Journal of Cleaner Production 17 (2009) 276–282

Contents lists available at ScienceDirect

Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Strategy development in small and medium sized enterprises for sustainability

and increased value creation
Samuel B. Moore a, *, Susan L. Manring b
a
Ouroboros Holdings, LLC. 4003 Birkdale Ct. Elon, NC 27244-2020, USA
b
Martha and Spencer Love School of Business, Elon University, Elon, NC 27244-2020, USA

a r t i c l e i n f o a b s t r a c t

Article history: Sustainability strategies create many synergistic effects for SMEs working collaboratively, as well as
Received 18 June 2008 systemic benefits for the commons. After setting forth the business case for sustainable SMEs, and
Accepted 18 June 2008 considering SME sustainability advantages in contrast to MNEs, this paper discusses several different
Available online 9 August 2008
incentives for SMEs to optimize sustainability: (1) becoming valuable sustainable investment targets for
larger firms; (2) creating highly competitive networks of sustainable SMEs in market spaces where large
Keywords: enterprises are less successful; (3) becoming highly efficient suppliers in global supply chains through
Sustainability
sustainable practices.
Small and medium sized enterprises (SMEs)
Sustainable supply chain management
While several successful models of the sustainable SME are evolving, it may be that networks of SMEs
Resilience will become essential for addressing the systemic problems that underlie industrial ecology, enterprise
Industrial ecology resilience, and global supply chain sustainability. SMEs represent the majority of all enterprises, and
rapidly evolving communication technologies allow for various routes of network formation.
Ó 2008 Elsevier Ltd. All rights reserved.

1. Introduction are ignored. Paradoxically, the global economy grows more rapidly
as companies become more resource efficient. Ecological footprint
Since the 1990s, environmental and social factors have become analysis indicates that with this ‘‘rebound effect’’ [5], humanity’s
increasingly important strategic considerations for enterprises of ecological demands already exceed what nature can supply [6]. This
any size. Emerging 21st century market conditions are now creat- ‘‘ecological overshoot’’ means that we are depleting the stock of
ing truly new lenses through which the world must be viewed [1]. natural environmental capital rather than ‘‘living off the interest’’
By ignoring the ‘‘hidden connection’’ between business and the [6]. In spite of limits to growth, just as is true for all living organ-
environment, business is missing many new sustainable de- isms, business enterprises need to grow at least enough to keep
velopment (SD) opportunities that may prevent the threat of an pace with the economy, but defining growth and the ways and
inevitable collapse of society [2]. As more companies recognize our means of ‘‘growth’’ need to change [7]. Sustainable enterprise
‘‘Common Journey’’ [3], which underscores the necessity of creating resilience is the ‘‘capacity for an enterprise to survive, adapt, and
sustainable development, firms worldwide are intentionally de- grow in the face of turbulent change,’’ and at the same time, ‘‘to
veloping strategic plans to make their companies competitive increase shareholder value without increasing material through-
sustainably. Hart and Milstein have insisted that creating a sus- put’’ [5]. Sustainable enterprise resilience within the framework of
tainable enterprise should be viewed as just another factor in the industrial ecology creates multiple business opportunities through
modern business environment and should be addressed as such green technologies, reduction of raw material and energy use, and
within the planning process by 21st century business strategists ‘‘discovering innovative pathways for recovery and reuse of waste
[4]. However, even this view may no longer be adequate. streams in place of virgin resources’’ [5]. This redefines growth in
Modern business plans should include both ‘‘the limits and a more sustainable context, a context that is not foreign to SMEs,
opportunities’’ presented by changes in global social and environ- who have been operating for centuries within the context of limited
mental circumstances, as limitations of future growth may occur if local markets, and adapting to those conditions successfully [8].
the global and environmental perspectives for sustainable societies The strategy of a sustainable enterprise has been defined as ‘‘the
process of aligning an enterprise with the business environment to
maintain a dynamic balance’’[9]. By adding a sustainability lens
* Corresponding author. Tel.: þ1 336 269 0959.
within the framework of SME strategic planning, SME development
E-mail addresses: [email protected] (S.B. Moore), manring@elon. seeks to balance resilience and growth so as to align the creation of
edu (S.L. Manring). abundance: economically, environmentally, and socially, and to

0959-6526/$ – see front matter Ó 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2008.06.004
 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282 277

