsquo In

the postal survey the measure of environmentalperformance was carried out by asking theSMEs to select from a list of 11 industry specificinitiatives that they undertook Using a simplecount of the number of initiatives undertakenthree performance groups were formed

compli-ance only

for firms that undertook 0ndash2 initiatives

compliance plus

for firms that undertook 3ndash5initiatives and

excellence

for firms that undertook6 or more initiatives All firms sampled com-plied Hence compliance firms compliance plusfirms and excellence firms were defined fromthe distribution of the number of initiatives (formore details see Hitchens

et al

2003 p 15)

KEY FINDINGS

Environmental performance ndash

With the excep-tion of Italian furniture firms which showed onaverage the best environmental performanceGerman firms were ahead in the other twoindustries (textile and finishing sector fruit andvegetable processing sector) the UKROI andItaly followed with less differentiation betweenthem In Germany and the UKROI there wasa relationship between size of firm and thenumber of initiatives adopted but this was lessevident for Italy (Table 7) In Italy this may

Table 3 Environmental management measurement

Initiative Allocated points

1323 1 2

Environmental officer YesEnvironmental policy Idea discussed Draft version Official versionEnvironmental improvement programmea

Idea discussed Draft version Official version

Environmental team 1 meeting per year 2 meetings per year 3+ meetings per yearEvaluation of environmental performance of suppliers

Yes for few suppliers

Yes for many suppliers

Protocols for all suppliers

Data collection for controlling environmental improvementb

Rarely Quite often Systematically

EMAS or ISO14001 implemented or planned in the next 3 years

Yes

EMS certified externally YesEnvironmental communication instruments

One 2 or more

a Excluding textile finishingb Excluding furniture


547


reflect the smaller average size of firm sam-pled and the less differentiated driver Regu-lation predominated in Italy for example whilethe market was especially important for Ger-man firms

Analysis of the hypothesis on firm competi-tiveness (Hypothesis 1) involved a set of four

tests to relate firm competitiveness with firmenvironmental performance

(i) Environmental performance and measuresof firm performance ndash

The key competitivenessvariables included size (economies of scale)productivity employment growth destination

Table 4 Environmental process control measurement


1 2

Solvent reduction initiativesa One 2 or moreEnvironmental effect of solvent reductiona KnownWaste separationb 3ndash5 streams 6 or more streamsEnvironmental effect of waste separation KnownEnergy saving initiatives One 2 or moreEnvironmental effect of energy saving KnownEnvironmentally friendly packaging One 2 or moreEnvironmental effect of environmentally friendly pack KnownWater use and protectionc One 2 or moreEnvironmental effect of water protectionc Known

a Excluding fruit and vegetable processingb Zero points for fewer than three separate waste streamsc Excluding furniture

Table 5 Ecological raw materials and products measurement


1 2

FurnitureEcological marketing strategy YesNaturalecological materials One 2 or moreToxic use reduction in raw materials One substance 2 or moreEco-design scheme YesDesign award Yes

Textile finishingCo-operation in environmental projects One 2 or moreToxic use reduction in raw materials One substance 2 or moreNaturalecological materials OneEco-Tex standard 100 certification Yes

Fruit and vegetable processingRaw materials from organic farming Some requirements of organic

farming applied to supplies 100 certified organic raw material

Percentage of organic raw material processed Up to 30 Over 30Avoidance of artifical ingredients One substance 2 or moreOrganic products sold YesRegional sourcing Yes

548

DAVID HITCHENS

ET AL


of sales RampD age of machinery labour forcequalifications reflecting both input and outputdefinitions of competitiveness (see Hitchens1999 Hitchens

et al

2000 p 13 Hitchens

et al

2003 for more details)There was clearly no convincing evidence

that firms with a better economic performanceadopt more environmental initiatives

7

The evi-dence was also too weak to draw distinctionsbetween industries and countries However itwas noted that the firmrsquos competitive positionis not a hindrance to environmental perform-ance or that the take up of environmental ini-tiatives weakens the competitive performanceof firms

(ii) Individual environmental initiatives andfirm performance ndash

In this analysis considera-tion was given to (a) the pattern of adoption ofenvironmental initiatives as environmental per-

formance rises and hence the overall economicimpact and (b) drivers (eg cost regulationmarket etc) and the economic impact (oncost profits employment etc) of individualenvironmental initiatives

For all three sectors there was evidence ofa hierarchy of initiatives performed by firmswhen comparisons were made between com-pliance only compliance plus and excellenceenvironmental performers In the furniture andtextiles sector this implied a rise in the techni-cal complexity of the adopted initiative and thedriver (regulation for compliance only firms)In the case of the fruit and vegetable processingsector for the UKROI there were initiativesthat were adopted by compliance only firmswhich were market driven in Germany and Italythe type of initiative was less differentiated fromthose of compliance only firms in the other twoindustries Excellence performers in all three

Table 6 Maximum score possible

Table 7 Environmental performance by country and sectors ( face to face interviews)

Furniture Textiles Fruit and vegetables

Environmental management 9 9 10Environmental process control 12 15 12Ecological raw material and products 7 6 8Total 28 30 30

Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points

FurnitureSample size 32 32 33Compliance only 17 468 9 984 32 563Compliance plus 15 808 12 1448 1 1333Excellence ndash ndash 11 2237 ndash ndashTextile and finishingSample size 33 30 33Compliance only 16 525 6 1000 6 150Compliance plus 17 1136 11 1606 20 410Excellence ndash ndash 13 2190 7 800Fruit and vegetable processingSample size 33 34 30Compliance only 16 773 5 840 11 851Compliance plus 17 1437 18 1470 16 1408Excellence ndash ndash 11 2142 3 1965


