Sustainability Management and Small and Medium-Sized Enterprises:

Managers’ Awareness and Implementation of Innovative Tools*

Matthew Phillip Johnson

Leuphana University Lüneburg
Centre for Sustainability Management (CSM)
Scharnhorststr. 1
D-21335 Lüneburg
johnson@uni.leuphana.de

ABSTRACT

With the intention of integrating environmental and social practices in small and medium-sized
enterprises (SMEs), a growing body of research proposes the implementation of corporate social
responsibility (CSR) and environmental management tools. Collectively referred to as
sustainability management tools in this paper, voluntary management approaches range from
environmental and social audits, indicators and management systems to reporting schemes and
stakeholder dialogues. While the adoption of such management tools in SMEs has been
increasingly anticipated in the academic literature, the rates of awareness and implementation for
these management tools are missing. Furthermore, the connections between awareness and
implementation remain underresearched. Using Roger’s (1995) stages of innovation model, the
results from a web-based survey with 176 German SME managers investigate these connections.
Roger’s model is particularly useful to identify managerial and organizational characteristics that
might explain why particular SMEs are more likely to adopt sustainability management tools.

KEYWORDS

Corporate social responsibility (CSR), diffusion of innovation, environmental management

system (EMS), small and medium-sized enterprise (SME), sustainability management

*This is a preprint of an article accepted for publication in Corporate Social Responsibility and
Environmental Management, Copyright © 2015 Wiley & Sons Ltd and the European Research
Press Ltd*

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 INTRODUCTION

While it is still unclear how small and medium-sized enterprises (SMEs) should integrate
environmental sustainability and social equality into their everyday business practices, it is
apparent that such matters are gaining in political and societal importance (Revell and
Blackburn, 2007; Seidel et al., 2008). Environmental and social issues are also becoming central
business concerns (Bansal, 2005; Revell et al., 2010). Pressing environmental and social issues
related to business performance, such as rising prices for energy and raw materials, eliminating
waste and harmful substances in the production processes, guaranteeing health and safety at the
workplace, etc., present major challenges and simultaneously considerable opportunities for
business enterprises.

At first glance, the environmental and social impacts of SMEs might be easily overshadowed by
the impacts of large, multi-national corporations. However, small businesses with less than 250
employees constitute the majority of companies in all industrialized and developing nations. The
collective ecological and social impacts of countless SMEs are overwhelming. For example, it is
estimated that SMEs contribute to roughly 70% of global pollution (Hillary, 2000; Revell et al.,
2010). Despite this revealing statistic, most SME managers have yet to implement eco-friendly
practices to minimize these impacts (Revell and Blackburn, 2007; Seidel et al., 2008).

Looking beyond strict legislative pressures and environmental regulations to rectify these
harmful impacts from small businesses (Rutherfoord et al., 2000), a number of SME-focused
approaches have been proposed in the literature to support small business managers increase
their overall awareness and improve their environmental and social performance. A growing
body of literature (Friedman and Miles, 2002; Ammenberg and Hjelm, 2003; Lawrence et al.,
2006; Halila, 2007; Zobel, 2007; Seiffert, 2008; Zorpas, 2010) proposes the implementation of
CSR and environmental management instruments and systems, referred to as sustainability
management tools in this paper. These tools range from environmental management systems
(EMS) over social audits, CSR and sustainability reports to employee training schemes. Even
SME-specific tools have been developed in the academic literature, such as the sustainability
evaluation and reporting scheme (SERS; Perrini and Tencati, 2006).

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With few exceptions (e.g., Graafland et al., 2003; Tencati et al., 2004; Hahn and Scheermesser,
2006), a closer examination on the rates of awareness and implementation of sustainability
management tools in SMEs is outdated at best, and the figures on implementation for most of
these tools are hard to find. Even less is known about the connections between awareness and
implementation to understand why some SMEs are more likely to adopt such management tools
(Halila, 2007). For these reasons, this paper compares the results of an empirical investigation on
the rates of awareness and implementation of multiple sustainability management tools in SMEs.
In addition, it examines various managerial and organizational characteristics that could
potentially influence the rates of adoption using Roger’s (1995) stages of innovation diffusion
model. These characteristics include managers’ perceived relative advantages over previous
practices and systems, top management support, level of engagement throughout an enterprise,
and organizational size.

The paper is structured as follows: after a brief introduction of sustainability management tools
and their relevance in the SME context, a framework is established, which is based on Roger’s
(1995) stages of innovation diffusion model. The third section explains the methodological
approach of the empirical quantitative survey with 176 German SME managers. The fourth
section presents the survey results according to Rogers’ model, including awareness,
implementation, and the managerial and organizational characteristics that might influence
adoption. The final two sections provide a discussion of the results and conclude with
implications for SME management and future research.