conserve that value for future generations [10]. Integrating sus- convert sustainability challenges into compelling strategic
tainability into their competitive strategy, and thereby obtaining opportunities.
greater profitability for SMEs through adoption of intentional
A number of forces underscore the emerging opportunities
sustainable strategies, can help them to optimize their rate of
[16,17] for SMEs to become proactively involved in sustainable
sustainable change.
practices:
‘‘It is becoming apparent that voluntary, incremental environ-
mental improvements by individual companies will be in-  accelerating cycles of technological innovation;
adequate to significantly offset the growth of the global  rapid globalization of networked communications;
economy, and that the rapid growth of China, India, and other  extended and interconnected supply chains;
Asian economies will likely exacerbate this problem’’ [5].  rapidly changing markets.
Sustainability strategies create many synergistic effects for SMEs
A further important factor to bear in mind is the fact that at least
working collaboratively, as well as systemic benefits for the com-
80% of all global enterprises are considered SMEs, having less than
mons. After setting forth the business case for sustainable SMEs,
250 employees [18]; SME’s constitute 85þ% of USA business [16];
and considering SMEs sustainability advantages in contrast to
99% of the European Union business [19]; over 99% of enterprises in
MNEs, this paper discusses several different scenarios for SMEs to
the UK [20]; and SMEs account for at least 70% of the world’s
optimize and use sustainability to create competitive advantages
production [21]. Possible scenarios of the future should be part of
rather than simply focusing on reducing unsustainability [5]:
any lens for incorporating sustainable development within a plan-
ning process [13,22–25]. Such lenses have led to the conception of
 become valuable sustainable investment targets for larger
‘‘sustainable enterprises’’ [26]: i.e., enterprises that are robust and
firms;
resilient in face of anticipated and unanticipated economic, envi-
 create networked SMEs in sustainable market spaces where
ronmental and social challenges [27]. Scenarios anticipating future
MNEs are less successful;
market conditions predict that a sustainable enterprise growth will
 become sustainable suppliers in global supply chains.
be enhanced by: (a) adapting to and diminishing the risk of ex-
ceeding social and environmental limits, and (b) meeting currently
Through this exploration, there is a critical underlying question,
unmet market needs for the 2þ billion potential consumers that do
which will require fuller investigations; which of these scenarios,
not currently participate in the global marketplace [28–34].
or combinations of scenarios, can provide the best alignment for
SMEs with the principles of industrial ecology, enterprise resil-
ience, and global sustainability? 3. Differences between large and small firms that result in
sustainability advantages to SMEs
2. Why do SMEs need to articulate and use SD business plans
A major facet of corporate planning among leading manufac-
for integrating factors of globalization within social and
turers in every industrial sector is the emphasis on sustainability in
ecological limits to growth?
‘‘internal business processes, external stakeholders and investor
relations, and customer value propositions’’ [5]. It appears that
Ignoring the possibilities offered by sustainability can produce
global multinational enterprises are taking actions towards be-
an artificially narrow vision, with even small firms being con-
coming more sustainable and they feel strongly enough about the
strained as they attempt to operate in a global marketplace, if an
importance of their efforts to report on their progress through
expanding vision of sustainability is not included in planning and
various avenues [29]. An entire lexicon and specific techniques
benchmarking performance [11,12]. SMEs have a vital role to play in
have been developed to define and measure ‘‘sustainability’’ [35].
managing limited global environmental and social resources. A
The following indicators of MNE’s strategic plans and actions
broad, multidimensional, multi-stakeholder perspective that is
towards sustainability reveal that the concept of the sustainable
formed based on emerging ideas and trends should be the basis of
enterprise as a successful business paradigm has become a reality:
a system approach towards an intentional, proactive situational
analysis. A thoughtful, situational analysis, as the basis for de-
 The development of the World Business Council for Sustainable
veloping enterprise strategy, must incorporate new global stake-
Development (WBCSD) [26], the Sustainable Enterprise Acad-
holders and should not be stagnant or reactionary [13]. Such
emy (SEA) [36], and other consulting organizations whose
analyses can culminate in development of scenarios leading to
purpose is to train and inform business leaders on sustainable
sound strategic plans, based on foreshortened learning cycles that
enterprise.
benefit from the time and efforts spent in the planning process [14].
 The creation of sustainable stock indexes such as the Dow Jones
Recognition of the use of sustainability to promote expeditious
Sustainability Index (DJSI), which are designed to measure the
planning dialogues to create competitive advantages are described
economic performance of sustainable enterprises, enabling
by Senge et al. [15]:
comparison to indexes which do not measure any aspect of
People creating together work in different ways. They are sustainability.
anchored in the future rather than in the past, drawn forward  The growing number of paid advertisements and web sites
by images of what they truly want to see exist in the world. encouraging and reporting on sustainable efforts as a compet-
They learn how to work with a distinctive source of energy itive advantage.
that animates the creative process, the creative tension that  The audited sustainability reports of hundreds of leading firms
exists whenever a genuine vision exists in concert with people that have utilized the Global Reporting Initiative (GRI) as their
telling the truth about what exists now. They learn how to let guide in preparing their reports.
go of having to have everything worked out in advance and to
step forth with boldness into immense uncertainty. The The benefits of sustainable strategic plans for SMEs are different
organizations that truly lead in the profound (sustainable) from those offered to MNEs. With their large asset bases, MNEs can
changes starting now to unfold around the world, who do not invest and spread the costs of product development over a large
get stranded in just being ‘‘less bad’’, will be those who and diversified global market. For large firms, if a strategic plan or
278 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282