549


sectors were distinguished by the extent theyundertook management initiatives The abilityto take on these initiatives was not related sys-tematically to RampD capacity or skills There wassome indication of a size effect on initiativesadopted for example management initiativeswere adopted above the very small firm sizethreshold In the German fruit and vegetableprocessing sector as size increased more firmswere involved in market initiatives

Drivers for the adoption of initiatives weresimilar for the same initiatives across the threeindustries but there were differences acrosscountries In Italy regulation predominated inUKROI regulation and cost were importantin Germany market pressures were much moreimportant in bringing forth environmentalinitiatives Analysis of the economic impact ofinitiatives indicated variability between posi-tive and negative effects for the same initiativebetween firms Comparing across the environ-mental performance groups the furnituresector showed a marginal economic payoffreported by those firms which had moved abovecompliance only status in the cases of textilesand fruit and vegetable processing the dataclearly showed that economic benefits risethrough the performance groups In all threeindustries there were small positive effects onemployment

(iii) Obstacles to the adoption of environmentalinitiatives ndash

A set of economic factors whichmay inhibit the adoption of environmental ini-tiatives were considered namely difficulties inraising capital risk regulatory uncertainty payback periods and so forth These obstacles arethose stated by respondents and not measuredby the research

First there was no relationship between sizeof firm and type of constraint for any of thesectors Second capital constraint was mostimportant in all sectors The opportunity costof undertaking the initiatives ie managementpriorities was a further common constraint aswas having the correct skills and expertise oradvice Third there was little to distinguish theconstraints reported by any of the environmen-tal performance groups This may imply thatthese factors are always a constraint on environ-mental performance independent of the levelof performance achieved

(iv) Relationship between the environmentalstrategy and the economiccompetitivenessstrategy adopted by the firm and the firmrsquosenvironmental performance ndash

With

environmentalstrategy

regulation was an important strategyirrespective of the environmental performanceof the firm German firms showed evidence infurniture and fruit and vegetables for their envi-ronmental strategies becoming more proactiveas they moved along the environmental per-formance groups to incorporate eco-practiceseco-products and markets There was some indi-cation of a similar finding for the UKROI andItaly respectively in furniture and fruit andvegetable processing Other than this althoughthere was a representation of different environ-mental strategies in different proportions ineach sector there was little evidence of an asso-ciation between environmental performanceand environmental strategy The latter mayreflect the mix of environmental drivers that allfirms face Table 8 shows the environmentalstrategy of firms across countries and sectors

In the UKROI and Italian furniture firmscost leadership (firms with an emphasis on lowcost) was the competitive strategy approachadopted by almost half of the compliance onlyfirms compared with about one-quarter of thecompliance plus firms (Table 9) For firms fol-lowing a differentiation strategy (the emphasiswas on uniqueness) these proportions werereversed and reduced for compliance onlyfirms In Germany the situation was somewhatdifferent with no firms pursuing a low-cost com-petitive strategy and a high proportion imple-menting a niche strategy (focus on a particularsegment of the market) irrespective of environ-mental performance

In the UKROI and Italian textile finishingsector almost half of firms interviewed adopteda differentiation strategy with roughly equal pro-portions following either a cost or niche compe-titive strategy In Germany only one firm pursueda low cost competitive strategy and equal propor-tions adopting differentiation or niche strategies

As regards the fruit and vegetable processingsector almost half of the firms followed a costleadership strategy with about one-third adopt-ing a differentiation strategy and the remaindera niche strategy in the UKROI In Italy about halfof the firms had a differentiation strategy one-third niche and the remaining one-sixth a cost

550

DAVID HITCHENS

ET AL


strategy In Germany the situation was again differ-ent with niche strategies dominating followedby differentiation and less than 12 per cent offirms pursuing a low cost competitive strategy

Compliance plus firms were more likely to bepursuing a non-cost based competitive strategyThis may be because their ability to charge aprice premium allows them the flexibility to

adopt environmental initiatives or it may be thatthey consider that undertaking environmentalinitiatives reflects a form of differentiationquality Thus there was an expectation thatfirms following a cost leadership strategy wouldundertake fewer initiatives than those with a dif-ferentiation or niche strategy However the datadid not support this assumption

Table 8 Environmental strategy number and percentge (in brackets) of firms ( face to face interviews)

Furniture Textile finishing Fruit and vegetable processing

UKROIRegulation 15 (469) 14 (438) 10 (323)Cost saving 5 (156) 14 (438) 14 (452)Eco-practices 7 (219) 3 (94) 5 (161)Eco-products 5 (156) 1 (31) 2 (65)Total firms 32 32 31GermanyRegulation 9 (360) 9 (310) 7 (233)Cost saving 8 (320) 10 (345) 9 (300)Eco-practices 2 (80) 6 (207) 2 (67)Eco-products 5 (200) 4 (138) 10 (333)New markets for eco-products 1 (40) ndash 2 (67)Total firms 25 29 30ItalyRegulation ndash 19 (633) 7 (241)Cost saving ndash 5 (167) 7 (241)Eco-practices ndash 3 (100) ndashEco-products ndash 1 (33) 3 (103)New markets for eco-products ndash 2 (67) 12 (414)Total firms ndash 30 29