LITERATURE REVIEW

Sustainability Management Tools and SMEs

Sustainability management includes the internal development of environmental and social

measures as well as the external contribution to the sustainable development of society and the
economy (Shrivastava and Hart, 1995; Bansal, 2005; Schaltegger and Burritt, 2005). Thus,
sustainability management tools assist managers to monitor and evaluate this internal
development while simultaneously engaging in a dialogue with external stakeholders on
sustainable development issues (Kuhndt, 2004). A wide range of such tools have been proposed
in the literature for various functional areas (e.g., accounting tools, marketing tools, production

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management tools, supply chain management tools, etc.) as well as cross-functional support
systems affecting the overall goals of an enterprise (Schaltegger et al., 2012).

Such management tools can be particularly useful in aiding managers’ decision-making on

important environmental and social aspects relating to organizational operations. For example, a
properly executed EMS can help company personnel monitor and pinpoint environmentally
harmful operations, which can lead to organizational efficiencies and internal cost savings
(Hillary, 2004; Seiffert, 2008; Zorpas, 2010). Further benefits of sustainability management tools
include the improvement of environmental and social performance through better overall
awareness and communication (Gerrans and Hutchinson, 2000; Ammenberg and Hjelm, 2003;
Perrini and Tencati, 2006; Rao et al., 2009; Zorpas, 2010), the operationalization of
sustainability strategies by creating measurement and feedback channels (Friedman and Miles,
2002; Fresner and Engelhardt, 2004; Kerr, 2006; Rao et al., 2009; Parisi and Maraghini, 2010),
and the facilitation of organizational learning and innovativeness through new environmental and
social management practices (Dibrell et al., 2001; Hansen et al., 2010; Steward and Gapp, 2012).

However, tools alone will not lead to the improvement of environmental and social performance
for several reasons. First, they are not substitutes for human action (Malmborg, 2003; Holton et
al., 2010). Second, most tools fail to integrate environmental and social aspects into the daily
routines without proper management controls (Schaltegger and Burritt, 2005). Finally, many
tools will not be relevant to all companies all the time (Starkey, 2000). Rather, an enterprise
should choose the most appropriate tool or set of tools for its particular sustainability
management needs. Therefore, tools must be practical, adaptable and consider the human factor
during implementation and continued management (Liedtke and Kaiser, 2006).

A review of the literature has captured an extensive list of sustainability management tools
proposed for implementation in SMEs. While most studies concentrate on one particular tool,
such as an EMS (Ammenberg and Hjelm, 2003; Halila, 2007; Zobel, 2007; Seiffert, 2008;
Kehbila et al., 2009), this paper incorporates previously researched tools as means for
comparison. This list of tools includes accounting tools, environmental and social audits,
benchmarking tools, employee development tools (e.g., training, employee suggestion scheme
and incentive program), labels (e.g. organic, fair trade and stewardship labels), environmental
and social management systems, reporting schemes and stakeholder tools (e.g., dialogue and

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networking). Considering that most tools can be classified as environmentally, socially or
(combined) sustainability-oriented, a total of 36 tools were identified in the literature. Table 1
provides a list of tools, their various orientations, and the highlighted articles in the SME context.
---------------------------------
Insert Table 1 about here
---------------------------------

As the amount of published papers and proposed tools for SMEs steadily increases, an implicit
debate regarding the applicability of such tools in SMEs persistently lingers. On one hand,
advocating scholars offer various reasons for implementation of tools in SMEs, such as the
owner-manager’s willingness to engage in sustainability activities (Revell et al., 2010; Cassells
and Lewis, 2011; Hsu and Cheng, 2012). Furthermore, promising benefits from tools may
encourage implementation, including the enhancement of stakeholder relationships (Biondi et al.,
2000; Hillary, 2004; Seiffert, 2008), the reduction of complexities of sustainable development
that small business are able to comprehend (Burke and Gaughran, 2006), and the improvement of
SMEs’ environmental and social performance through planning and measurement controls
(Gerrans and Hutchinson, 2000; Ammenberg and Hjelm, 2003; Kehbila et al.; 2010; Zorpas,
2010). The implementation of tools can also be fostered through local support programs and
small business networks, allowing members to implement tools under the consultation of experts
and with other firms’ acting as cooperative peers pursuing a common goal (e.g., improved social
and/or environmental performance, in Ammenberg and Hjelm, 2003; Halila, 2007; Battaglia et
al., 2010; Jämsä et al. 2011; Stewart and Gapp, 2012).

On the other hand, several authors highlight major setbacks for the widespread diffusion and
adoption of tools in SMEs. First, SME managers are often quoted to have little awareness of the
programs and management practices available to them dealing with environmental and social
sustainability (Gerstenfeld and Roberts, 2000; Hillary, 2004; Gadenne et al., 2009). Second, very
few market or governmental incentives are in place to encourage SMEs in the improvement of
their environmental and social practices (Friedman and Miles, 2002; Bradford and Fraser, 2008;
Kehbila et al., 2010; Brammer et al., 2012). Third, many proposed tools were originally designed
and implemented in large corporations. It is questioned in the literature whether these tools are
too complex and resource-intensive for SMEs to implement (Ammenberg and Hjelm, 2003;
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Graafland et al., 2003; Tencati et al., 2004; Lawrence et al., 2006; Hammann et al., 2009;
Jenkins, 2004, 2009; Bos-Brouwers, 2010; Cassells and Lewis, 2011; Williams and Schaefer,
2013).

