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Proactive corporate sustainability practices and performance in small and medium enterprises


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Torugsa, N 2010 , 'Proactive corporate sustainability practices and performance in small and medium enterprises', PhD thesis, University of Tasmania.

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Proactive corporate sustainability practices (CSPs) are normally delimited as voluntary
practices in which a firm engages, and that go beyond regulatory requirements, in order to:
reduce or minimize negative economic, social and environmental impacts that might affect
its competitive position; and thereby enhance performance and competitive advantage.
Proactive CSPs have been well researched in large enterprises; however, so far little
attention has been given to the challenge that the adoption of such practices poses for small
and medium enterprises (SMEs). It is conventionally assumed that SMEs have constrained
or inadequate resources to engage in proactive CSPs, and that this means SMEs are unlikely
to reap the benefits that proactive CSPs offer. Nevertheless, evidence has been presented in
recent research into sustainable environmental practices (EnvPs) (Aragon-Correa, Hurtado-
Torres, Sharma & Garcia-Morales, 2008), that SMEs possess distinctive organizational
capabilities which can aid in the adoption of proactive business practices and which in turn
can contribute positively to SME financial performance. However, there is a need for
research that extends this work to include the two other constituent dimensions of proactive
CSPs – economic practices (EconPs) and social practices (SocPs) – with the aim of
developing an integrative strategy model and holistic view of proactive CSPs and SME
financial performance.
This empirical study addresses that research need. The study aims to develop an
understanding of the role that proactive CSPs play in mediating the relationship between
three specific organizational capabilities (shared vision, stakeholder management and
strategic proactivity) and SME financial performance. Two hypothesized models, showing
how proactive CSPs and the interaction between its three constituent dimensions (EconPs,
SocPs and EnvPs) might mediate that relationship in SMEs, are proposed. Using
longitudinal survey data collected from a sample of 171 Australian SMEs in the machinery
and equipment manufacturing industry sector, structural equation modeling is used to test
the research hypotheses derived from the theoretical models. Qualitative data collected
through open-ended survey questions is also used in order to help explain the quantitative
data findings in greater depth.
This study has several key findings. These include that: proactive CSPs, and the interaction
that occurs between EconPs, SocPs and EnvPs, represent a necessary and sufficient
mechanism through which the specified three capabilities are able to influence SME
financial performance positively; and the adoption of each dimension of proactive CSPs by
SMEs is influenced differently by each capability. The study also presents evidence that
SMEs which deploy all three capabilities are more likely to engage in the wide range of
proactive CSPs. The study concludes that each dimension of proactive CSPs influences
financial performance differentially.
These findings contribute to a more comprehensive understanding of proactive CSPs in the
SME context. They show that SMEs, even with constrained resources, are able to adopt
proactive CSPs when the three capabilities of shared vision, stakeholder management and
strategic proactivity are used in tandem. Recognizing the importance of the interaction
between proactive EconPs, SocPs and EnvPs is a critical factor in enabling SMEs to
understand how to make best use of these capabilities and to achieve an improvement in
financial performance

Item Type: Thesis - PhD
Authors/Creators:Torugsa, N
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