Table 9 Competitive strategy adopted by firms number and percentage (in brackets) ( face to face interviews)


UKROICost leadership 12 (375) 9 (281) 15 (455)Differentiation 10 (313) 15 (468) 11 (333)Niche 10 (313) 8 (250) 7 (212)All firms 32 (1000) 32 (1000) 33 (1000)GermanyCost leadership ndash 1 (33) 4 (118)Differentiation 10 (312) 14 (467) 11 (324)Niche 22 (688) 15 (500) 19 (559)All firms 32 30 (1000) 34 (1000)ItalyCost leadership 13 (419) 6 (194) 5 (167)Differentiation 6 (194) 18 (581) 15 (500)Niche 12 (387) 7 (226) 10 (333)All firms 31 (1000) 31 (1000) 30 (1000)

ENVIRONMENTAL PERFORMANCE COMPETITIVENESS AND MANAGEMENT 551


With an environmental and competitive strategythere was some limited evidence to suggest alink between environmental and competitivestrategy namely that product differentiationand the pursuit of niche markets facilitatedenvironmental performance As expected therewere many reasons why a firm will adopt alter-native competitive strategies independent oftheir environmental performance but therewas slight evidence that strong environmentalperformance can be associated with differen-tiated and niche strategies The importantconclusion that follows from this is that costleadership strategies are not a constraint onenvironmental performance

The research hypothesised (Hypothesis 2)that the internal lsquoculturersquo of the firm was impor-tant in effecting environmental decision-making and environmental performance Itwas clear that attitudes towards the environmentwere on average positive A greater number ofrespondents in the sample countries voicedtheir concern about environment Howeverthere is little relationship between these atti-tudes and environmentally responsible behavi-our of the firms who were interviewed In mostof the small businesses while recognition of theimportance of the environment was high thecapacity to act was low because there has beenno sustained pressure to improve Pieters et al(1998) state that although many people viewthemselves as lsquoenvironmentalistsrsquo they do nottranslate their attitudes into pro-environmentalbehaviour One reason may be that the choicebetween acting in a pro-environmental way andnot doing so often involves a conflict betweenimmediate individual and long-term collectiveinterests

The third key area of interest was the impor-tance and influence of information and advi-sory sources (Hypothesis 3) in enabling thetake up of clean technologies The investigationrevealed that there was an abundance of easilyaccessible and cheap information indeed nomanufacturing firm complained of a lack ofadvice as an obstacle to the adoption of cleantechnology or environmental initiatives (exceptin the case of UKROIrsquos furniture sector) How-ever most SMEs remained unaware of theenvironmental impacts associated with theirbusiness activities and had a low awarenessof environmental programmes or resources

available to them As environment was notregarded as important many SMEs did not feelthe need for any advisory services MoreoverSMEs were isolated they did not have the net-works to understand and evaluate technologyDrivers were important especially in environ-mental regulation

Low responses and poor interest in free advi-sory services were notable in the UKROI Thiswas compounded because the quality of advicewas stated to be problematic in both the publicand private sectors In Germany firms felt therewas not much difference in the quality of serviceoffered by public and private sectors and inItaly firms observed that public sector serviceswere more reliable and efficient than those ofthe private sector

Obstacles to the take up of advice by firms (asidentified by sources of advice) ndash The peopleresource constraint was more important thanany financial constraints (though lack of capitalcould also be important) The smaller the firmthe more tasks fall to one particular person Theresource constraint was combined with the cul-ture within the firm namely the view that envi-ronmental concerns were a necessary evil anddealt with through compliance The result wasthat environmental responsibility was oftencombined with health and safety and not viewedas a separate issue This reinforced the lowpriority and often led to environmentalimprovements being treated as lsquointerruptibleprocessesrsquo that take second place to productionrelated activities

Management attitude was conceived to playan emphatic role in the environmental per-formance of firms across all the countries Thiswas contrary to the findings (except for theItalian fruit and vegetable processing sector) ofthe measured relationship between environmen-tal attitudes and environmental performanceSchaper (2002) points out that key externalvariables for example amount of time availablefor owners to undertake discretionary businessactivity and the level of environmental informa-tion available to business owners shows asignificant positive relation to a firmrsquos lsquogreenrsquoactivities In this research it did emerge that lackof management time was a constraint on thepart of small businesses in the take up of cleanertechnologies however enough research could

552 DAVID HITCHENS ET AL


not be carried out to link this constraint withthe firmrsquos pro-environmental attitude

While in both Germany and Italy there was apoor response from the advisors on the majortechnological and organisational problems facedby the SMEs in the adoption of environmentalinitiatives the UKROI SMEs experienced arange of problems (Figures 1 and 2)

To summarise sources of information andadvice were important The diversity was impor-tant and the main difficulty was with their underuse

CONCLUSIONS IMPLICATIONS FOR POLICY

Despite competitive advantages which mayvariously take the form of above average profit-ability growth and associated RampD skills andmodernity there was only scattered evidence tosuggest any of these was importantly correlatedwith the environmental performance of thefirm

The policy implication follows that strongenvironmental performance is not constrainedby the competitive status of the firm This find-ing was further underlined by the evidenceshown that firm constraints on the adoption ofenvironmental initiatives did not differ accordingto environmental performance groups Capitalor skills were a constraint irrespective of the levelof environmental performance already achievedHowever there was evidence that environmen-tal performance can be a function of the sizeof the firm and that was demonstrated for anumber of environmental initiatives notablyenvironmental management but also sometechnical initiatives