product introduction is not successful in one region, then perhaps, competition may actually backfire, such that larger organizations
in some market half way around the globe, it will be. This re- become weaker competitors in the long run [43]. These implica-
alization of greater returns from R þ D has generally been perceived tions suggest that since smaller firms cannot effectively constrain
as an advantage for larger firms, as they are incumbent in global competitive forces nor shield themselves from these external
markets. The limits and advantages of smaller firms are well de- forces, the organizational development processes of smaller firms
scribed by Ács [37], in particular the limitations which are based on may also constitute a built-in engine for addressing the challenges
a historically defined, geographically limited market scope for non- of disruptive innovation and change.
networked SMEs; however, SMEs are also able to act more nimbly
to fill local or specialized market and technology niche markets 4. SMEs as a laboratory-sandbox for developing sustainable
[15,37,38] through being less encumbered by existing organiza- strategies and technologies which are then integrated into
tional structures that predate sustainability as a factor in enterprise MNEs via acquisition
performance:
SMEs have traditionally been entrepreneurial businesses that
Industries that are capital-intensive, concentrated, and adver-
grow through internal financing. The leap to external financing or
tising intensive, tend to promote the innovation advantage in
acquisition becomes necessary when growth outpaces the ability of
large firms. The small firm innovation advantage, however, tends
the SME to finance that growth, or if an SME’s technology or market
to occur in industries in the early stages of the life cycle, where
segment becomes of special interest to investors [8]. Small firms
total innovation and the use of skilled labor play a large role, and
can fulfill the desire to grow larger by raising capital in public
where large firms comprise a high share of the market [15].
markets, or they can become attractive acquisition targets for larger
An organization’s resilience and ability to ‘‘integrate, build, and firms [37]. Large firms seeking investments or acquisitions in small
reconfigure internal and external competences to address rapidly to medium sized enterprises typically use traditional strategies to
changing environments’’ are critical success factors in coping with improve profitability by:
shifting markets and for responding to disruptive innovations and
change [39]. Rothaermel and Hess [40] suggest that the antecedents  acquiring SME technology and market share [45];
to build these organizational capabilities can be found at the in-  achieving ‘‘roll-up’’ efficiencies through elimination of re-
dividual, organizational, and network level. At the organizational dundant expenses [46];
level, two major hurdles to effectively manage disruptive in-  de-fragmenting markets through consolidation of SME com-
novations and change are higher in larger firms and lower in smaller petitors [47].
firms.
The benefits that SMEs bring to larger firms may be otherwise
3.1. Streamlined organizational processes and business models unreachable by larger organizations. However, there are hurdles in
seeking to integrate smaller firms into larger organizations.
One hurdle for larger organizations to surmount is that while Roughly 50–80% of mergers and acquisitions, depending on whose
they usually have adequate human capital assets and other re- research is cited, fail to deliver anticipated benefits [48]. Regardless
sources, they are often caught facing the challenges of disruptive of whether the focus of an acquisition is on the issue of strategic fit,
change with inappropriate and ineffective organizational processes or organizational fit, or the acquisition process itself, failure rates
and business models [41]. An organization’s capacity to meet the remain consistently high [49]. Two meta-analyses of empirical
challenges of disruptive change is affected by its resources, pro- studies called for a ‘‘greater recognition of the process and organi-
cesses, and values. Initially, organizational resources determine the zational dimensions of acquisitions’’ that are increasingly recog-
firm’s capabilities. As the firm matures, organizational processes nized in the behavioral literature [50,51]; for example, inappropriate
become well-defined, and once the firm’s business model becomes decision-making, negotiation and integration processes can lead to
clearly defined, organizational values are articulated. These factors inferior acquisition outcomes [52–54]. Additional industrial ecology
– resources, processes, and values – are the building blocks of the criteria [5] for gauging the success of an SME acquisition should be
organization’s culture. Christensen and Overdorf [41] argue that whether the acquired SME helps an MNE reduce its degrees of
changing a company’s processes, business models, values, and unsustainability, or increases MNE capabilities to fundamentally
ultimately its culture is difficult, if not impossible, for large, strengthen the systemic underpinnings of sustainability [55].
established companies; and yet, this is precisely what must happen Despite the risks for larger firms, being acquired is an interesting
in order for a firm to deal with disruptive innovations and major option for SMEs, financially and organizationally, since acquisition
changes. Smaller organizations can leverage their capacities for can free the founding entrepreneurs and their capital, to continue
entrepreneurial innovations and organizational change, thereby, to develop new firms and to pursue other synergistic alternatives.
learning to achieve advantages over larger organizations [42].
5. Network advantages for SMEs utilizing the effects of
3.2. SMEs exposure to competitive forces creative destruction and information technology