Nevertheless, the literature has provided little evidence of awareness and implementation rates
for most of these management tools. Thus far, the empirical research on awareness and
implementation has concentrated either on environmental and social standards (e.g., ISO 14001,
SA 8000, OHSAS 18001, in Graafland et al., 2003; Tencati et al., 2004) or on a single tool (e.g.,
environmental management system, in Heras and Arana, 2010). While the connection between
awareness and implementation has been made in large German corporations (Schaltegger et al.
2012), it has not been empirically investigated in SMEs. Therefore, the next subsection
establishes a framework to make this connection based on Rogers’ (1995) model on the stages in
the innovation process.

Sustainability Management Tools and Stages of Innovation Diffusion

Sustainability management tools can be considered as organizational innovations. An

organizational innovation is defined as, “the implementation of a new organizational method in
the firm’s business practices, workplace organization or external relations” (OECD, 2005: p. 51).
Sustainability management tools fulfill this requirement as they contain a novelty approach to
integrate fresh environmental and social management practices into conventional business
operations. For example, Halila (2007: p. 167) establishes an EMS as an “organizational
environmental innovation” because it creates new management practices, processes and systems,
or it modifies previous management practices. In another study, Hsu and Cheng (2012) apply
Roger’s diffusion of innovation model to observe the level of adoption of CSR policies in
Taiwanese SMEs.

Recognizing sustainability management tools as forms of organizational innovations, Rogers’

(1995) stages of the innovation diffusion model offers a useful framework for examining
awareness and implementation of tools. Furthermore, this model helps to make connections
between these two variables by identifying managerial and organizational characteristics
explaining why certain innovative tools are implemented in companies (Figure 1).

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 ---------------------------------
Insert Figure 1 about here
---------------------------------
As seen in the first row of boxes in Figure 1, Rogers (1995) model explains five stages that most
enterprises will experience in the adoption of organizational innovations, which in this case
refers to sustainability management tools. In the first stage “awareness”, managers of an
enterprise would become acquainted with sustainability management tools and gain a better
understanding of them (Halila, 2007). According to Ozaki (2011), if the awareness stage does
not occur, adoption is unthinkable. The second stage is attitude formation, where managers are
able to form attitudes towards these tools, which can be influenced by technological, managerial
and/or organizational characteristics (Tornatzky and Fleischer, 1990; Hashem and Tann, 2007;
Hsu and Cheng, 2012). Depending on the circumstances, managers can form positive or negative
attitudes concerning management tools, depending on managers’ beliefs about the outcomes
from adoption and organizational situations (Hashem and Tann, 2007). This leads to the third
stage “evaluation”, where decisions are made to adopt or reject the tools depending on the
positive and negative attitudes formed (Rogers, 1995; Williams and Rao, 1998). In the fourth
stage “implementation”, management tools are implemented in an enterprise. In the final stage
“confirmation”, managers integrate the tools into their daily activities and replace the former
management practices and systems (Halila, 2007).

The second row of boxes in Figure 1 illustrates how data from this study can be applied to
Roger’s (1995) model. The first and third boxes show the approximate rates of awareness and
implementation for sustainability management tools in SMEs, which is provided from the
dataset. The middle box shows managerial and organizational characteristics that influence
attitude formation and the evaluation stages. Several authors (Tornatzky and Fleischer, 1990;
Hashem and Tann, 2007; Hsu and Cheng, 2012) have identified important characteristics that
support or hinder the adoption of innovation. They group these into three sets of characteristics,
including technological, managerial and organizational characteristics. While technological
characteristics focus on a single innovation, the managerial and organizational characteristics can
be applied to a wider set of innovations on an organization level. Since this paper investigates
multiple sustainability management tools on an organizational level, the latter two sets of
characteristics were used.

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The managerial and organizational characteristics designated for this study include: (a) perceived
relative advantage – managers’ perceptions on the economic benefits from the implementation of
sustainability management tools (Halila, 2007; Hsu and Cheng, 2012); (b) management support –
the support by top management can lead to the implementation of such tools (Halila, 2007;
Hashem and Tann, 2007; Hsu and Cheng, 2012); (c) level of engagement – the level of
engagement and involvement from multiple functional areas in an enterprise (e.g., human
resources, marketing, production, in Windolph et al., 2013); and (d) organizational size –
organization size is considered an important characteristic that influences the actual
implementation of tools (Hashem and Tann, 2007).

In addition, awareness of tools has been observed to have a positive influence on the
implementation of tools (Hutchinson and Chaston, 1994). Several authors emphasize that raising
awareness of sustainability management tools in SMEs may be the greatest driver of adoption
(Bradford and Fraser, 2008; Maijala and Pohjola, 2008). All of these managerial and
organizational characteristics can be positively associated with the adoption of sustainability
management tools in SMEs. Therefore, this paper proposes the following five hypotheses:

H1: Perceived relative advantage of sustainability management tools is positively associated

with the adoption of these tools.