At the aggregate level the finding thatfirm competitiveness was generally unrelated toenvironmental performance implied that strongenvironmental performance was not associatedwith a weakening of competitive performanceIt also means that the most economicallycompetitive firms are not the necessarily strongenvironmental performers Increasing environ-mental standards can affect productivity eitherpositively or negatively

High standards can push firms on to a highergrowth path by forcing them to make productand process changes which yield higher com-petitiveness ndash representing partly the so-calledlsquodouble dividendrsquo effect While on the otherhand high standards could also lead to negativecompetitive effect due to certain inherent pro-duction or market factors

As regards competitiveness and economiceffects in general the majority of economicimpacts were positive Moreover the ratio ofpositive economic benefits arising from any ini-tiative rose as the firm moved up the environ-mental performance ladder This supports thefinding that improved environmental perform-ance is not associated with a worsening of econ-omic performance

Figure 1 Technological problems faced by SMEs in theUKROI

Figure 2 Organisational problems faced by SMEs in the UKROI



However this analysis has an important policyimplication It indicates that across countriessectors and within sectors there are a variety ofpositive and negative economic experiencesfrom adopting environmental initiatives Onaverage the experience was positive but for anysingle firm there was a probability that the experi-ence could be negative compared with theircurrent techniques and performance It doesnot therefore follow that all firms can improvetheir environmental performance with uni-formly positive economic outcomes This vari-ability in experience is likely to be an importantbarrier to movement up the environmentalimprovement ladder in response to any givendriver with the exception of regulation

The obstacles noted by the firms themselvesand those stated by firm advisors were broadlysimilar The advisors also highlighted the lackof demand for their services (as indicated by thelow take up of even free services) They empha-sised the need for external expertise especiallywhere the technicalities of the environmentalinitiative were outside the scope of the businessof the SME

Hence the hypothesis that information aboutenvironmental initiatives is likely to be a criticaldeterminant of diffusion is supported particu-larly in the context of the provision of relevantskills and firm specific advice As Schaper(2002) rightly points out that increasing smallfirmrsquos knowledge of environmental issues wouldenable small firms to improve their perform-ance and encourage them to act in an environ-mentally responsible way

Investigation of the hypothesis on manage-ment culture indicated that positive environ-mental attitudes were quite common and werepositively held irrespective of the firmrsquos ownenvironmental performance or environmentalstrategy This positive view was independent ofthe size of the firm Moreover most respondents(with the exception of many German counter-parts with already good environmental per-formance) did not believe that environmentalimprovement had a deleterious effect on theeconomic performance of the firm See forexample Braun (2002 p 196)

Research conducted by Corraliza amp Berenguer(2000) shows that a significant number of peo-ple perceive a conflict between their dispositionat a personal level to carry out pro-environmental

behaviour and the situational conditions theyperceive that affect that performance of suchbehaviour It has been demonstrated thatstrong feelings of moral obligation for carryingout a pro-environmental behaviour are only deter-minants for that behaviour when favourableattitudes towards the realisation of responsiblebehaviours do not enter into conflict with highsituational inhibition Similarly low feelings ofmoral obligation do not necessarily imply anabsence of pro-environmental behaviour becausethe physical conditions influencing such beha-viour may be perceived as facilitatory Thereforeto stimulate peoplersquos pro-environmental beha-viour a better understanding of psychologicalfactors that influence their willingness to actin a pro-environmental manner is importantFurther a more detailed analysis at the micro-economic level is therefore required to explainthese patterns of behaviour

This dichotomy in attitudes and performancealso further suggests a need at least to enhance theknowledge base of the management to recognisethe benefits that can be derived from improvingenvironmental performance and where it canin cases lead to negative competitive effects

Schaltegger amp Synnestvedt (2002) argue thatthe relationship between the environmentaleffort and the benefits may vary according tothe legislative practices in the country the sizeof the business the culture customer beha-viour the type of industry and the time spanThey argue that the best environmental prac-tices are moderated by managerial qualitiesresulting in not so specific economic perform-ances They also cite Christmann (2000) andKanagozoghu amp Lindell (2000) to argue thatsuperiority in performance does not lead tocompetitive advantage

It therefore sums up the fact that policyshould not be constrained by the expectedimpact on competitiveness of pressure to improvethe environmental performance of firms If allfirms were forced to rise to excellence thensome would be uncompetitive However it mustbe recognised that similar pressures can lead todifferent economic impacts on what look likeidentical firms Firms need more expert helpthan they seek or realise they need to adoptenvironmental initiatives Finally poor environ-mental performance is not the outcome of anegative attitude to the environment



Acknowledgements

The authors would like to thank the EuropeanCommission for funding this study under theHuman Dimensions of Environmental Change workprogramme of DG Research and all those industriesenvironmental associations universities and govern-ment departments who willingly completed thequestionnaires and agreed to long interviews to fulfilthe objectives of this study Due thanks are accordedto those regulators industrialists academic and tradeassociation members and environmentalists who con-tributed to the focus groups

Notes

1 Corresponding author2 According to the EU definition ndash the category of

small and medium-sized enterprises (SMEs) ismade up of enterprises which have fewer than250 occupied persons and which have either anannual turnover not exceeding $50 million or anannual balance sheet total not exceeding $43million

