Corporate sustainability in SMEs: an Asian perspective
| DOI | https://doi.org/10.1108/JABS-10-2017-0176 |
| Pages | 109-138 |
| Date | 10 January 2020 |
| Published date | 10 January 2020 |
| Author | Maitreyee Das,K. Rangarajan,Gautam Dutta |
| Subject Matter | International business,Strategy |
Corporate sustainability in SMEs: an
Asian perspective
Maitreyee Das, K. Rangarajan and Gautam Dutta
Abstract
Purpose –The purpose of this paperis to do a thorough literature review to assess the currentstatus of
corporate sustainability(CS) practices, issues and challenges in small and mediumenterprises (SMEs)
and based on literaturesuggest a model that can improve and strategically managetheir sustainability
practicesin the emerging market context of Asia.
Design/methodology/approach –After setting the theoretical background on why the corporations
need to shoulder the responsibility of sustainable development, the authors did a high level literature
review to estimate the gap areaand based on the findings formulated some research questionson why
the SMEs, morespecifically those in Asian emergingmarket, are lagging behind in terms ofCS practices.
Next, using the ‘‘literature survey’’ as the methodology the authors did a thorough in-depth literature
review to answer the above research questions and organised the findings in light of those research
questions. Consideringthe research gap and the crucial role of SMEs in a country’s economicprogress
the authorsrestricted the literature searchon CS in the case of SMEs only.
Findings –CS is a well-practiced areain big organisations. However, the literature suggeststhat in the
case of SMEs the situationis different. Social and environmentalpractices are grossly neglected in SMEs
more specifically in emergingmarkets. Existing literature mentions thatcollaborative mode of operation,
government policy and facilitation, supporting organisation culture can positively influence SME’s
sustainabilityperformance, and hence, improvetheir financial performance.
Research limitations/implications –The conceptual model has been developed based on
suggestions and recommendations in western countries context . To establish the validity of the
model in the Asian business scenario it needs to be tested wit h a sizable sample of SMEs in the
Asian market.
Practical implications –The current paper has practical implications both for academic research on
sustainable developmentand also in business development. The proposed model in the currentform is
based on the literature survey only. Once such a model is empirically established this can be proved
beneficial for providing guidance to SMEs to enhance the sustainability of their business operations.
Moreover, environmentaland social best practices adopted by SMEs will also have a positive influence
on societyand the environment in the long run.
Originality/value –This paper had done a country-wise comparison of sustainable practices in SMEs
and based on the recommendations and suggestions of different scholars as found in the detailed
literature review, the authors developed few research propositions and also presented a conceptual
model. Finally, to address the gapit mentions some future researchpossibilities to test and validate the
proposedmodel in the context of SMEs in emerging marketsof Asia.
Keywords Corporate social responsibility, Corporate sustainability, Small and medium enterprises,
Business performance
Paper type Literature review
Introduction
The industry sector comprising of small and medium enterprises (SMEs) is an integral part
of every economy. SME sector has made immensecontributions to the economic and social
well-being of the people across all the countries in the world and more significantly for
countries in emerging, developing and underdeveloped economies (Fourth All India
Maitreyee Das is Research
Scholar at the Indian
Institute of Foreign Trade,
New Delhi, India.
K. Rangarajan is Professor
at the Strategic
Management, Indian
Institute of Foreign Trade,
New Delhi, India.
Gautam Dutta is Professor
at the International
Business and
Entrepreneurship, Indian
Institute of Foreign Trade,
New Delhi, India.
Received 9 October 2017
Revised 30 January 2018
6 August 2018
18 March 2019
16 August 2019
28 September 2019
Accepted 28 October 2019
DOI 10.1108/JABS-10-2017-0176 VOL. 14 NO. 1 2020, pp. 109-138, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 109
Census of Micro, Small and Medium Enterprises (MSME) 2006-2007). It has a large share in
employment generation and a significant contribution to the gross domestic product,
manufacturing output and exports of a country (Reeg, 2013). The sector is instrumental in
nurturing entrepreneurial talent and also ensures economic sustainability at the grass-root
level thus promoting balanced and equitablegrowth of the country.
Besides, the development of SMEs can contribute to economic diversification and
resilience. Especially, in the caseof emerging economies of Asia, SMEs contribute up to 45
per cent of total employment and 33 per cent of GDP (Harvie, 2010;Iqbal and Rahman,
2015). They offer job opportunities to millions of poor people and also help to upgrade the
skill level for low skilled or unskilled manpower. This sector promotes upward mobility in the
society, by allowing disadvantaged or marginalised groups such as women, seniors,
migrants, ethnic or religious minorities andthe disabled, to create their own opportunities to
participate in the economy. SMEs also contribute by serving locations that do not have a
scale advantage to attract larger firms. Thus, SMEs act as an important channel for poverty
reduction and inclusive growth, especially but not exclusively in emerging and low-income
economies (Meeting of the OCED Council at Ministerial Level, 2017). The development and
sustainability of SMEs are importantfor the overall economic growth of the country.
The purpose of the current paper is to identify the factors responsible for driving the
sustainability performance of SMEs and develop an empirical model that can help SMEs to
achieve sustainable businessgrowth through improved sustainability performance.
Corporate sustainability –concept development
In response to legislative changes and increased public scrutiny on the activities of
companies towards sustainability issues, SMEs, nowadays are becoming increasingly
aware of the impact of their brand reputation and their relationship with multilevel
stakeholders (Tonello, 2012). This has come about because of the forces of economic
liberalisation during the early 1990s, privatisation, globalisation of trade and government
intervention on societal and environmental impacts of business operations. As a result, the
terms such as “corporate citizenship”, “corporate accountability”, “corporate social
responsibility (CSR)”, “responsible business behaviour” and “corporate sustainability (CS)”
have got prominence. The two most frequently used terms in literature in this area are CSR
and CS (Swarnapali, 2017). While earlier academic literature used the term “CSR” to
emphasise more on the social and environmental protection activities of the organisations
the more recent papers have used the term CS, which has a broader perspective and aims
at including all earlier concepts of socio-economic considerations, ethics and governance
as an integral part of overall business strategy. It is a newer concept in management
(Montiel and Delgado-Ceballos,2014).
The concept of CSR emerged in the early 1970s. It mainly deals with the philanthropic and
ethical behaviour and community contribution on the part of the organisation over and
above their legal and economic considerations (Geva, 2008). CS, on the other hand, is
based on three essential dimensions to sustainable development, namely, environmental
protection, economic development and social equity (Lackmann et al.,2012). It deals with a
concept that tells how business entities, along with their usual goal of profit maximisation
need to focus on social and environmental improvement to enhance the sustainability of
their business operations in the long term. Earlier concepts considered community
development and environmental protection activities as voluntary philanthropic activities.
Currently, these activitiesare essential for the very sustenance of the company. Sustainable
business practices integrated within the core business strategy remains strong and less
susceptible to cost-cutting measures during economic downturns and also help the
company adopt a strategic approachthrough cost leadership (Husted and Allen, 2001).
PAGE 110 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 14 NO. 1 2020
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