H2: Top management support for sustainability management is positively associated with the
adoption of sustainability management tools.

H3: Level of engagement of multiple business function is positively associated with the adoption
of sustainability management tools.

H4: Organizational size is positively associated with the adoption of sustainability management
tools.

H5: Awareness of sustainability management tools is positively associated with the adoption of
these tools.

A survey was designed to investigate the rates of awareness and implementation for multiple
sustainability management tools. In addition, it examined the connections between awareness
and implementation by surveying managerial and organizational characteristics that could
explain why SMEs are more likely to adopt sustainability management tools. The next section
explains the research design for the empirical investigation.

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 METHODS

Operationalization of Measures

For this research a web-based questionnaire was designed, which consisted of 19 close-ended
questions. The questionnaire addressed SME managers’ current awareness and implementation
of 36 sustainability management tools. In addition, questions were developed to examine various
managerial and organizational characteristics that could influence the adoption of sustainability
management tools. These questions were presented to the respondents as close-ended questions
using a five-point Likert scale. The influence of managerial and organizational characteristics on
the implementation of tools is examined using a linear regression model.

Data Collection

The web-based survey was conducted with top managers in German SMEs from February to
June, 2012. In attempts to have an appropriate representation of SMEs from all German industry
sectors, enterprises were selected based on two main criteria. First, an enterprise’s annual
turnover and total staff could not exceed the European Union’s classification of an SME.
According to the European Commission (2005), an SME has less than 250 employees and does
not exceed 50 million Euro in annual revenues. The sample selection was further distributed
according to company size: 539 small enterprises (10 to 49 employees and maximum 10 million
Euro annual revenues) and 461 medium-sized enterprises (50 to 249 employees and maximum
50 million Euro annual revenues) using the Hoppenstedt Firm Database (2012). Micro-sized
enterprises (1 to 9 employees and maximum 2 million Euro annual revenues) were intentionally
omitted from the sample selection. Micro enterprises with very few employees usually have a
low degree of formalization, which in turn have little or no need to implement formal tools to
manage sustainability aspects (Graafland et al., 2003; Russo and Tencati, 2009).

The second selection criterion reflected the representation of all German industry sectors. In
total, SMEs from 18 industry sectors were included in the survey, e.g. agriculture,
manufacturing, wholesale and retail trade, IT and communication, and various service sectors.
The number of SMEs selected from each industry was based on the actual percentages of
enterprises in each sector, which was taken the German Federal Statistics Office (2011). In
several industries with low overall populations (e.g., agriculture), exceptions were made to

9
include more enterprises (a minimum of 10 per industry sector) to improve the likelihood of
representation.

Response Rate

The survey produced 176 completed questionnaires from the original 1,000 surveys e-mailed.
From the total sample, 68 responding managers (38.6%) are employed in small enterprises and
108 managers (61.4%) belong to medium-sized enterprises. The response rate of 17.6% is
comparable with other quantitative surveys with similar research objectives in SMEs (Graafland
et al., 2003; Gadenne et al., 2008; Brammer et al., 2012). It provides a solid basis for
investigation of organizations as a single group (Revell et al., 2010). The next section will
examine the results according to the rates of awareness and implementation, and the connection
between them by investigating managerial and organizational characteristics as influential
predictors that potentially increase the likelihood of tool adoption in SMEs.

RESULTS

This paper examines multiple sustainability management tools adopted by SMEs. The findings
are grouped into the two following subsections. First, the actual rates of awareness and
implementation of these tools are closely examined. Second, the results of a regression model are
presented and the hypotheses are tested.

Awareness and Implementation of Tools

The respondents indicated their awareness and implementation of 36 sustainability management

tools. Table 2 gives an overview of these two variables listed in descending order according to
awareness.

---------------------------------
Insert Table 2 about here
---------------------------------

It becomes evident from the results in Table 2 that awareness and implementation rates of most
tools are relatively low. Taking a closer look, however, it appears as though the rate of
implementation steadily increases with the rate of awareness. Two techniques can be utilized to

10
test if a relationship exists between awareness and implementation. Both techniques have already
been utilized in a similar study in large German corporations (Schaltegger et al., 2012). First, the
ratio of implementation to awareness shows the relative percentage a tool is implemented by its
degree of awareness. It is calculated by dividing the rate of implementation by the rate of
awareness of every tool (as seen in the right-handed column of Table 2). This ratio can also be
applied to multiple tools simultaneously. For example, the top ten tools according to awareness –
i.e. quality management system, employee training, etc. – have a higher ratio of implementation
to awareness (74.2%) when compared to the overall ratio (57.8%). On average, the ratio of
implementation to awareness increases moving up the table.

The second technique to measure the relationship between awareness and implementation is
employed by means of a correlation analysis (Schaltegger et al., 2012). A preliminary correlation
analysis finds an extremely positive correlation (0.97) between awareness and implementation.
However, this correlation does not explain the direction of influence, or the causation between
these two variables. For this reason, a second correlation analysis was conducted on the
relationship between awareness of tools and the ratio of implementation to awareness. This
second analysis reflects a strong positive relationship (0.75), signifying that greater awareness of
tools induces a relatively higher rate of implementation. Table 3 illustrates both tests conducted
to measure this relationship, including the averages of awareness and implementation as well as
the results from both analyses.