3 The postal survey yielded a total of 844 responseswhich represents a response rate of 14 per centin the UKROI and 15 per cent in GermanyItalian interviews were conducted by telephone andachieved a substantially higher response rate of 50per cent

4 The choice of environmental initiatives whichwere included in the research was based on ananalysis of Reference documents on best avail-able techniques from the European IPPC Bureaufor the respective sectors The Pollution Preven-tion and Abatement Handbook of the WorldBank Environmental regulation focus in theparticipating countries and environmental state-ments from firms within the sectors that appliedEMAS Taking into consideration these sourceseight initiatives were chosen which were ofhigh environmental importance as well as beingreasonably commonplace in the three sectors

5 For example the following question provided aninsight into the attitude of the firms as regardsenvironmental legislation and its implementation

Q What in your opinion was the main impact ofenvironmental legislation

a An incentive to improvement for the good ofsociety

b A hindrance to market competitivenessc Encourages increased efficiency of production

6 The precise definitions of the variables are shownin the questionnaires which are available fromthe authors on request

7 Competitiveness variables included size produc-tivity employment growth destination of salesRampD age of machinery and labour force qualifi-cations For furniture there was limited evidenceto support the hypothesis that the more competi-tive the firm the more initiatives it would under-take though there were inconsistencies betweensurveys (face to face postal) countries there wassome relationship for productivity age of machin-ery and employment growth in Britain andIreland none in Germany and in Italy a smallcorrelation with exports only In textile finishingthere was no relationship for Ireland Britain orItaly In Germany there was some relationshipwith exports in the survey data and age of machin-ery and RampD in the face to face data Finally infruit and vegetable processing there was no rela-tionship in the face to face data save for somerelationship with age of machinery for GermanyIn the survey data there was no relationship in theUKROI data In the German and Italian surveydata there was some relationship with exports

REFERENCES

Angel DP HS Brown R Broszkiewicz amp SWronski (1999) The Environmental Regulationof Privatised Industry in Poland Environment andPlanning C 18 pp 575ndash592

Annandale D (2000) Mining Company Approachesto Environmental Approvals Regulation A Surveyof Senior Environment Managers in CanadianFirms Resources Policy 26 pp 51ndash59

Atlas M amp R Florida (1998) Green ManufacturingIn R Dorf ed Handbook of Technology ManagementBoca Raton FL CRC Press

Bennett M amp P James (1998) Environment underthe Spotlight Current Practice and Future Trends inEnvironment-related Performance Measurement forBusiness London ACCA

Biondi V M Frey amp F Iraldo (2000) Environ-mental Management Systems and SMEs GreenerManagement International 29 pp 55ndash69

Birch D (1979) lsquoThe Job Creation Processrsquo Final Reportto Economic Development Administration CambridgeMA MIT Program on Neighbourhood and RegionalChange

Braun B (2002) Competitive and Green



Determinants of Successful EnvironmentalManagement in the Manufacturing Sector In RHayter amp R Le Heron eds Knowledge Industryand Environment Institutions and Innovation inTerritorial Perspective Burlington VT Ashgate

Carpenter D amp B Meehan (2002) MainstreamingEnvironmental Management Case Studies fromAustralasian Universities International Journal ofSustainability in Higher Education 2 pp 19ndash37

Christie I H Rolfe amp R Legard (1995) CleanerProduction in Industry Integrating Business Goals andEnvironmental Management Policy Studies ResearchReport 772 Lodon Policy Studies Intitute

Christman P (2000) Effects of Best Practices ofEnvironmental Management on Cost AdvantagesThe Role of Complementary Assets Academy ofManagement Journal 43 pp 663ndash681

Corraliza JA amp J Berenguer (2000) Environ-mental Values Beliefs and Actions A SituationalApproach Environment and Behaviour 32 pp 832ndash848

De Bruijn TJNM amp PS Hofman (2000)Environmental Management Systems and SMEsGreener Management International 29 pp 55ndash69

Ditz D amp J Ranganathan (1997) Measuring UpToward a Common Framework for Tracking CorporateEnvironmental Performance Washington DC WorldResources Institute

Environment Agency (2003) SME-nvironment 2003NetRegs ltwwwenvironment-agencygovuknetregsgtAccessed on 15 November 2003

Eurostat (2004) lthttpeppeurostatceceuintcacheITY_OFFPUBKS-BW-04ndash001ENKS-BW-04ndash001-ENPDFgt Accessed on 21 December 2004

Florida R (1996) Lean and Green The Move toEnvironmentally Conscious Manufacturing CaliforniaManagement Review 39 pp 80ndash105

Friedman AL S Miles amp C Adams (2000) Smalland Medium Sized Enterprises and the EnvironmentEvaluation of a Specific Initiative Aimed at AllSmall and Medium Sized Enterprises Journal ofSmall Business and Enterprise Development 7 pp 325ndash342

Gerrans PA amp WE Hutchinson (1998) EMS andSMEs Current and Likely Impact of EnvironmentalManagement Systems (EMS) on Small to MediumEnterprises (SMEs) Paper presented to the 43rdICSB World conference on EntrepreneurshipNanyang Technological University Singapore 8ndash10 June

Gerstenfeld A amp H Roberts (2000) Size MattersBarriers and Prospects for Environmental Man-

agement in Small and Medium Sized EnterprisesIn R Hillary ed Small and Medium Sized Enterprisesand the Environment Business Imperatives SheffieldGreen Leaf Publishing