A second hurdle is that while larger organizations may do well One of the apparent reasons for the increasing number of
initially with technological developments, their capability to smaller firms globally is the acceleration of ‘‘creative destruction’’
ameliorate competitive constraints insulates them so that they are effects caused by rapid technology transitions within global
likely to become weaker competitors over time, compared with markets [41,56]. This factor has persisted despite the breadth of
smaller organizations that cannot escape the rigors of technology advantages inherent to larger firms [31,57]. Moreover, globalization
survival contests [43]. When disruptive innovation and change are of communication technology is facilitating the formation of SME
driven by competition contests, larger organizations tend to have networks. These inter-organizational networks, which are strategic
significant survival and competitive advantages [43,44]. However, partnerships or alliances among SME stakeholders, introduce a new
when a larger organization succeeds in neutralizing the constraints organizational form into Ács’ assumptions [37], as networked SMEs
of competition, the organization’s perceived invulnerability serves can behave in the marketplace as a single larger firm, thereby
as insulation from critical sources of continuous organizational achieving market penetration through synchronized competency
development. Hence, strategies that isolate organizations from building [58–60].
 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282 279

Smaller firms may also be more nimble and creative in SMEs become more firmly networked and investors become com-
leveraging the ‘‘force multiplier’’ advantages of stakeholder net- fortable with networked structures, combining assets of networks
working [61]. The continuous updating of organizational learning could provide equal sources of market capital and access. There is
and knowledge bases through networking is a significant way for also the additional evidence that the market capital of MNEs will
SMEs to achieve both positional and performance advantages in the most likely be utilized for investments that are aligned with in-
face of disruptive innovations and change. The involvement of cumbent MNE activities, rather than unaligned opportunities that
former and new business, government, and NGO collaborators are disruptive to existing business activities [57]. Herein is another
creates communities of sustainable-knowledge networks similar to advantage for SMEs: the ability to connect unaligned opportunities
the open-source participation model that is ‘‘lumpy with small by becoming sustainable suppliers in global supply chains.
groups and clustered with coalitions’’ [60], rather than clearly de-
fined roles with linear reporting hierarchies [20]. For these many 7. SMEs as sustainable suppliers in global supply chains
reasons, SMEs are evolving to play a significant role within the
modern global economy. If judged solely by the percentage of all Firms of all size are increasingly being confronted by multiple
employees working in them, it may be said smaller firms are really external stakeholders to demonstrate a commitment to corporate
the backbone of the modern market. Therefore, SME’s behaviors social and environmental responsibility (CSR/CER). One response is
and characteristics are important in the evolution towards resilient, ‘‘supplier management for risks and performance’’ that takes
sustainable enterprises. If over 95% of all global enterprises are a minimalist approach to incorporate environmental and social
SMEs, and there is a growing mandate to create sustainable en- criteria to complement what are essentially economic-based sup-
terprises, then developing and implementing strategies for pro- plier evaluations [16]. The second strategy, ‘‘supply chain man-
moting SME investments in sustainable business practices is agement for sustainable products’’ goes beyond mere compliance
paramount in making progress towards sustainability [62]. The with legislation and regulations; it demands the ‘‘definition of life
growing competitiveness and importance of SMEs in the general cycle based standards for the environmental and social perfor-
economy are linked to the growing influence of networking these mance of products’’ that are implemented by certified companies
firms to meet the demands of growing populations participating in upstream and downstream in the supply chain [16,68,69]. For ex-
global markets [57,63,64]. ample, one of the ‘‘leading-edge efforts to incorporate sustainable
Axelrod indicated that the results from experimental game systems thinking into the design and development of new energy
theory, where games are developed that mimic market behavior, and mobility solutions is Well-to-wheels life cycle modeling’’ [5].
show that linking individuals through networks develops in- Vachon and Mao established a link between sustainability in-
terdependence, and that interdependence makes cooperation dicators and supply chain strength (defined as the availability,
much more efficient than adversity and conflict [65]. Comparing the quality, and interactions among organizations in the supply chain)
role and influence of large trans-national enterprises and SMEs in at the country level [70]. Their findings indicate that no trade-off
the world of the 21st century is, in reality, comparing the influence exists between sustainability and economic development and
of fluid and nimble decentralized networks of numerous SMEs wealth creation; i.e., ‘‘a positive link between supply chain strength
seeking mutually efficient transactions, vs. fewer (albeit mega- and natural environment is possible’’ [68].
sized) global multinational firms, seeking monopoly. It is very While SMEs may acknowledge their often significant environ-
similar to comparing mainframe computers to networked PCs [66]. mental impacts (in the UK, for instance, SMEs could be responsible
for up to 70% of all industrial pollution) [20], SMEs may tend to
6. The end game of the comparison of large and small firms is focus their CSR/CER behaviors on internal stakeholders, rather than
the triple bottomline on stakeholders in the supply chain [19]. The high costs and re-
source demands make it difficult for SMEs to adopt CSR/CER
Kerr concludes that SMEs should develop strategies that in- practices and monitor their transfer along the supply chain.
corporate sustainable development, and that the resulting skills Meeting these demands is all the more difficult for SMEs operating
would guide them to act in a sustainable way [62]. Acting and in developing countries, and it is generally pressure from customers
leading in sustainable ways that acknowledge the global commons or supply chain partners in developed countries that is the primary
are premised on multiple ethical, social, and environmental im- driver for SMEs in developing countries to adopt CSR/CER behaviors
peratives. However, significant research findings which cannot be [19]. Much of the literature to date considers the role of SMEs
ignored indicate that a primary survival driver for SMEs (or for any primarily as suppliers of larger companies. When SMEs produce
size firm) to invest in sustainability must increase opportunity for unique sustainability technologies or processes, they can use their
profits and/or to avoid threats to profitable growth [1,11,33,67]; i.e., innovation potential to move their customers in the supply chain
firms will not value a global commons unless a connection to towards more sustainable directions [20]. SMEs need also to be
profitability is made. considered as buyers from upstream suppliers, and by acting as
Will larger firms or networked SMEs produce the most rapid buyers, SMEs can exert more pressure for ‘‘sustainable supply chain
returns on investment in a global market scenario where sustain- management,’’ defined as the ‘‘management of SCs where all the
able development must occur? Will the highest returns from in- three dimensions of sustainability, namely the economic, envi-
vestments in sustainability be achieved within a rapid transition to ronmental, and social ones, are taken into account’’ [19]. Ultimately,
networks of sustainability driven SMEs, or through an evolution of what determines the success of SMEs in sustainable SCM is
MNEs transitioning towards sustainable behavior? Inevitably, a combination of their relative unique product positioning in niche
whichever avenue produces the most rapid returns on investment, markets and the personal CSR/CER values of the owner/entrepre-
this will depend on situational market environments and organi- neur [19]. This is precisely the commitment that is needed to evolve
zational capabilities, will yield improved competitive advantage, towards a systems approach to sustainability.
and will become the preferred structure for a particular situation.
In situations that require long term, very large financial in- 8. SME sustainability and resilience
vestments in infrastructure and R&D, MNEs with large market
capitalizations may remain the most efficient organizational form. It seems that rapid growth and disruptive innovations are being
Their diversified sources of income and ability to efficiently pene- achieved by SMEs from core competencies derived from a focus on
trate global markets should maximize their returns. However, as entrepreneurial sustainability. Why are small firms innovating in
280 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282

