Human Capital and Environmental Engagement of SMEs in Pakistan: A Comparative Analysis of the Leather Industry

As part of a broader effort to reduce environmental degradation, small and medium-sized enterprises (SMEs) around the world are increasingly being required by different stakeholders to adopt more environmentally responsible business practices. The existing literature suggests that the main factors prompting SMEs to adopt environmental practices are: compliance with regulations, economic advantage and the realisation of personal ethical values. However, knowledge and understanding about the resources and capabilities that might enable SMEs to adopt environmental practices remains very limited. At the same time, much of the prior literature is about developed economies. The aim of this case study is to address these gaps in the literature by exploring the influence of human capital on environmental engagement of SMEs in Pakistan’s leatherworking industry. Findings reveal that human capital does influence environmental practices in SMEs of leather industry. Compared to some earlier studies from developed economies, which emphasis more on informal environmental learning, this study finds that both formal education and informal environmental learning are important for better environmental engagement of SMEs. Importance of networking for seeking environmental knowledge also came up quite clearly. The implications are that well-designed and executed interventions could promote large-scale improvements in environmental performance of this industry sector. Furthermore, awareness programmes should aim, not simply to educate entrepreneurs and employees, but also to inspire them to pursue environmental opportunities