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Archives of Business Research – Vol. 9, No. 9
Publication Date: September 25, 2021
DOI:10.14738/abr.99.10822. Chazireni, B. (2021). Does the Environment Matter, A Closer Look at the Environmental Approach by Small Businesses in Africa
Developing Countries. Archives of Business Research, 9(9). 43-54.
Services for Science and Education – United Kingdom
Does the Environment Matter, A Closer Look at the
Environmental Approach by Small Businesses in Africa
Developing Countries
Dr. Bobo Chazireni
Bycdi Holdings, Pretoria, South Africa
ABSTRACT
Environmental Social Responsibility (ESR) is a notion, where business integrates
environmental concerns in their operations and the interaction with stakeholders,
without compromising profit. To this day, ESR studies are limited to areas of ethics,
society and employees while literature is blunt on its impact on societies, consumer
behaviour and governments. SMEs in developing countries are not spared their
approach to ESR as a sustainability strategy. SMEs’ approach seems to digress from
leverage on loyalty which emanates from their nearness to communities who in
turn are potential customers. This paper takes a closer look at SMEs’ approach to
ESR driven by SME business owners’ perception towards ESR. The paper will take
account of SMEs’ behavioural response towards ESR and establish whether they
regard ESR a strategic sustainability approach with long-term positive bottom-line
benefits. Results were attained through assessing perceptions of SMEs towards ESR;
assessing impact practice of ESR by SMEs; exploring factors that undermining
practise of ESR by SMEs. A mixed approach was adopted where data was obtained
using face to face interviews. Results showed that the majority of SME business
owners had a negative approach towards the practice of ESR. SMEs believe ESR was
mainly for large corporations since their operations were hideously affecting the
environment. As new knowledge, recommendations from this paper will be shared
with Chambers of Commerce in Africa developing countries. Some of the
recommendations were that the chambers of commerce, local authorities must
proactively support SMEs to practise ESR through awareness workshops, train and
share the ESR strategy alignment with business strategy.
Key Words: Environmental Social Responsibility, Social Responsibility, Small and
Medium Enterprises and Sustainable Growth
INTRODUCTION
The 20th-century businesses have witnessed an increase in environmental catastrophes that
are contributed by the unprincipled business interest and human careless environmental
attitudes (Banyte 2010). Corporates are turning to Corporate Social Responsibility (CSR) as its
payback tool to communities, employees and environment. It is widely expected for companies
to actively seek to integrate environmental consideration into their operation and activities.
Most of these environmental considerations would be targeted on promoting the advantages of
eco-friendly products, eco-tourism; naturing environment-friendly behaviour through
workplace climate (Nik and Naja, 2011: 240) and environmental conservation activities
initiated by communities. While concluding CSR as a multidimensional construct, as most of the
dimensions are discussed more relevant to corporate governance issues and organisational
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Archives of Business Research (ABR) Vol. 9, Issue 9, September-2021
Services for Science and Education – United Kingdom
performance as the unit of analysis, studies to do with the implementation of ESR with external
stakeholders, especially its customers, community are hardly explored.
There is a general belief about SME businesses being key to the development of most economies
in Africa. SMEs have been labelled as productive drivers of economic growth and development
in local economies such as developing countries.
The presence of functional SME businesses in these areas has saved a significant employment
gap which large corporations have failed to cover. The adverse condition is that of SME failure
rate is still high leading to their status as critical job creators substantial diminishing.
Nonetheless, for a variety of reasons, SMEs are lacking practises of modern brand growth
strategies such as ESR.
Despite their vital contribution to economic growth, SMEs in the developing countries still face
numerous challenges that inhibit growth. The frustrating growth rate has been predominantly
contributed by SMEs failing to embrace sustainable growth strategies such as ESR. SME lament
cost linked to adoption, implementation and practise of ESR. However, apart from SME funding
and access to finance, Global Entrepreneurship Monitor Reports (2018: 21) still maintain that
developing countries SMEs suffer from inadequate business training or technical education that
can equip them to run the business effectively. Furthermore, SME business owners’ ethics play
a prohibitive role in the adoption of ESR as a strategy to build brand loyalty and other benefits
realised through the successful practice of ESR.
To date, very little research has been conducted in developing countries on the perceived role
of the owner’s ethical values which directly or indirectly impact on the business’ adoption,
practise or implementation of ESR. Research on ESR in SMEs is limited, especially in developing
countries. While playing such a significant role in the economy, to address this, the study will
also investigate the perceived role of SME business owner’s ethics to ESR as a stimulant of
growth for SMEs in developing countries.
