The Relationship Between Firm Size, External Affiliations and Adoption of Sustainable Business Practices by SMEs in Kitchener-Waterloo Region

Abstract

Businesses have traditionally been focused on financial growth and short-term profits. However, in recent years there is an increasing realization of the potential that Sustainable Business Practices (SBPs) can play in business development. There is a growing body of literature that explains why large firms choose to adopt SBPs into their core operations. Small and Medium-Sized Enterprises (SMEs), although they represent a large proportion of businesses within the economy, the literature on their adoption of SBPs remains relatively underexplored. This study explores the adoption of SBPs by SMEs while identifying the role of firm demographics (i.e., size, age, industry) and Business Support Organizations (BSOs) in the Kitchener-Waterloo (KW) region, to encourage the implementation and communication of those practices. Support for SMEs is significant in the KW region, yet there is little known of the role that BSOs play in encouraging SBPs adoption. A quantitative survey and Structural Equation Modeling (SEM) techniques were used to analyze the theorized relationships between firm demographics, BSOs and SBPs. Conceptually, I deconstruct the SBPs construct and argue that implementation of SBPs and the communication of SBPs are unique and warrant distinct empirical consideration. Results indicate that larger SMEs tend to access a greater number of BSOs and as a consequence, have a higher likelihood of implementing and communicating SBPs. These results are important for not only local SMEs in understanding “when and what” business practices are being adopted by similar businesses, but also for BSOs in understanding how their role can nurture and encourage the proliferation of sustainable economic growth