External Motivating Factors for Greening Small- and Medium-sized Enterprises in China

Severe environmental degradation worldwide calls for imperative action from human society. Small- and Medium-sized Enterprises (SMEs), which constitute an important component in almost every economic entity in the world, are subject to growing concern, as their environmental performance is essential to regional and global environmental protection and sustainable industrial development. Due to the weakness of SMEs and the various barriers they encounter, pressure and incentives from outside are needed to engage SMEs in adopting environmental initiatives. In order to understand the current greening process of SMEs in China, this thesis identifies and evaluates several important motivating factors, their relative roles, current status and future directions in China’s green business initiative. Four factors, including the Chinese government, supply chain partners, international aid, and network & alliance, are found to be dominant in promoting the greening initiatives of Chinese SMEs. The Chinese central government regulates the environmental practice of SMEs, through creating an integrated framework of legislation and standards, which is however compromised by weak enforcement at a local level. More financial and technological support from the government is needed to improve the environmental behavior of SMEs. Through case studies, it is shown that pressure from supply chain partners can effectively push SMEs to carry out environmental management in their business practice. However, this might be limited to a small set of SMEs, and require more financial and technological cooperation across the supply chain. International aid from organizations such as the United Nations Industrial Development Organization (UNIDO) greatly promotes the dissemination of green technology and experience to Chinese industries. However, the effort is ironically currently focused on large (e.g., state-owned) enterprises due to improper government interference. Networking among Chinese enterprises, including SMEs such as China Association of Small and Medium Enterprises (CASME), plays a key role in information exchange, experience sharing and cooperation. More efforts are nonetheless needed to shift to the area of corporate environmental management