---------------------------------
Insert Table 3 about here
---------------------------------

Previous studies have provided mixed reviews of the awareness and implementation of tools in
SMEs. On one hand, several studies propose widespread adoption of various tools among SMEs
through awareness raising programs (Fresner and Engelhardt, 2004; Burke and Gaughran, 2007;
Halila, 2007; Perrini and Minoja, 2008; Seiffert, 2008; Borga et al., 2009). On the other hand,
several scholars have presented statistical data showing relatively low application of a limited
number of surveyed certified standards and tools in SMEs, including environmental systems

11
according to ISO 14001 and EMAS, and reporting schemes according to Global Reporting
Initiative (Graafland et al., 2003; Tencati et al., 2004; Hahn and Scheermesser, 2006).

This paper sheds light on this debate and delivers a clear overview of the awareness and
implementation of multiple sustainability management tools in SMEs. From these results, the
rates of awareness and implementation are apparently low for most tools. However, a positive
correlation exists between awareness and the ratio of implementation to awareness. Several
authors emphasize that raising awareness of particular tools may be the greatest driver of
adoption of tools in large corporations (Schaltegger et al., 2012) and SMEs (Bradford and Fraser,
2008; Maijala and Pohjola, 2008). While raising awareness can have a positive impact on the
implementation of tools, this study attempts to find other factors that can influence the adoption
of tools. In order to explore other influential characteristics, this paper utilizes Rogers’ (1995)
model of stages of innovation diffusion. This model points out various managerial and
organizational characteristics that might explain why some SMEs are more likely to adopt
sustainability management tools. The next section combines the influence of awareness along
with other managerial and organizational characteristics for the adoption of tools in SMEs.

Managerial and Organizational Characteristics

In order to understand which managerial and organizational characteristics have the greatest
influence on the implementation of tools, a linear regression model was carried out. The
dependent variable for the analysis is the total sum of implemented tools per enterprise with a
minimum of at least one tool. Five managerial and organizational characteristics were entered as
the independent variables for the analysis, including:

(1) Total awareness – the sum of awareness per respondent (minimum of one tool);

(2) Perceived relative advantage – the mean of nine perceived economic effects (from 1
“negative effect” to 5 “positive effect” on a Likert scale) from tool implementation, including
company reputation, competitiveness, costs, customer acquisition and retention, employee
motivation, employee productivity, internal operations, product and service innovation, and
sales. This is a reliable measure to test its influence on implementation of multiple tools as the
alpha value for these variables is .920;

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(3) Management support – the mean of support (from 1 “no support” to 5 “major support” on a
Likert scale) for two leadership functions, including top management and strategic planning. The
alpha value (0.60) is below the recommended value of 0.70 as established by Pallant (2001). This
low value could be a result of using only two items for measuring management support.
Nevertheless, it was left in the regression model since the item total correlations for this measure
were not less than 0.30 compared to the other items (Hashem and Tann, 2007);

(4) Level of engagement - the mean of the level of engagement (from 1 “no engagement” to 5
“high engagement” on a Likert scale) from ten functional areas in the enterprise, including
accounting and finance, CSR and sustainability, human resources, logistics, marketing and sales,
production, public relations, purchasing, quality assurance, and research and development.
These variables also have a satisfactory degree of reliability for the regression model, as the
alpha value for these variables is .872; and

(5) Organizational size – the size is measured according to total full-time employees. While the
survey only examines SMEs, the amount of employees ranges from 10 to 249 within the sample.
It is perceived that larger SMEs are more likely to adopt sustainability management tools. Table
4 presents the results of the regression analysis.

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Insert Table 4 about here
---------------------------------

As shown in Table 4, the result of the regression analysis is statistically significant yielding an
adjusted R-square of 0.561. This result implies a considerable portion of variation in the total
amount of implemented tools per enterprise can be explained by the managerial and
organizational characteristics. According to the standard regression coefficient (ß), three
independent variables have significant degrees of influence, including the awareness of tools
(0.603), followed by organizational size (.185), and perceived relative advantage (.179). The
remaining variables neither have a high regression coefficient nor were they significant.

The outcome of the regression analysis further confirms from the previous section that
managers’ awareness of sustainability management tools is the major determinant for the

13
implementation of tools in SMEs. Furthermore, it reveals that additional factors play an
important role in application of tools, including the organizational size and the optimistic
perception of relative advantage from the implementation of sustainability management tools
over the previous management practices. The following discussion and conclusions compare the
overall results to previous literature and offers implications for SME management, public policy
and future research.

DISCUSSION

This paper addresses the rates of awareness and implementation of sustainability management
tools in SMEs, and it makes a connection between them. It examines the influential determinants
of adoption, including awareness itself and other facilitating managerial and organizational
characteristics. While not all of these characteristics are not major determinants of the
implementation of such tools, the results provide hints for further development of sustainability
management tools in SMEs. The findings also provide key insights on the extent that tools are
being implemented in practice. To the author’s knowledge, this is the first paper to contain both
awareness and implementation rates and to link these variables with influential managerial and
organizational characteristics that partially explain the adoption of tools in SMEs.

