Exploring SME environmental behaviour and practice: The case of Malaysia

Abstract

AbstractMotivationA better understanding of the dynamics of the factors that influence the environmental behaviour of small and medium‐sized enterprises (SMEs) in Malaysia is crucial for new policy experiments.PurposeWe examine the drivers, barriers, and incentives of SMEs in adopting environmental practices and reporting, as well as the dynamics driving SME decision‐making in Malaysia.Methods and approachThis article uses multiple case studies and semi‐structured interviews as the qualitative methodology is best suited to gain an in‐depth understanding of SME experiences and perceptions.FindingsSMEs have adopted several environmental practices, and few have already engaged in environmental reporting, albeit at varying levels. The perceived reputation‐enhancing and knowledge‐disseminating results are a strong incentive for SMEs. Interestingly, SMEs' decision to adopt environmental practices and reporting is driven by multiple factors, leaving more room for policy experimentation, as our dynamic interaction matrix shows.Policy implicationsComprehensive environmental practices and reporting by SMEs is feasible if policy design considers the dynamics of regulatory pressures, key drivers, and perceived incentives.