Proposal of a green index for small and medium-sized enterprises: A multiple criteria group decision-making approach
Introduction
Sustainable development, at its core, reflects long-term processes that ensure continuous improvement in the three components of sustainability: economic equity, social justice, and environmental preservation (Brundtland Report, 1987). As far as the last of these components is concerned (i.e., environmental preservation), it is worth noting that, with the global population explosion and expansion of science and technology, the resources of our planet appear increasingly limited and even close to depletion. Primarily because of greenhouse gas emissions and air and water pollution, several studies have concluded that environmental degradation has an impact on climate change and that this phenomenon threatens humankind's survival (see Zobel, 2008; Ahmadi, 2015; Thollander and Palm, 2015; Luís et al., 2018). To control these problems, a long-term vision is needed to ensure the status quo is organizationally and environmentally sustainable, thus guaranteeing a better future for coming generations (Brundtland Report, 1987; Shi et al., 2008; Govindan et al., 2017).
In the business sector, investments made in sustainable environmental practices by companies are associated with increased competitiveness, even under unfavorable economic conditions (Ahmadi, 2015). This is largely because these practices have a positive, direct, and significant influence on companies’ image, effectiveness, and relational marketing, which suggests that environmental practices should be implemented whenever strategically relevant (Morrow and Rondinelli, 2002; Thanki et al., 2016).
Small and medium-sized enterprises (SMEs) have long been recognized as a driving force of economic development. Europe, for instance, has over 21 million SMEs employing 88.8 million people and generating a total of 3.666 billion euros in added value within the European economy (European Commission, 2015). Significant interest in the topic of SMEs' environmental conduct in recent decades is thus unsurprising, with much of the relevant literature focusing on how to measure SMEs’ environmental conduct and its impact on the surrounding environment (Guinée et al., 1992; Lundberg et al., 2005; Zobel, 2008).
Despite this issue's importance, many solutions proposed to date are considered restricted by the type of method used to determine environmental evaluation criteria and the limited analysis of cause-and-effect relationships among these criteria. This underlines the need for new methodological approaches in this context (Ferreira, 2016; Fernandes et al., 2018). The present study sought to address these limitations – and research gap – specifically through an integrated use of cognitive mapping and the Analytic Hierarchy Process (AHP).
Cognitive mapping brings together uncertainty, different perspectives, conflicts of interest, and multiple decision makers, using evaluation criteria to represent the values of individuals and their organizations and structure complex decision problems (Ferreira et al., 2016a). The AHP method, in turn, facilitates work on abstract, subjective, or non-quantifiable evaluation criteria by structuring them into hierarchies (Saaty, 1990). This structuring procedure produces a clearer understanding of the interconnections between alternative choices, evaluation criteria, and final goals (Russo, 2015; Stefanovic et al., 2016).
Given this research context, the present study sought to answer two interrelated questions:
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How can SMEs' environmental conduct be measured?
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What qualitative and quantitative metrics can be used?
Our research design thus combined cognitive mapping and AHP to create a measure of SME environmental conduct (i.e., a green index) that could serve as an evaluation and decision support tool for strategic planning in the SME sector. Even though this approach produced quite focused results, the process-oriented nature of the methodologies used means they can be replicated and used to produce parallel findings anywhere in the world. Thus, the green index can be employed not only as a complement to previous work on SMEs’ environmental conduct (see, for instance, Shi et al., 2008; Thanki et al., 2016; Singh et al., 2018) but also as a springboard for additional, potentially comparative studies.
With adequate adjustments, the procedures followed could be used in other contexts and/or with other participants to create appropriate assessment measures of environmental practices. This would then facilitate theoretical and practical developments in the areas of corporate social responsibility (CSR), performance evaluation, and operational research/management science (OR/MS). We found no evidence of prior studies reporting the integrated use of these two well-established, soft OR/MS techniques (i.e., cognitive mapping and AHP) in this study context, which confirms the novelty of our study's contributions.
The next section presents a summary of the relevant literature on social responsibility, environmental conduct, and SMEs, while section three provides the methodological framework of the techniques applied. Section four then discusses the results, highlighting the practical/managerial implications of the insights obtained. The concluding section offers the study's contributions and limitations and lays out a roadmap for future research.
Section snippets
Related literature
Social responsibility has been the subject of increasing discussion in the scientific community, especially since no widely accepted conceptualization is yet available (Govindan et al., 2014). Throughout the years, this term's definition has been changed and refined to match better the realities to which it has been applied. One of the first references to social responsibility was made by Bowen (1953), who claimed that this comprises the obligations of business persons to pursue policies and/or
Cognitive mapping
Cognitive mapping is one of the best known techniques used to capture and clarify individuals’ ideas and perceptions and thus promote collaborative problem-solving (Ackermann and Eden, 2001; Eden, 2004). As Özesmi and Özesmi (2003) note, the development of cognitive maps can be helpful in terms of both obtaining the support of decision makers involved in decision-making processes and comparing the similarities and differences among groups of stakeholders. According to the cited authors, this
Implementation
Based on the literature on multiple criteria decision analysis (MCDA) (Belton and Stewart, 2002), the decision-making process followed in the present study included three major phases: (1) structuring the decision problem using cognitive mapping; (2) evaluating value preferences and constructing performance scales using AHP; and (3) making recommendations based on the results obtained. Fig. 2 presents the sequence of the methodological procedures followed.
The structuring phase, therefore,
Conclusion
Environmental degradation has an impact on climate change – a phenomenon that threatens humankind's survival (Ahmadi, 2015; Luís et al., 2018). This is a key concern of contemporary society and generations to come. Thus, alterations are needed in companies' environmental behaviors, including using their current resources better without compromising the future of humankind. SMEs' environmental conduct has been recognized as crucial to this process – as is understanding the determinants and
Funding
This work was partially supported by the Portuguese Foundation for Science and Technology [Grant UID/GES/00315/2013].
Acknowledgments
The authors gratefully acknowledge the outstanding contribution and infinite willingness of the panel members: Ana Paula Rita, Fernando Carvalho, Joaquim Santos, José Batista, Margarida Gomes, Katya Romão, Paulo Chainho, and Rahim Sacoor. We also wish to thank the ISCTE Business School, University Institute of Lisbon, Portugal, for providing facility support.
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