these new, exciting areas, while large global firms are not? The Seventh Generation (‘‘green’’ cleaning products), Plug Power
reason for this differential may be due to the nature of sustain- (hydrogen fuel cells), Zip Cars (transportation services), Grameen
ability itself. Hart and Milstein [4] introduced a strategy framework Bank (micro-credit), etc., produced strategies working throughout
which describes how firms can analyze investments through the all quadrants of the Hart–Milstein matrix, but most of the value
lens of ‘‘sustainable enterprise’’ with the goal of increasing profit- (growth) has occurred in the upper half of the matrix. These are the
ability synergized through increasing sustainability. Their frame- areas of innovation and repositioning for green technology de-
work directs investments that profitably resolve tensions created velopment, efficient resource utilization, socially aligned business,
by the following global conditions: and meeting the needs of the base of the economic pyramid [33].

 increasing human population; 9. Conclusions

 approaching the limits of the available environmental
commons; As SMEs succeed in integrating social and environmental sus-
 apparent limitations to growth due to limited availability of tainability performance into financial projections and strategic
energy and raw materials; business goals, they will expand opportunities for innovation by
 globalization of trade and economic development; increasing their opportunities for rapid learning. This paper has
 social issues (war and terrorism) that disrupt global trade. made the business case for SMEs investing in sustainability while
exploring various scenarios: being acquired by an MNE; becoming
Hart and Milstein’s framework is shown in a 22 matrix that networked with other SMEs; playing a major role in creating and
analyzes returns on investments in sustainability which can pro- maintaining sustainable supply chain management.
duce ‘‘present’’ and ‘‘future’’ value within internal operations of the Whether larger firms wishing to venture into new sustainable
firm and externally in the broader market (see Fig. 1). While larger business segments will find it less expensive to enter these markets
firms seek paths to increased profits through innovations within an through investment or acquisition of adroit SMEs, or whether they
existing ‘‘sustainability space,’’ the appreciation in value for MNEs will build capability internally, is still an unanswered question and
is largely achieved through maximizing opportunities found in may relate to the perceived importance of sustainability within the
lower quadrants of Hart’s strategic matrix, i.e., incremental im- existing management of MNE firms. As ‘‘new’’ business units at-
provement in existing operations through pollution prevention and tempt to compete for resources within larger firms, organizational
by finding sustainable efficiencies. Larger, incumbent firms first hurdles arise, if these new units compete with or are in conflict
must ‘‘fix’’ perceived challenges in present operations, before they with incumbent activities. As rates of change are accelerated by
begin experimenting in new markets [31]. global environmental and social conditions, new disruptive paths
A review of business cases indicates that SMEs can bring skill sets will be necessary to answer these challenges, even if they are not in
to bear on disruptive opportunities quickly and more competitively alignment with current missions. Disruptive ‘‘skunk works’’ may be
than existing MNE firms [17,28,33,71]. These cases, ranging from forced to develop outside MNE structures. Such a situation is
health care and communications to apparel and manufacturing, all documented in ‘‘The NIKE World Shoe Case’’ where NIKE was un-
have similar narratives: SMEs, founded and structured using a lens successful with an inexpensive, sustainable ‘‘world shoe’’ that was
of sustainability, can focus on new innovations without the dis- designed for developing markets, because it was in conflict with
tractions of having to ‘‘fix’’ existing operations. These SMEs, focused existing brands and company missions [72].
on sustainable opportunities, do not have an existing history of Smaller firms can often develop without such competitive fric-
‘‘compliance only’’ investment and infrastructure to overcome. tion and expectations. Therefore, MNEs may find that by adopting
SMEs can invest in leading edge efforts in sustainable enterprise, new sustainable strategies, through SMEs, they can more quickly
without risking or dealing with entrenched expectations internally evolve technologies and markets that are disruptive, rather than
or externally to the firm. Initially, entrepreneurial firms such as fighting through frustrating organizational conflicts. This strategy

