Motivational and Enabling Factors of Environmental Engagement in the SMEs of Developing Economies: Perceptions From the Leather Industry in Pakistan

Globally small and medium-sized enterprises (SMEs) are under constant pressure of different stakeholders to adopt environmentally responsible business practices. It has also inspired researchers, who have identified different internal and external drivers of and barriers to environmental engagement of SMEs. Crucially, the research on factors that might enable the environmental practices of SMEs is limited indeed. At the same time, much of the prior literature represents the context of developed economies. Consequently, little is known about the environmental practices of SMEs in developing economies. This qualitative study research has tried to address this gap in literature by exploring the influence of human capital- as an enabling factor- on environmental engagement of SMEs in the leather industry in Pakistan, which is a developing economy. Also the motivations for adopting environmental practices are explored. The thematic analysis of 8 Skype-based interviews has revealed that SMEs in the leather industry develop links with environmentally responsible suppliers to get environment friendly inputs, get environmental certifications and adopt different resource saving and pollution prevention measures to reduce their environmental impacts. Considerably, contrary to the earlier studies that often regard compliance with regulation as a primary motivation for SMEs to adopt environmental practices in developed economies, this research has identified that for the SMEs in leather industry in Pakistan the pressure from customers (mainly international buyers) is the leading motivation for environmental engagement. This study also asserts that human capital does enable the environmental practices of SMEs but it is hard to explain its exact impact. Significantly, this study highlights that often the investment in environmental initiatives is pre-dominantly informed by the economic rationale and willingness of owner-mangers to invest in such measures and less by the academic qualification and environmental-awareness of owner-managers and the sustainability rationale

[Case Study] Reducing the negative environmental impact of SMEs in Pakistan’s leather and tanning industry

In the year 2000 the Norwegian Agency for Cooperation and Development (NORAD) and the Pakistan Government began to work together to reduce the environmental impact of small and medium-sized enterprizes (SMEs) in Pakistan’s private sector. Initial work began with the leather and tanning industry; one that was particularly known to be responsible for water pollution impacting on the availability of clean water to local communities. A social marketing programme was launched to change SME owners’/managers’ behaviour so as to reduce waste and negative environmental impact. At the same time SMEs would benefit from developing new capabilities, improving working conditions, increasing efficiency and cost savings, enhancing product quality, reputation and profitability. The programme was judged to be successful and was subsequently extended to other industrial sectors. However, while many SME owners adopted the new behaviours, others did not. This case study particularly focuses on the differences between adopters and non-adopters of pro-environmental behaviours to suggest how those implementing social change programmes can best target their interventions and accelerate the adoption process

Understanding the Drivers of Sustainable Entrepreneurial Practices in Pakistan’s Leather Industry: A Multi-Level Approach

Purpose: The main objective is to analyse the drivers of sustainable entrepreneurial practices in SMEs operating in a developing economy. The secondary objectives are to explore the relationship between these drivers and to draw out the implications for policy and practice. Design/methodology/approach: The research is informed by the literature on sustainable entrepreneurship, and on the drivers of pro-environmental practices in SMEs. It reports on the results of an intensive multi-level empirical study, which investigates the environmental practices of SMEs in Pakistan’s leatherworking industry using a multiple case study design and grounded analysis, which draws on relevant institutional theory. Findings: The study identifies that coercive, normative and mimetic isomorphic pressures simultaneously drive sustainable entrepreneurial activity in the majority of sample SMEs. These pressures are exerted by specific micro, meso and macro level factors, ranging from international customers’ requirements to individual-level values of owners and managers. It also reveals the catalytic effect of the educational and awareness-raising activities of intermediary organisations, in tandem with the attraction of competitiveness gains, (international) environmental regulations, industrial dynamism and reputational factors. Practical implications: The evidence suggests that, in countries where formal institutional mechanisms have less of an impact, intermediary organisations can perform a proto-institutional role that helps to overcome pre-existing barriers to environmental improvement by sparking sustainable entrepreneurial activity in SME populations. Originality/value: The findings imply that the drivers of sustainable entrepreneurial activity do not operate in a ‘piecemeal’ fashion, but that particular factors mediate the emergence and development of other sustainability drivers. This paper provides new insights into sustainable entrepreneurship and motivations for environmental practices in an under-researched developing economy context