Gibbs D (1996) Integrating Sustainable Develop-ment and Economic Restructuring A Role ofRegulatory Theory Geoforum 27 pp 1ndash10

Gibbs D amp M Healey (1997) Industrial Geographyand the Environment Applied Geography 17 pp 193ndash201

Gonzaacutelez-Benito J amp O Gonzaacutelez-Benito (2005)Environmental Proactivity and Business PerformanceAn Empirical Analysis Omega International Journalof Management Science 33 pp 1ndash15

Gray C (2000) lsquoFormality Intentionality andPlanning Features of Successful EntrepreneurialSMEs in the Futurersquo Conference Paper presentedat the ICSB World conference 2000 Brisbane June

Hayter R amp R Le Heron (2002) ConclusionInstitutions and Innovation in TerritorialPerspective In R Hayter amp R Le Heron edsKnowledge Industry and Environment Institutionsand Innovation in Territorial Perspective BurlingtonVT Ashgate

Hillary R (1995) Small Firms and the EnvironmentA Groundwork Status Report BirminghamGroundwork

Hillary R (2000) Small and Medium Sized Enterprisesand the Environment Business Imperatives SheffieldGreen Leaf Publishing

Hitchens DMWN (1999) The Implications forCompetitiveness of Environmental Regulationsfor Peripheral Regions in the EU Omega TheInternational Journal of Management Science 27pp 101ndash114

Hitchens DMWN F Farrel J Lindblom ampU Triebswetter (2001) The Impact of BestAvailable Techniques (BAT) on the Competitiveness ofEuropean Industry Report EUR 20133 EN SevilleInstitute for Prospective Technological Studies

Hitchens D M Trainor J Clausen S Thankappanamp B De Marchi (2003) Small and Medium SizedCompanies in Europe ndash Environmental PerformanceCompetitiveness and Management International EUCase Studies Berlin Springer

Hitchens DMWN JE Birnie W Thompson UTriebswetter P Bertossi amp L Messori (2000)Environmental Regulation and Competitive AdvantageA Study of Packaging Waste in the European SupplyChain Cheltenham Edward Elgar

Hobbs J (2000) Promoting Cleaner Production inSmall and Medium Sized Enterprises In R



Hillary ed Small and Medium Sized Enterprises andthe Environmental Business Imperatives SheffieldGreen Leaf Publishing

Holland L amp J Gibbon (1997) SMEs in the MetalManufacturing Construction and ContractingService Sectors Environmental Awareness andActions Eco-Management and Auditing 4 pp 7ndash14

Hooper P S Jukes amp M Stubbs (2000) SME Envir-onmental Performance and Business Support Net-works Problem Solving not Panacea In Proceedingsof the Business Strategy and the Environment Conferencepp 173ndash178 Shipley European Research Press

Hunt CB amp ER Auster (1990) ProactiveEnvironmental Management Avoiding the Toxictrap Sloan Management Review Winter pp 7ndash18

Hutchinson A amp I Chaston (1994) EnvironmentalManagement in Devon and Cornwallrsquos Small andMedium Sized Enterprise Sector Business Strategyand the Environment 2 pp 19ndash24

Hutchinson A amp F Hutchinson (1997) Environ-mental Business Management Sustainable Developmentin the New Millennium London McGraw-Hill

Kanagozoghu N amp M Lindell (2000) Environ-mental Management Testing the Win-Win ModelJournal of Environmental Planning and Management43 pp 817ndash830

Kassinis GI (2000) Location Networks and FirmEnvironmental Management Practices Journal ofEnvironmental Planning and Management 44 pp 815ndash832

Ludevid AM (2000) Small and Medium SizedEnterprisesrsquo Perceptions of the Environment AStudy from Spain In R Hillary ed Small andMedium Sized Enterprises and the Environment BusinessImperatives Sheffield Green Leaf Publishing

Marshall Report (1998) Economic Instruments andthe Business Use of Energy London Stationery Office

Merritt JQ (1998) EM into SME wont GoAttitudes Awareness and Practices in the LondonBorough of Croydon Business Strategy and theEnvironment 7 pp 90ndash100

Morris R amp G Brennan (2000) Creating aSeamless Local Government and Small BusinessInterface for Better Regional Economic DevelopmentOutcomes Paper presented at the ICSB WorldConference 2000 Brisbane June

Noci G amp R Verganti (1999) Managing lsquoGreenrsquoProduct Innovation in Small Firms RampDManagement 29 pp 3ndash15

Oberthur S amp HE Ott (1999) The Kyoto Protocolndash International Climate Policy for the 21st CenturyBerlin Springer Verlag

Petts J A Herd S Gerrard amp C Horne (1999)The Climate and Culture of EnvironmentalCompliance within SMEs Business Strategy andEnvironment 8 pp 14ndash30

Pieters R T Bijmolt F van Raaij amp M de Kruijk(1998) Consumers Attributions of Proenviron-mental Behaviour Motivation and Ability to Selfand Others Journal of Public Policy amp Marketing 17p 215

Porter M amp C van der Linde (1995a) Green andCompetitive Ending the Stalemate HarvardBusiness Review 73 pp 120ndash134

Porter M amp C van der Linde (1995b) Toward aNew Conception of the Environment Competi-tiveness Relationship Journal of Economic Perspectives9 pp 97ndash118

Rennings K R Kemp M Bartolomeo JHemmelskamp amp D Hitchens (2003) Blueprintfor an Integration of Science Technology andEnvironmental Policy (BLUEPRINT) lthttpwwwblueprint-networknetgt