Even though the awareness and implementation rates are low for the majority of surveyed tools,
several exceptions are highlighted. Sustainability management tools with comparatively high
rates of awareness and implementation are those already established in the conventional business
management literature (e.g., quality management system, employee training, supply chain
management, codes of conduct, risk analysis). Nevertheless, these tools are conformable to
environmental and social sustainability goals and measures. For example, a properly executed
quality management system can lead companies to minimizing waste, thus reducing negative
environmental impacts and unwanted financial burdens simultaneously. Principally, a quality
management system according to ISO 9001 is compatible with an EMS according to ISO 14001.
These two management systems can be harmoniously integrated into one, which has also been
researched in the SME context (Douglas and Glen, 2000; Fresner and Engelhardt, 2004; Tsai and
Chou, 2009).

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Two tools, an EMS and corporate citizenship, are exceptions to the conventional management
approach since they do not originate from traditional business management practices. However,
these tools have been in existence for well over 20 years. They have been implemented by small
businesses basically since their conception, and they have generated greater rates of awareness
versus other environmental and social management tools (Hutchinson and Chaston, 1994;
Spence et al., 2003; Brammer et al., 2012). Other specific environmental and social management
tools, such as eco-efficiency analysis and life cycle assessment, are hardly known and rarely
implemented in SMEs (Cote et al., 2006; Seidel et al., 2008).

A novel insight in this paper is the connection made between awareness and implementation by
using Roger’s (1995) stages of innovation diffusion model. Extending the managerial and
organizational characteristics from Tornatzky and Fleischer (1990) to include awareness as a
predicting variable, it is apparent that the major determinant for the implementation is awareness
itself. The strong positive correlation between awareness and the ratio of implementation to
awareness also provides a compelling case that the greater awareness of tools leads to a higher
probability of implementation in SMEs. The regression model further supports the rationale that
awareness strongly increases the number of tools implemented in SMEs. Previous literature
states that awareness raising programs targeted at SMEs may be the best chance for higher
adoption rates of sustainability management tools (Bradford and Fraser, 2008; Maijala and
Pohjola, 2008; Ozaki, 2011). After all, without awareness, implementation cannot occur (Ozaki,
2011). However, the fact remains that SMEs are mostly unaware of the options available to them
and may remain unwilling to implement as long as the perceived relative advantages of tools are
not emphasized (Friedman and Miles, 2002; Revell et al., 2010; Brammer et al., 2012).

CONCLUSIONS

Implications for SME Management

Several major implications for SME managers can be drawn from the results and discussion
sections in this paper. Firstly, this study provides managers with a wide-ranging overview on the
level of awareness and implementation for multiple sustainability management tools in SMEs.
Most studies have only demonstrated successful implementation of individual tools in a handful
of case study enterprises. With the exception of several studies covering norms and standards

15
(Graafland et al., 2003; Tencati et al., 2004; Hahn and Scheermesser, 2006), previous research
has fallen short of providing figures on awareness and implementation rates for multiple
sustainability management tools in SMEs.

Even though the paper does not go into depth on any particular tool, it is a good starting point for
managers to become familiar with the options available to them. It draws immediate attention to
the prevalent management tools being adopted in SMEs. In a sense, it serves to raise awareness
for SME managers interested in various approaches to measure and eventually improve their
enterprises’ social and environmental performance. Managers equipped with this sort of
information are able to make informed decisions, which in turn positively affect the development
of their own sustainability program. Secondly, the most frequently implemented sustainability
management tools are modified versions of conventional management tools, such as quality
management systems and employee training and incentive programs. SME managers addressing
sustainability management for the first time might consider implementing such tools from
conventional business approaches and incorporate social and environmental aspects to them
gradually. From a strategic perspective, these tools can help develop a sustainability program at
its own pace that fits the economic goals of the company.. In contrast to conventional
management approaches, specialized environmental and social management tools, such as an
eco-efficiency analysis and life cycle assessment, suffer from low levels of implementation for
good reason. Either modified versions of these tools should be designed or new approaches need
to be considered to tackle more advanced issues of sustainability management in SMEs.

Finally, several key managerial and organizational characteristics have been investigated on their
degree of influence on the implementation of multiple sustainability management tools. The two
most pertinent characteristics for SME managers are the awareness of tools and the positively
perceived relative advantages of tools. Awareness is key to improving the likelihood of
implementation (Ozaki, 2011). In combination with the highlighted relative advantages, the
benefits of tools should go hand-in-hand with awareness raising (Brammer et al., 2012).

Other environmental characteristics not included in this study, such as external support from
consultants, networks and governmental agencies, might play an influential part in the
implementation of multiple tools. External parties could further promote awareness in SMEs.
They could encourage implementation through the promotion of the relative advantages of tools,

16
including lower costs, greater reputation and overall competitiveness. In particular, they bring a
fresh external perspective and expertise that SME managers might not possess at the time
internally.