Tomorrow
Strategy: Strategy:
Drivers Clean Technology Sustainability Vision Drivers
•Disruption Develop the sustainable Create a shared roadmap •Population
•Clean Tech competencies of the future for meeting unmet needs •Poverty
•Footprint •Inequity
Corporate Payoff: Corporate Payoff:
Innovation and Growth Trajectory
repositioning

Sustainable
Internal Value External

Strategy: Strategy:
Pollution prevention Product Stewardship
Minimize waste and Integrate stakeholder views Drivers
Drivers
Emissions from operations Into business process •Civil Society
•Pollution
•Consumption •Transparency
Corporate payoff: Corporate Payoff: •Connectivity
•Waste
Cost and Risk Reduction Reputation and Legitimacy

Today
Fig. 1. The Hart–Milstein matrix for assessing the value of sustainability within an organization’s strategic plan, from Hart and Milstein [4].
 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282 281

may move MNEs towards a new paradigm that addresses and [12] Willard B. The next sustainability wave: building boardroom buy-in. Gabriola
Island, BC: New Society Publishers; 2005.
strengthens an open-system approach to global sustainability [5].
[13] Schwartz P. The art of the long view. New York: Doubleday/Currency; 1991.
Networked SMEs provide much financial and organizational [14] Geus AD. The living company. Boston: Harvard Business School Press; 1997.
efficiency that enable development of technologies and markets [15] Senge P, Smith B, Kruschwitz N, Laur J, Schley S. The necessary revolution-how
essential to achieve ‘‘sustainable development.’’ Many of these individuals and organizations are working together to create a sustainable
world. New York: Doubleday; 2008.
developments are new and disruptive. While larger firms have [16] Ács ZJ. Are small firms important? Their role and impact. Boston: Kluwer
organizational barriers that may slow innovation in more revolu- Academic; 1999.
tionary technology and market spaces, SMEs are not as large and [17] Seuring S, Muller M. From a literature review to a conceptual framework for
sustainable supply chain management. Journal of Cleaner Production 2008;.
therefore, do not have as many organizational inertia effects. Ex- doi:10.1016/j.jclepro.2008.04.020.
actly how important individual SMEs will be to a sustainability [18] OECD Publications Service. OECD small and medium enterprise outlook. 2, rue
driven local or global marketplace and how disruptive their accel- André-Pascal, 75775 Paris Cedex 16, France: OECD; 2002.
[19] Ciliberti F, Pontrandolfo P, Scozzi B. Investigating corporate social re-
erating rate of entry and exit into and out of markets could be on sponsibility in supply chains: a SME perspective. Journal of Cleaner Production
their economies, may depend upon their speed and efficiency of 2008;. doi:10.1016/j.jclepro.2008.04.016.
networking so they can act in congress [59]. Networking should [20] Walker H, Preuss L. Fostering sustainability through sourcing from small
businesses: public sector perspectives. Journal of Cleaner Production 2008;.
mitigate the disruptive influences generated by individual SMEs doi:10.1016/j.jclepro.2008.04.014.
and should help to produce progress towards sustainable de- [21] O’Laoire D. Wider applications of the systems based approach – The EMS in
velopment. This can only occur if cooperation on the challenges the SME. In: Welford R, editor. Corporate environmental management: sys-
tems and strategies. London: EarthScan; 1996.
facing society and ecology clearly favor the competitiveness of the
[22] Hoffman AJ. Competitive environmental strategy: a guide to the changing
networked companies and if stable business communities are business landscape. Washington, D.C.: Island Press; 2000.
formed [65,73]. The connection to Corral’s insights should be clear [23] Scheley S, Laur JS. Creating sustainable organizations: meeting the economic,
[67]: to be sustainable, SMEs must network in order to obtain the ecological and social challenges of the 21st Century. Waltham: Pegasus;
1998.
size and efficiencies needed to compete. Through the success of [24] Senge PM, Presence: human purpose and the field of the future. Cambridge,
such networks, the individual SMEs must believe that the success of MA; Society for Organizational Learning; 2004.
the whole is paramount to individual SME successes. [25] Costanza R, Graumlich L, Steffen WL. Sustainability or collapse?: an integrated
history and future of people on earth. Cambridge, MA: MIT Press in co-
Developing networked SME strategies for sustainable supply operation with Dahlem University Press; 2007.
chain management also seems to offer opportunities for better [26] WBCSD (World Business Council for Sustainable Development). In:
economic performance in market spaces that are foreign to MNEs. Timberlake L, editor. Business case for sustainable development. Switzerland:
WBCSD; 2002.
As creative destruction effects accelerate within an increasing [27] Day RM. Beyond eco-efficiency: sustainability as a driver for innovation.
global marketplace, the gravitational effects from existing in- Available from: http://www.natural-resources.org/minerals/latam/docs/read-
cumbent operations may not allow large firms to take full advan- ings/day.doc; 1998 [cited 6.10.2008].