Roome N (1994) Business Strategy RampD Managementand Environmental Imperatives RampD Management24 pp 65ndash82

Rowe J amp R Enticott (1998) Evaluating the LinksBetween Locality and Environmental Performanceof SMEs Some Observations from Survey andPartnership Programmes in the Greater BristolArea Eco-Management and Auditing 5 pp 112ndash125

Rowe J amp D Hollingsworth (1996) Improvingthe Environmental Performance of Small andMedium Sized Enterprises A Study in Avon Eco-Management and Auditing 3 pp 97ndash107

Rutherford R amp LJ Spence (1998) SmallBusiness and the Perceived Limits to ResponsibilityEnvironmental Issue Paper presented at 21stInstitute of Small Business Affairs National SmallFirms Policy and Research Durham

Schaltegger S amp T Synnestvedt (2002) TheLink Between Green and Environmental SuccessEnvironmental Management as the CrucialTrigger Between Environmental and EconomicPerformance Journal of Environmental Management65 pp 339ndash346

Schaper M (2002) Small Firms and EnvironmentalManagement Predictors of Green Purchasing inWestern Australian Pharmacies International SmallBusiness Journal 20 pp 235ndash251

Schulz C (2002) Environmental Service-ProvidersKnowledge Transfer and the Greening of IndustryIn R Hayter amp R Le Heron eds Knowledge



Industry and Environment Institutions and Innovationin Territorial Perspective Burlington VT Ashgate

Sinclair-Desgagneacute B amp HL Gabel (1997)Environmental Auditing in Management Systemsand Public Policy Journal of Environmental Economicsand Management 33 pp 331ndash346

Smith A amp R Kemp (1998) Small Firms and theEnvironment 1998 A Groundwork Report BirminghamGroundwork

Stoneman P (2001) The Economics of TechnologyDiffusion Oxford Blackwell

Tilley F (2000) Small Firm Environmental EthicsHow Deep Do They Go Business Ethics A EuropeanReview 9 pp 31ndash40

Triebswetter U amp D Hitchens (2005) The Impactof Environmental Regulation on Competitivenessin the German Manufacturing Industry ndash A Com-parison with Other Countries of the EuropeanUnion Journal of Cleaner Production 13 pp 733ndash745

Turok I amp M Raco (1999) Developing Expertisein Small and Medium Sized Enterprises AnEvaluation of Consultancy Support Environmentand Planning C 18 pp 409ndash427

Wehrmeyer W amp D Tyteca (1998) MeasuringEnvironmental Performance for Industry From

Legitimacy to Sustainability The InternationalJournal of Sustainable Development and World Ecology5 pp 111ndash124

Weizsacker EU AB Lovins amp HL Lovins(1997) Factor 4Factor 10 SustainabilityObjectives In EU Weizsacker ed Factor FourDoubling Wealth Halving Resource Use ndash A Report tothe Club of Rome London Earthscan

Welford R (1994) Environmental Barriers to theImprovement of Environmental PerformanceThe Case of the SME sector In R Welford edCases in Environmental Management and BusinessStrategy London Pitman

Winter L amp G Ledgerwood (1994) Motivationand Compliance in Environmental Performancefor Small and Medium Sized Companies AModel Based on Empirical Evidence from a PilotInvestigation of Small Businesses in the EnglishWest Midlands Greener Management International 7pp 62ndash72

Xepapadeas A amp A De Zeeuw (1999) Environ-mental Policy and Competitiveness The PorterHypothesis and the Composition of Capital Journalof Environmental Economics and Management 37pp 165ndash182

542

DAVID HITCHENS

ET AL


998 per cent of the total number of companiesin the European Union two thirds of employ-ment and 60 per cent of value added

SMEs are considered to be the backbone ofthe business economy accounting for morethan 99 per cent of all enterprises two thirdsof employment and more than half the valueadded generated in both the EU and the 10acceding countries (Eurostat 2004) The rela-tive contribution of SMEs to the total industrialenvironment impact though is unknown buttheir sheer numbers and contribution to valueadded may mean that their impact on the eco-system in many sectors could be substantialThe Marshall Report (1998) which originallyendorsed proposals for a climate change levyestimated that as much as 60 per cent carbondioxide emissions from businesses result fromthe activities of the SMEs The EnvironmentAgency (2003) estimates that 60 per cent of thecommercial waste and 80 per cent of the pollu-tion accidents result from SMEs in the UnitedKingdom Most research in this area though hasfocused on the large firms and their impact onthe environment the impact of small firms con-tinues to be an under-researched area (Noci ampVerganti 1999 Hillary 2000 p 141)