Implications for Public Policy

In the introduction of this paper, it was mentioned that approaches to sustainability management
school consider approaches beyond strict legislative mandates and regulations to address
sustainability issues. Even though the current rates of implementation of tools are low, which
could rectify many of these problems, governments should first attempt to raise awareness
through soft policies before they resort to hard, strict policy making on sustainability issues
(Steurer et al., 2012) Considering the low rates of implementation of sustainability management
tools in SMEs, local and national government agencies could become more involved in
awareness raising programs. Steurer et al. (2012: p. 212) highlight EU member states’ awareness
raising initiatives through various informational instruments, including educational activities
(e.g., conferences, seminars, training), information resources (e.g., websites, brochures, reports),
and government-sponsored guidelines (e.g., German Corporate Governance Code). In some
cases, SMEs require financial assistance to implement sustainability management tools (Revell
and Blackburn, 2007; Seidel et al., 2008). From time to time, several German states have offered
partial financial assistance to SMEs for consultation, auditing and first-time registration of an
EMS according to the Eco-Management and Audit Scheme (EMAS).

Government sponsored awareness raising campaigns could be mobilized through existing

business networks (Collins et al., 2006; Halila, 2007) and public-private partnerships, such as the
case for EcoProfit (Martinuzzi et al., 2000; Fresner, 2004), which can serve as platforms to
facilitate the diffusion of sustainability management tools in SMEs. Both of these platforms have
been observed in the literature provide a cost-effective way for SMEs to become aware and
oftentimes implement appropriate management tools (Ammenberg and Hjelm, 2003; Collins et
al. 2006; Halila, 2007; Battaglia et al., 2010; Revell et al., 2010; Stewart and Gapp, 2010).
Educational workshops offered by such networks and partnerships have great success in
attracting interested parties in many local and regional municipalities.

17
Future Research

This paper establishes a basis for future studies to measure trends of adoption from awareness to
implementation for multiple sustainability management tools in SMEs. This paper expands on
various types of sustainability management tools appropriate for SME implementation. In
particular, it serves as a basis for longitudinal studies to observe the trends for awareness and
implementation rates over the course of time to examine the adoption rates in SMEs.

While a limited number of studies can be found on SME-specific tools (e.g. EKOSCAN, in Heras
and Arana, 2010; Sustainability Evaluation and Reporting System, in Perrini and Tencati, 2006),
further research and development of SME-specific tools is still warranted. This paper offers a
foundation to investigate further SME-specific tools, especially using Rogers’ (1995) stages in
the innovation process. Future research could expand on the facilitating characteristics to include
innovation characteristics (e.g., compatibility, complexity, trialability, observability) and
environmental characteristics (e.g., external support organizations). While innovation
characteristics are typically applied to one innovation at a time, they could provide a basis for
comparison between various sustainability management approaches.

Furthermore, tools could be adapted to fit innovation, organizational and environmental

characteristics to improve the likelihood of adoption. Until now, such an adaptation has only
been observed for an EMS (Gerstenfeld and Roberts, 2000; Burke and Gaughran, 2007; Tsai and
Chou, 2009; Heras and Arana, 2010) and sustainability reports (Perrini and Tencati, 2006; Borga
et al., 2010).

The success of widespread adoption of sustainability management tools rests upon two key
factors: raising awareness of tools with SME managers and promoting the relative benefits from
the implementation of tools. While other managerial and organizational characteristics not
included in this study (e.g., degree of formalization, in Hashem and Tann, 2007) may also help
predict the likelihood that tools will be adopted, it is first and foremost a matter of raising
awareness in SMEs to promote adoption.

18
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 Table 1
Sustainability Management Tools for SMEs

Sustainability Highlighted Articles in SME Context

Orientation
Management Tools (in alphabetical order)
Accounting Env, Soc, Sus Heupel & Wendisch (2005); Karvonen (2000)
Analysis Env, R Cote et al. (2006)
Audit Env, Soc, Sus Graafland et al. (2003); Perez-Sanchez et al. (2003);
Williamson & Lynch-Wood (2001)
Balanced Scorecard Sus Hansen et al. (2010); Parisi & Maraghini (2010)
Benchmarking Env, Soc, Sus Altham (2007); Tencati et al. (2004)
Code of Conduct Soc Graafland et al. (2004); Tencati et al. (2004)
Corporate Citizenship Soc Høivik & Melé (2009); Jenkins (2006); Veleva (2010)
Ecomapping Env Koroljova & Voronova (2007)
Employee Training Env, Soc, Sus Cloquell-Ballester et al. (2008); Tseng et al. (2010)
Dialogue Soc Arnold (2010); Hammann et al. (2009); Longo et al.
(2005); Seidel et al. (2008)
Design for Environment Env Cassells & Lewis (2011); Starkey (2000)
Indicator Env, Soc, Sus Kinderyte (2010); Rao et al. (2009); Tencati et al. (2004)
Label Env, Soc, Sus Hahn & Scheermesser (2006)
Life Cycle Assessment Env Masoni et al. (2004); Perez-Sanchez et al. (2003); Seidel
et al. (2008); Starkey (2000)
Management System Env, Q, Soc Ammenberg & Hjelm (2003); Fresner & Engelhardt
(2004); Halila (2007); Hillary (2004); Kehbila et al.
(2009); McKeiver & Gadenne (2005); Seiffert (2008);
Williams et al. (2000); Zobel (2007); Zorpas (2010)
Network Sus Battaglia et al. (2010); Collins et al. (2006); Halila
(2007); Jämsä et al. (2011); Lawrence et al. (2006);
Nielsen & Thomsen (2011)
Policy Env, Q, Soc Bradford & Fraser (2008); Dibrell et al. (2011);
Hsu & Cheng (2012)
Report Env, Soc, Sus Borga et al. (2009); Burke & Gaughran (2007); Perrini
& Tencati (2006)
Abbreviations – Env (Environment); Q (Quality); R (Risk); Soc (Social);
Sus (Sustainability)