[28] Bhagwati JN. In defense of globalization. New York: Oxford University Press;
tage of clean technologies, resource efficiencies, including raw 2004.
materials and new energy sources, and the needs of emerging [29] Brown LR. Plan B: rescuing a planet under stress and a civilization in trouble.
populations of consumers. SMEs have demonstrated the ability to New York: Norton; 2003.
[30] Chambers R. Whose reality counts? Putting the first last. London, GB: ITDG
thrive in these new spaces. Perhaps, new networked organizational
Publishing; 1997.
structures, including sustainable supply chains involving SMEs and [31] Christensen CM. The innovator’s dilemma: when new technologies cause
MNEs, will emerge, with MNEs supplying much needed in- great firms to fail. Boston: Harvard Business School Press; 1997.
frastructure and capital, and SMEs providing the sustainability [32] Gilding P. In Ecos Corporation (letter). Sydney, Australia; June 5, 2005.
[33] Hart S. Capitalism at the crossroads: the unlimited business opportunities in
driven innovation engine that MNEs desire. While more than one solving the world’s most difficult problems. Indianapolis, IN: Wharton;
successful model of the sustainable enterprise is evolving, collab- 2005.
oration, with the ‘force multiplier’ of networks will remain essen- [34] Hopkins TK, Wallerstein IM. The age of transition: trajectory of the world-
system 1945–2025. London: Atlantic Highlands; 1996.
tial for addressing the systemic problems that underlie industrial [35] Glavic P, Lukman R. Review of sustainability terms and their definitions.
ecology, enterprise resilience, and global sustainability. Real and Journal of Cleaner Production 2007;15:1875–85.
lasting systemic changes can only be achieved through coordinated [36] Wheeler D, Zohar A, Hart S. Educating senior executives in a novel strategic
paradigm: early experiences of the Sustainable Enterprise Academy. Business
global efforts, and this will necessitate collaborative participation Strategy and the Environment 2005;14:172–85.
from public, private, and non-governmental organizations. [37] Ács ZJ, Yeung B. Small and medium-sized enterprises in the global economy.
Ann Arbor: University of Michigan Press; 1999.
[38] Admiraal PH, Thurik R, Carlsson B, Admiraal PH. Small business in the modern
References economy. Oxford, UK; Cambridge, MA: Blackwell Publishers; 1996.
[39] Teece D, Pisano G, Shuen A. Dynamic capabilities and strategic management.
[1] Friedman TL. The world is flat: a brief history of the twenty-first century. New Strategic Management Journal 1997;18:509–34.
York: Farrar Straus and Giroux; 2005. [40] Rothaermel F, Hess A. Innovating within a new technological paradigm: the
[2] Capra F. The hidden connections: integrating the biological, cognitive, and role of the individual firm and network level effects in building capabilities.
social dimensions of life into a science of sustainability. New York: Doubleday; (cited 6.10.2008) Available from http://www.hbs.edu/entrepreneurship/pdf/
2002. PAPER_Rothaermel-Hess.pdf.
[3] NAC, editor. Our common journey: a transition toward sustainability. National [41] Christensen C, Overdorf M. Meeting the challenge of disruptive change. The
Academy Press; 2003. Harvard Business Review 2000;78(2):66–76.
[4] Hart S, Milstein M. Creating sustainable value. Academy of Management Ex- [42] Hyvonen S, Touminen M. Entrepreneurial innovations, market-driven in-
ecutive 2003;17(2):56–67. tangibles and learning orientation: critical indicators for performance ad-
[5] Fiksel J. Sustainability and resilience: toward a systems approach. Sustain- vantages in SMEs. International Journal of Management and Decision Making
ability: Science, Practice, & Policy(2):14–21, http://ejournal.nbii.org, 2006;2. 2006;7(6):643–60.
[6] Venetoulis J, Chazan D, Gaudet C. Ecological footprint of nations. San Fran- [43] Barnett WP, McKendrick DG. Why some organizations more competitive than
cisco: Redefining Progress; 1994. others? Evidence from a changing global market. Administrative Science
[7] Daly H. Beyond growth. Boston: Beacon Press Books; 1996. Quarterly 2004;49(4):535–71.
[8] Blackford MG. A history of small business in America. Chapel Hill: University [44] Carroll G, Hannan MT. The demography of corporations and industries.
of North Carolina Press; 2003. Princeton, N.J.: Princeton University Press; 2000.
[9] WCED (World Commission on Environment and Development). Our common [45] Harrison B, Kelley M, Gant J. Innovative firm behavior and local milieu: ex-
future. Oxford: Oxford University Press; 1987. ploring the intersection of agglomeration, firm effects, and technological
[10] Giddings BH, O’Brien G. Environment, economy and society: fitting them to- change. Economic Geography 1996;72(3):233–58.
gether into sustainable development. Sustainable Development 2002;10(4): [46] Hayward M. When do firms learn from their acquisition experience? Evidence
187–96. from 1990–1995. Strategic Management Journal 2002;23:21–39.
[11] Willard B. The sustainability advantage. Gabriola Island, BC: New Society [47] Johansson D. Is small beautiful? The case of the Swedish IT industry. Entre-
Publishers; 2002. preneurship & Regional Development 2004;16:271–87.
282 S.B. Moore, S.L. Manring / Journal of Cleaner Production 17 (2009) 276–282

