Environmental Innovations in Small and Medium Sized Enterprises

Abstract

Supporting and accelerating the adoption and diffusion of environmental innovations amongst small and medium sized enterprises (SMEs) is a major challenge to environmental policy makers. Research suggests that whilst SMEs possess high flexibility, their innovative capacity may be limited to incremental changes within their existing technology system and network. Twenty case studies examining the innovation adoption process in SMEs in four sectors and in five countries within the ENVIS project (commissioned by the EU) revealed great variety in factors driving this process. Findings indicate that this variation can be attributed to the character of the environmental innovation, the specific business opportunity, the regulatory setting and pressure experienced by the sector. Based on these findings an analytical framework is suggested, whereby the environmental innovative capability of SMEs is conceived as the result of an interplay between the competencies, the network relations and the strategic orientation of the company (the 'dynamic triangle'). This indicates that policy to support SME's adoption of environmental innovations has to take an integrated form, i.e. addressing and developing competence, networks and strategic orientation of SMEs simultaneously whilst remaining systemic and context sensitive

A Review of Interventions to Encourage SMEs to Make Environmental Improvements

“…Hillary (2004) 8 EU countries SME 1-249 survey (unclear, approx. 120 SMEs) Peters & Turner (2004) UK no clear SME definition interview (62 SMEs) Pimenova & van der Vorst (2004) UK micro 1-9, SME 10-249 survey (13 micro, 9 SMEs) Rothenberg & Becker (2004) USA small <= 20, medium > 20 survey (54 small, 74 medium) interview (7 SMEs, 9 advisers) Simpson et al (2004), Taylor et al (2003) UK SME < 250 survey (63 SMEs) interview, site visit (15 SMEs) Ammenberg & Hjelm (2003) Sweden SME 0-249 interviews (25 SMEs) Kannan & Boie (2003) Germany SME < 500 case study (1 SME) Lefebvre et al (2003) Canada SME < 500 survey (368 SMEs) Naffziger et al (2003) USA SME <= 500 survey (100 SMEs) Revell (2003) Japan small < 50 interview (20 small) Vernon et al (2003) UK micro < 10 focus group (25 micro, 34 staff) Friedman & Miles (2002) UK SME < 250 interview (61 SMEs, 21 stakeholders) Gunningham & Sinclair (2002) Australia small < 50 interview (13 small, 8 stakeholders) Hansen et al (2002) 5 EU countries SMEs <= 250 interview (20 SMEs) Schaper (2002) Australia small < 20 survey (154 small) Rutherfoord et al (2000) UK, Netherlands small < 50 interview (40 small) Tilley (2000), Tilley (1999) UK small < 50 interview (60 small) Non-empirical journal articles Clement & Hansen (2003) Content analysis of documents on Nordic SME environmental funding schemes Hoevenagel & Wolters (2000) Secondary data on Dutch SME (< 100 staff) use of environmental intermediaries Shearlock et al (2000) Studied a database of environmental service firms, but not SMEs using the services Walley & Taylor (2002) Literature review which identified and defined a typology of green entrepreneurs…”

Do Entrepreneurial SMEs Perform Better Because They are More Responsible?

“…These innovations also encourage improved productivity (Biondi and Iraldo 2002), the implementation of continuous improvement processes (King and Lenox 2002;van Berkel 2007), and external partnerships (Hansen et al 2002). These innovative practices in the environmental field are thus also linked to innovations at the level of human resource and community relations.…”

The Role of an SME’s Green Strategy in Public-Private Eco-innovation Initiatives: The Case of Ecoprofit

“…Identifying an SME's specific eco-innovation strategy helps to understand why it chooses to engage in eco-innovation, for example, increasing the eco-efficiency of their production processes, and in which ways this influences organizational, product, and/or process innovations. As is pointed out by Hansen, Sondergard and Meredith (2002):…”

“…Ecoprofit pushed these SMEs out of their initial comfort zone by enabling them to recognize and develop a more explicit strategic interpretation of future opportunities for eco-innovation (see Hansen, Sondergard and Meredith 2002). Moreover, the SMEs made competencies available, engaged in some networking activities, and continued to engage in eco-innovations years after Ecoprofit participation.…”

“…This then contributes to the formation of expectations (Cohen and Levinthal 1990;Hansen, Sondergard and Meredith 2002) and subsequently enables an SME better to evaluate the role of (ecological) factors for the future development of technology and markets (Cohen and Levinthal 1994). New knowledge can alter the way in which companies define their industry and competitive strategy, lead to strategic flexibility, and thereby enable strategic change (Lane, Koka and Pathak 2006;Zahra and George 2002, p.190), particularly when owner-managers are involved directly in the handholding processes.…”