Explicating the microfoundation of SME pro-environmental operations: The role of top-managers

Abstract

By recognizing the decisive role of top-managers (TMs) of small and medium-sized enterprises (SMEs), this study attempts to explicate the microfoundation of pro-environmental operations of SMEs by examining the influence of institutional pressure on managerial cognition and subsequent SME pro-environmental operations. This study highlights the personal ethics of TMs, so as to examine the moderating effect of TMs’ place attachment on SMEs’ pro-environmental operations. Empirical data is collected from a questionnaire survey of 509 SMEs in China. Hierarchical regression results are subject to cross-validation using secondary public data. This study demonstrates that coercive and mimetic pressures have inverted U-shaped effects, whilst normative pressure has a U-shaped effect on the threat cognition of TMs. The results also show that TMs’ threat cognition (as opposed to opportunity cognition) positively influence SMEs’ pro-environmental operations. Moreover, both the emotional (place identity) and functional (place dependence) dimensions of place attachment have positive moderating effects on the relationship between threat cognition and SMEs’ pro-environmental operations. Practical implications – Findings of this study lead to important implications for practitioners such as regulators, policy makers and trade associations. Enabling better understanding of the nature of SMEs’ pro-environmental operations, they allow for more targeted development and the provision of optimal institutional tools to promote such operations. This study allows some important factors that differentiate SMEs from large firms to surface. These factors (i.e., institutional pressures, managerial cognition and place attachment) and the interactions between them form important constituents of the microfoundations of SMEs’ pro-environmental operations.