[48] Nalbantian HR, Guzza RA, Kieffer D, Doherty J. Making acquisitions work. Journal [61] MacLean R, Nalinakumari B. The new rule makers: The paradigm shift in
of Organizational Excellence. doi:10.1002/joe.20047, www.interscience.wiley. environmental, health, safety, and social responsibility ‘regulations’ now un-
com; 2005. derway. Corporate Environmental Strategy 2004;11(8):183–98.
[49] Cartwright S, Schoenberg R. Thirty years of mergers and acquisitions research: [62] Kerr IR. Leadership strategies for sustainable SME operation. Business Strategy
recent advances and future opportunities. British Journal of Management and the Environment 2006;15:30–9.
2006;17(S1):S1–5. [63] Anderson C. The long tail. Wired 2004.
[50] King DR, Dalton DR, Daily CM, Covin JG. Meta-analyses of post acquisition [64] Winter SG. Schumpeterian competition in alternative technological regimes.
performance: Indications of unidentified moderators. Strategic Management Journal of Economic Behavior and Organization 1984;5:287–320.
Journal 2004;25:187–200. [65] Axelrod RM. The evolution of cooperation. New York: Basic Books; 1984.
[51] Stahl G, Voight A. Meta-analyses of the performance implications of cultural [66] Trainer T. Saving the environment: what it will take. Sidney: University of
differences in mergers and acquisitions, Annual Meeting of the Academy of New South Wales Press; 1998.
Management. New Orleans: Proceedings: Academy of Management; 2004. [67] Corral CM. Environmental policy and technological innovation: why do
[52] Schweiger D, Very P. Creating value through merger and acquisition in- firms adopt or reject new technologies? New Horizons in the Eco-
tegration. Advances in Mergers and Acquisitions 2003;2:1–26. nomics of Innovation. Cheltenham, UK; Northampton, MA: Edward
[53] Cartwright S, Cooper C. Managing mergers, acquisitions and strategic Elgar; 2002.
alliances: integrating people and cultures. Oxford, England: Butterworth- [68] Kovacs G. Corporate environmental responsibility in the supply chain. Journal
Heinemann; 1996. of Cleaner Production 2008;. doi:10.1016/j.jclepro.2008.04.013.
[54] Hapeslagh P, Jemison D. Managing acquisitions. New York, NY: Free Press; 1991. [69] Tsoulfas GT, Pappis CP. A model for supply chains environmental performance
[55] Ehrenfeld J. The roots of sustainability. Sloan Management Review 2005; analysis and decision making. Journal of Cleaner Production 2008;. doi:10.
46(2):23–5. 1016/j.jclepro.2008.04.018.
[56] Schumpeter JA. Capitalism, socialism, and democracy. New York; London: [70] Vachon S, Mao Z. Linking supply chain strength to sustainable development:
Harper; 1942. a country-level analysis. Journal of Cleaner Production 2008;. doi:10.1016/j.
[57] Andersen ES. Population thinking, Price’s equation and the analysis of economic jclepro.2008.04.012.
evolution. Evolutionary and Institutional Economics Review 2004;1(1):127–48. [71] Prahalad CK. The fortune at the bottom of the pyramid: eradicating poverty
[58] Roome N. Metatextual organizations – innovation and adaption for global through profits: enabling dignity and choice through markets. Upper Saddle
change. Rotterdam; 2001. River, NJ: Wharton School Pub; 2005.
[59] Strogatz S. Sync: the emerging science of spontaneous order. New York: [72] McDonald H, London T. Expanding the playing field: Nike’s world shoe
Hyperion Books; 2003. project. Chapel Hill: University of North Carolina Kenan-Flagler Business
[60] Manring S, Moore S. Creating and managing a virtual inter-organizational School; 2002.
learning network for greener production: a conceptual model and case study. [73] Dorogovtsev SN, Mendes JFF. Evolution of networks: from biological nets to
Journal of Cleaner Production 2006;14:891–9. the Internet and WWW. Oxford: Oxford University Press; 2003.