Developing countries experience abundant socio-economic challenges, and the challenges are
however to a large extent linked to high levels of unemployment. Hall (2018: 126) pointed out
that the unemployment rate on average is approximately above 30 per cent. Garwe (2016:101)
revealed that growth failure rate of SMEs in developing countries is around average 75 per cent,
which conveniently contributes to vast unemployment in the country. Nevertheless, according
to the Stakeholder Theory, by involving all stakeholders in the business activities, SMEs
improve their relationship with customers, work in an accommodative business environment,
and engage motivated workforce, willing community and increased brand loyalty resulting in
the potential growth of the business (Freeman, 2011: 57). Therefore, the purpose of this paper
was to establish the perception of SME business towards ESR.
KEY LITERATURE ARGUMENTS
ESR activities refer to the instrument or measures a business can take to diminish its negative
impact on the natural environment, such as the ecological and economic use of natural
resources; energy and water conservation, recycling; using environmentally friendly
packaging, and pollution control waste reduction. The most important ESR activities concern
the consumption of materials and energy and the handling of pollution and waste in the most
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Chazireni, B. (2021). Does the Environment Matter, A Closer Look at the Environmental Approach by Small Businesses in Africa Developing Countries.
Archives of Business Research, 9(9). 43-54.
URL: http://dx.doi.org/10.14738/abr.99.10822
environmentally friendly approach. ESR activities are generally aimed at designing
environmentally friendly products or production processes or being actively engaged in
recycling activities (Holbrook, 2014: 33).
Supanti (2018: 200) observed that ESR activities had a positive impact on their business
reputation, which in turn influenced their competitiveness. A survey of local SME owners in the
Western Cape South Africa revealed a positive relationship between embracing ESR activities
and increased competitiveness in terms of profitability. Customers find it desirable to associate
themselves with businesses and products that are eco-friendly. Hence, businesses that are
environmental stewards stand to gain many satisfied and loyal customers.
When it comes to environmental sensitivity, there is a significant positive relationship between
regulated ESR activities and the increased competitiveness of SMEs. This implies that if a
business applies government regulations about the environment outside what the law requires
and uses environmentally friendly packaging materials, it is more likely to be well known
among its Stakeholders and become competitive in the long run. Taylor, Bowen and Ryu (2019:
304) stated that SMEs should consult with the government on the ESR initiatives that are most
beneficial to important stakeholders and the business. SMEs should also focus on the use of
environmentally-friendly packing materials that are at the end of the day cost-effective to
advance their image and enhance their competitiveness (Shepherd, 2019: 67). However,
according to Kulkarni and Rao (2017: 68), whilst SR has progressed to be a trendy topic of
investigation since the early 19th century, it has gained momentum in recent years as
academics and practitioners began recognising SMEs’ environmental impact. Since large
organisations have always been focusing on SR and all its dimensions holistically, ESR activities
in SMEs are often ignored and misjudged. These judgements germinate from a range of
unfounded assumptions derived from large organisations. As a result, the ESR approach of
SMEs has, until recently, remained largely unexplored (Pless, Maak & Stahl, 2015:45).
Concerning the statements above, Zeng (2014: 90) argues that ESR, instead of being a persistent
concept in business management, has been predominantly investigated at the level of the large
corporates. As a result, several authors are sceptical about the application of traditional ESR
concepts for the investigation of its activities in SMEs. This justifies the need to develop a
holistic understanding of the characteristics of SMEs. If a business implements government
regulations about the environment beyond what the law requires and makes use of
environmentally friendly packaging materials, there are greater chances of the SME business
being well known amongst its stakeholders and becoming competitive in the long run. Hence,
SMEs in developing countries should consult with their governments on the ESR initiatives that
are most beneficial to important stakeholders and the business. SMEs should also focus on the
use of environmentally friendly packing materials that are cost-effective to improve their image
and enhance their competitiveness.
Shin (2014: 108) establishes that one of the most vital contributions to the definition of CSR
was made by the Committee for Economic Development (CED). The CED articulated a triple
concentric model of the concept. The inner-circle shows the clear-cut basic responsibilities for
the efficient execution of economic functions like productivity, job and economic growth
reflecting the notion of ‘business responsibility’. The intermediate circle encompasses the
responsibility of the economic function about changing social values and priorities such as