PRME Corner: Could Small Business Support Sustainability?

The answer is “Yes”. Find out how by reading this article which is a summary of a study by one of SBM ITB Faculty members, Melia Famiola, PhD, to understand the implementation of sustainability concepts in small business.

People may ask: “Why do I choose to discuss sustainability in small business while in many cases, the majority today environmental problems are caused by large business activities?” Large firms should take the responsibility for global warming, pollution as well as social conflict in our society. “Yes, you may be right” My argument for this is not only because the discussion on this subject has much attention to its practices in large businesses but it is an urgent agenda that sustainability has to begin from small business as well.

A study at MIT stated that 80% of sustainable companies could maintain their sustainable performance when sustainable issues are incorporated into the business from its young age. Therefore, understanding the character of small companies and factors to encourage their business to be socially and environmental friendly will be essential to generate future sustainable enterprises.

Based on my investigation, I find at least four factors that affect the successful adoption sustainability in small businesses (see the figure).

The first important factor is the founders or business owners’ concerns and values on sustainability issues. Founders of majority green business (taking an environmentally initiative business) explained that their ideas came from the course and final project they have taken during school/university. Therefore, introducing sustainability in the ecosystem of learning in schools and universities has become a necessary agenda for today’s education.

 

Successful Factors for Sustainable Small Business

Secondly, founders should be always critically in integrating the concept of sustainability with market demand. Small businesses even though they are more flexible and dynamic compared to large companies, they are still struggling to convince and gain market trust. Around 70% of small business efforts will be drained to match their business value proposition with market conditions. To keep work in sustainability, they have to be smart to integrate the value of sustainability with the market needs, smart on seeing the trends to change consumer behavior on how to make they engage in their sustainable values. The most simple ways are giving special attention to segment consumer that are categorized as Green Consumer (consumers who are looking environmentally, healthy products, such organic communities etc) and trying to meet their demand since the initial stage. Focus on this niche market can make the small businesses earns profit while naturally continue to operate in an socially responsible and environmentally friendly manner.

Thirdly, “never-ending” innovation should be the mindset of the small business to be sustain. Sustainability requires a dynamic condition; none in this world will always be the same; everything will change. Therefore, the small business must be able to identify this condition and keep critically find new innovative ways and idea and to create new things to adapt to the changes. Adopting the principle of eco-efficiency, for example, will create a more productive environmentally friendly business. Eco-efficiency is a principle that drives the company becoming more efficient and effective on its day to day operations and finding creative ways to use waste as a prospective new business to support main source of revenue.

Final factor is collaboration with other companies or institutions that have the same values to realize their sustainability mission. Even though we argue that small business should change its main set and work with the principle “internalization” of environmental mission into their business it is quite challenging for small business. Therefore, collaboration will provide opportunities for small companies to share resources. The partnership will build knowledge sharing between two parties so that the sustainability mission of small businesses will be more innovative, efficient, and providing greater impact to the society and environment.

So, are you one of small business founders or just thinking of developing one but still find challenging to make a sustainable business? As this article has summarized, there is no reason that small business could not generate profit while also doing sustainable business … for a better world.

*Melia Famiola is a lecturer in Entrepreneurship and Technology Management research interest group. Her research interests are in sustainable business, business ethics, corporate social responsibility (CSR), and social entrepreneurship. She is currently the SBM ITB PRME (Principles for Responsible Management Education) coordinator. 

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