Green Responsiveness of SMEs: A Review of Theoretical Underpinnings

Abstract

Environmental challenges become a prominent factor in the contemporary business world since it highly impacts on sustainable economic development, human populations, and ecosystems around the globe. Environmental literature emphasized that Small and Medium-Sized Enterprises (SMEs) play a dominant role in the sustainable development of the economy, but their green credentials are at the infancy level.  This paper reports the outcomes of a review of literature on the green responsiveness of SMEs in theoretical lenses. Among the theoretical perspectives found in environmental literature, institutional theory, resource-based view, and the theory of planned behavior are the prominent theories in the SME perspective. SMEs are reactive rather than proactive when addressing their environmental concerns. The institutional forces are important factors for the green engagement of SMEs since owner-managers of SMEs are typically motivated to fulfill the regulatory requirement rather than being a green leader