Policy framework to overcome barriers to environmental improvement in Pakistan’s leatherworking SMEs

Environmental degradation is one of the major challenges of this ear. Alongside other actors, SMEs are taking various measures to address this issue. However, their environmental engagement varies across countries and industry sectors. Nevertheless, the majority of SMEs find it hard to take environmental protection measures proactively. Often it is attributed to their internal capacity constraints and lack of support from actors operating in their business environment. This research is about the leatherworking industry of Pakistan, an under-research economy context, where SMEs face a number of internal and external environmental barriers which limit their effective environmental engagement. Internal environmental barriers relate to limited financial resources, labour related issues and shortage of physical area. External environmental barriers range from policy related challenges to poor infrastructural facilities, societal barriers and inconsistent support from cleaner production centres. To deal with such environmental barriers some pragmatic policy measures are offered which if operationalised effectively are hoped to provide the much needed support to leatherworking SMEs for proactive engagement with environmentally responsible business practices. These policy measures relate to addressing the institutional voids in the country, improving infrastructural facilities, raising environmental awareness amongst masses, institutionalising cleaner production practices, providing platform to SMEs for getting environment-specific loaning facilities and improving the governance of tannery clusters. The paper makes an empirical contribution by uncovering the environmental barriers in an under-researched developing economy context, Pakistan. Its practical contributions are twofold. First, it offers insights to SME owner-managers for developing better strategies to address the identified barriers. Second, its findings can be useful for those formal and informal actors (local as well as international) engaged in formulating interventions focused at supporting SMEs to become environmentally responsible

Fan Industry of Pakistan: Growth Dynamics of Small, Medium and Large Enterprises

Executive Summary This research report ‘Fan Industry of Pakistan: Growth Dynamics of Small, Medium and Large Enterprises’ explores the various dimensions of growth dynamics of small, medium and large size firms in this specific industry. The fan industry landscape is, as typical of a developing economy, full of inter-firm resource heterogeneity and ‘technological dualism’, where larger, and some medium scale enterprises use more modern methods of production and business, and the small scale firms reply upon the traditional processes. Based on the information and data gathered through field surveys, this research attempted to formally analyse the pattern and determinants of the performance of fan making firms. The information and data comprised of various dimensions of entrepreneurial competence, business operation, skill sets, technological capabilities, as well as input-output dynamics. Starting from the development of industry specific classifications of firm sizes, based on number of workers, output range, number and types of machines, the research has analysed various issues related with firm performance across and within firms of different sizes. Other characteristics of firms like targeted income groups, types of markets (local and/or international), outsourcing practices, product diversification, R&D practices, product testing, nature and sources of skills acquisition, technological upgradation, over-time and advertisement practices have also been used for deeper and broader evaluation of industry and firm-size specific dynamics. The research has contributed to literature in terms of its industry specific findings, and also by developing an estimate of ‘growth orientation’ of different sized firms and their determinants. A low-growth oriented firm is characterised by fewer intentions and actions to expand vis-à-vis a more growth oriented firm. The how and why questions of this growth orientation have been dealt with in detail. One important general findings is that firms with higher growth orientation are more active in terms of investment, technological up-gradation, certifications, and product diversification. They usually analyse key factors shaping the demand and production processes etc. formally, though with less sophisticated methods and techniques. On the other hand, low growth oriented firms lack the relevant resources and hence are unable to overcome the barriers to growth. The resource heterogeneity hints towards what is often referred to as ‘technological dualism’ within the industry. The real challenge for any policy for technological up-gradation and also for skill development, at firm and industry levels, is to address this issue effectively. It is hoped that the further research may discover new horizons in our understanding of the SMEs in Pakistani context