Though some SMEs have taken the lead inmanaging their own environmental and socialimpacts in a well structured way a majority ofSMEs are still characterised by their lack ofawareness of their environmental and socialimpacts and the management of such issues(Biondi

et al

2000 de Bruijn amp Hofman 2000Freidman

et al

2000 Kassinis 2001)Gibbs (1996) and Gibbs amp Healey (1997)

argue that more research is needed into thesustainability implications For the benefit ofthe environment and the wider societal contextSMEs still need to be involved in the drivetowards sustainability They are an essential con-tributor to attaining reduction targets set by thelsquoKyoto Protocol to the United Nations Frame-work Convention on Climate Changersquo (see forexample Oberthur amp Ott 1999) or to reachingpolicy targets like lsquoFactor 410rsquo (Weizsacker

et al

1997 p 132)Despite considerable government efforts to

inform SMEs of the potential economic benefitsfrom positively managing their environmentalperformance and investing in clean technolo-gies most SMEs see no reason to address the

environmental aspects of their businesses Anyaction taken is often a response to legislativeand regulatory pressures rather than positivelyseeking new opportunities from environmentalmanagement (Gerstenfeld amp Roberts 2000 p 112Hutchinson amp Hutchinson 1997 p 16) This canpartly be explained by the fact that SMEs areunreceptive or unable to interpret the relevanceof the legislation to their business (Hutchinsonamp Chaston 1994 Hillary 1995 Gerstenfeld ampRoberts 2000 p 113) SMEs perceive that legis-lative compliance is expensive (Petts

et al

1999)and therefore regulation is resisted due to its impacton profits moreover owners of small businessestend to favour economic interests over social orenvironmental considerations (Tilley 2000)

SME owners feel limited responsibility towardsthe environment due to their belief that theircontribution towards environmental impactis negligible (Hillary 1995 Holland amp Gibbon1997 Rutherford amp Spence 1998 Smith ampKemp 1998) Furthermore small businesses lackthe time and money to investigate their envi-ronmental performance or access the high costconsultancy support network (Hillary 2000p 140) Research conducted by Tilley (2000)and Ludevid (2000 p 56) shows that SMEsresist voluntary initiatives that promote self-regulation due to fears of lsquofree ridersrsquo and a lackof a lsquolevel playing fieldrsquo

While this may describe the average positionof the environmental performance of SMEsthere are nevertheless cases where the use ofclean technologies and the environmentalperformance of firms are above the average ofSMEs in each industry (Gerrans amp Hutchinson1998 Merritt 1998 Ludevid 2000 p 58) Alarge number of researchers have noted theadoption of environmentally conscious manu-facturing practices (Porter amp Vander Linde 1995ab Florida 1996) similarly few other researchershave examined the factors associated with theadoption of these practices (Florida 1996 Atlasamp Florida 1997 pp 13 87 Hayter amp Le Heron2002 p 433)

This research relevant to Agenda 21 espe-cially in the recognition that governments alonecannot achieve the underlying principles pro-vides useful policy implications and emphasisesthat commitment of relevant groups andpeople is necessary in order to bring about theobjective of an integration of sustainability and


543



bull

Competitiveness


et al

2000 p 15 Rennings

et al


bull



et al


bull



et al


et al

2000Schulz 2002 p 135)


2


et al


et al





et al



$


$


544

DAVID HITCHENS

ET AL



$



METHODOLOGY



3


4






5



Methodsector UKROI

Germany Italy Total



545




6



et al

2000 p 21 Hitchens

et al



compliance +

) and (c) achieve

excellence














546

DAVID HITCHENS

ET AL



compliance+


compliance+

and

excellence




compli-ance only


compliance plus


excellence


et al

2003 p 15)

KEY FINDINGS





1323 1 2










Yes


One 2 or more



547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES
















































































543



bull

Competitiveness


et al

2000 p 15 Rennings

et al


bull



et al


bull



et al


et al

2000Schulz 2002 p 135)


2


et al


et al





et al



$


$


544

DAVID HITCHENS

ET AL



$



METHODOLOGY



3


4






5



Methodsector UKROI

Germany Italy Total



545




6



et al

2000 p 21 Hitchens

et al



compliance +

) and (c) achieve

excellence














546

DAVID HITCHENS

ET AL



compliance+


compliance+

and

excellence




compli-ance only


compliance plus


excellence


et al

2003 p 15)

KEY FINDINGS





1323 1 2










Yes


One 2 or more



547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES















































































544

DAVID HITCHENS

ET AL



$



METHODOLOGY



3


4






5



Methodsector UKROI

Germany Italy Total



545




6



et al

2000 p 21 Hitchens

et al



compliance +

) and (c) achieve

excellence














546

DAVID HITCHENS

ET AL



compliance+


compliance+

and

excellence




compli-ance only


compliance plus


excellence


et al

2003 p 15)

KEY FINDINGS





1323 1 2










Yes


One 2 or more



547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES
















































































545




6



et al

2000 p 21 Hitchens

et al



compliance +

) and (c) achieve

excellence














546

DAVID HITCHENS

ET AL



compliance+


compliance+

and

excellence




compli-ance only


compliance plus


excellence


et al

2003 p 15)

KEY FINDINGS





1323 1 2










Yes


One 2 or more



547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES















































































546

DAVID HITCHENS

ET AL



compliance+


compliance+

and

excellence




compli-ance only


compliance plus


excellence


et al

2003 p 15)

KEY FINDINGS





1323 1 2










Yes


One 2 or more



547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES
















































































547









1 2





1 2






548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES















































































548

DAVID HITCHENS

ET AL



et al

2000 p 13 Hitchens

et al



7










Performance groups

UKROI Germany Italy

No of firms

Average eco-points

No of firms

Average eco-points

No of firms

Average eco-points



549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES
















































































549








With






550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES















































































550

DAVID HITCHENS

ET AL














































Acknowledgements


Notes











REFERENCES


















































































































Acknowledgements


Notes











REFERENCES









































































































Acknowledgements


Notes











REFERENCES




























































































Acknowledgements


Notes











REFERENCES

















































































Acknowledgements


Notes











REFERENCES
















































































































































































































Documents

Environmental Performance, Competitiveness