26
 Figure 1
Adaptation of Rogers’ (1995) Stages of Innovation Diffusion

II. Attitude IV.

I. Awareness III. Evaluation V. Confirmation
Formation Implementation

Approximate Managerial and organizational Approximate

rate of characteristics: rate of
awareness - Perceived relative advantage implementation
for sustainability - Management support for sustainability
management - Level of engagement management
tools - Organizational size tools

27
 Table 2
Awareness and Implementation of Sustainability Management Tools in German SMEs

Ratio of
Awareness Implementation Implementation
Sustainability Management Tool
(%) (%) to Awareness
(%)
1 Quality Management System 79.07 65.12 82.36
2 Employee Training 76.74 67.44 87.88
3 Employee Suggestion Scheme 69.77 55.81 79.99
4 Sustainable Supply Chain Management 61.63 48.84 79.25
Corporate Citizenship
5 50.58 43.02 85.05
(e.g. Donations, Sponsorship)
6 Environmental Audit 47.67 21.51 45.12
7 Environmental Management System 44.77 27.91 62.34
8 Code of Conduct 44.77 29.65 66.23
9 Employee Incentive Program 44.19 30.81 69.72
10 Risk Analysis 44.19 27.91 63.16
11 Environmental Indicators 30.81 17.44 56.60
12 Environmental Report 30.23 12.79 42.31
13 Sustainability Audit 25.58 8.14 31.82
14 Sustainability Report 25.00 5.81 23.24
15 Sustainability Indicators 24.42 8.72 35.71
16 Social Accounting 23.84 13.95 58.52
17 Environmental Accounting 23.26 11.05 47.51
18 Social Indicators 21.51 10.47 48.68
19 Sustainability Balanced Scorecard 20.35 4.07 20.00
20 Environmental Policy 20.35 8.72 42.85
21 Eco-Efficiency Analysis 19.19 1.74 9.07
22 Eco-Efficiency Indicators 19.19 5.81 30.28
23 Eco-Balance / Life Cycle Assessment 18.60 4.07 21.88
24 Sustainability Network 18.02 12.79 70.98
25 Sustainability Benchmarking 16.86 4.65 27.58
26 Eco-/ Organic Labels 16.28 2.91 17.87
27 Design for the Environment 13.37 4.65 34.78
28 Social Report 13.37 4.07 30.44
29 Social Audit 10.47 2.91 27.79
30 Sustainability Labels 10.47 4.07 38.87
31 Social Management System 9.88 4.07 41.19
32 Social / FairTrade Labels 9.88 1.16 11.74
33 Ecological Benchmarking 9.30 4.65 50.00
34 Stakeholder Dialogue 8.14 5.23 64.25
35 Social Benchmarking 7.56 2.33 30.82
36 Ecomapping 4.07 1.16 28.50

28
 Table 3
Averages and Correlations between Awareness and Implementation

Awareness and Implementation of Survey Results of

Sustainability Management Tools 36 Tools

Average Awareness (36 tools) 28.15%

Average Implementation (36 tools) 16.26%
Average Awareness-Implementation Gap
11.89%
(Avg. Awareness minus Avg. Implementation)
Average Ratio of Implementation to Awareness 57.77%
Correlation of Awareness and Implementation (Pearson) 0.97**
Correlation of Awareness and Ratio of Implementation to 0.75**
** Statistically significant at p <0.05
_____________________________________________________________________________

Table 4
Regression Analysis on Managerial and Organizational Characteristics

Model Summary N df R² Adj. R² Sig.

151 150 0.575 0.561 0.000

Independent variables Regr. Coeff. B Stand. Regr. Sig. VIF

Coeff. ß
Constant -6.168 0.001 1.252
Total Awareness 0.414 0.603 0.000 1.180
Perceived Relative Advantage 1.409 0.179 0.003 1.887
Top Management Support 0.188 0.040 0.595 1.811
Level of Engagement 0.282 0.054 0.458 1.098
Organizational Size 0.008 0.185 0.001 1.252
Dependent Variable = Total Implementation

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