Examining stakeholders' influence on environmental responsibility of micro, small and medium-sized enterprises and its outcomes

Purpose - Given the uprising interest in the environmental responsibility issues among small businesses, the purpose of this paper is to design to probe into the relationship between stakeholders' influence and environmental responsibility of Micro, Small and Medium-Sized Enterprises (MSMEs), and its consequent outcomes in an emerging economy. Design/methodology/approach - A sample of 110 MSME owners participated in this study. Data were collected by means of questionnaire designed to measure the 12 constructs of focus. In order to test the hypotheses and examine the relationships proposed in the research framework, structural equation modelling was performed using SmartPLS. Findings - This study revealed that among the primary stakeholders, only employees and customers significantly influenced environmental responsibility practices of MSMEs. Besides, it was found that environmental responsibility results in financial improvements and better relations with employees and customers. Research limitations/implications - This study is limited to MSMEs in Malaysia. Despite the relatively low response rate, which is common in MSME research, the geographic and sector distribution of samples provides a basis for generalizability of the results. Practical implications - Since many MSME owners/managers are sceptical about the benefits of environmental practices, the findings of this study provided empirical support from an emerging economy about the positive outcomes of environmental practices. Social implications - By examining the key determinants that foster environmental practices in MSMEs, the current study provides important insights for policy makers to encourage MSMEs to initiate such responsible practices, which can lead to environmental preservation. Originality/value - Other than enriching a systems-based view of firms' environmental behaviour, this study empirically tests a research framework on role of stakeholders in determining environmental responsibility of small firms and their outcomes on firms' performance.