GREEN BUSINESS PRACTICES IN MICRO AND SMALL

ENTERPRISES WITH SPECIAL REFERENCE TO

TAMILNADU

SYNOPSIS
Introduction

Once an organization is set up either for manufacturing activity or for any

other operations and services, it is must to meet out the standards of EPA rules
(Environment (Protection) Act, 1986). This act is considered as umbrella
legislation for the protection of the framed environment. As per the population
census in India, it accounts nearly 1.2 billion for about 17 % in the world
population. The rapid growth in the population provides a significant pressure in
the environmental aspects of the country amidst of the companies. It is imperative
to share the economic indicators with global economy context. This induces the
economic performance of the companies with environmental perspectives and
strategic perspectives. Especially the Indian companies have the social
responsibilities of improving the living standards by reducing the negative
environmental impacts. Some critics felt that the traditional environmental-
friendly social practices only can tackle this situation and it is obviously the micro
and small enterprises which are bound with this social compound. The
environmental aspects and practices are coined under the topic of green business
practices and its adoption in the micro and small enterprises.

Indian Economy

The Indian Economy has undergone the necessary structural adjustments

with a focus on inefficient and bloated sectors with a view of improving the
utilization of public finance. It is time to overcome the shortcomings in Industry
sector especially the serious impediments in the emergence of dynamic private

1
sector, but said the country is on track to remain the world‘s fastest-growing large
economy. The report 2015 of RBI is explained that there is a fastest decline in the
inflation made space for a reasonable cut in the nominal policy rate but at the same
time the adjusted rate is very tight to decline to the target. The development of an
economy in the form of its GDP is not the real sustainable development that too
for a country like India. The real growth lies in the growth of the natural resources
to support the livelihood of the country. Under this backdrop, the current study
attempts to analyze the relationships among the factors contribute for national
equity and inclusion along with the concepts of global sustenance.The IMF
predicts a robust growth rate of 7.6% for India‘s economy in 2016 and 2017.

Figure 1.1
Global Growth

Source: https://www.weforum.org/agenda/2016/10/india-economy-in-numbers

India‘s Consumer Confidence score in the April-June 2016 quarter declined

to 128 from the high of 134 in the January-March 2016 quarter. India has highest
global consumer confidence index in 2015, as per the global consumer confidence
index created by Nielsen.The following chart shows a pictorial representation of
the Indian economy in terms of GDP rate, Production of food grains, Industrial
growth index, service sector growth, Inflation rate pattern and Indian foreign trade
index.

2
 Figure 1.2
Indian Economy: A Snapshot

Source:http://iksa.in/gs3/economic-survey-2016-highlights-and-pdf-download/3972

The above data shows that there is a concrete and sustainable development
in the Indian economy. This development is needed to be focused with
environmental deve.lopment of our country. According to data from Thomson-
Reuters, total M&A deals involving Indian companies grew by 82 per cent to US$
27 billion during January to June 2016, which is the highest. The steps taken by
the government in recent times have shown positive results as India's gross
domestic product (GDP) at factor cost at constant and registered a growth rate of
7.3 per cent. The economic activities which witnessed significant growth were
‗financing, insurance, real estate and business services‘ at 11.5 per cent and ‗trade,
hotels, transport, communication services‘ at 10.7 per cent. According to a
Goldman Sachs September 2015 report, India is having a potentiality of growth at
an average of 8 per cent in the fiscal 2016 to 2020 empowered withy highest
growth in the sectors such as banking, technology adoption, urbanisation and other
infrastructural reforms. With the improvement in the economic scenario, India has
3
emerged as one of the strongest performers in terms of deals related to mergers
and acquisitions (M&A).

Economy and Environment

The early approach was a more reactionary approach. This is the resistant
adaptation (Fischer &Schot, 1993) of industries. Over the years the environmental
movement kept growing and crossed national boundaries. The environmental
movement matured significantly. The sustainability approach made managers to
look beyond the obvious and predominantly technical environmental actions.
Businesses exercised greater discretion in their environmental responses.

Figure 1.3
Industry's Environmental Design and Management Learning Curve

SOURCE: Adapted from Wever, 1995, and Ehrenfeld, 1995.

The above graphical representation shows clearly the paradigm shift in the
response of industries towards environmental focus. It is clear that only after
2000s the shift is seriously concerned by all the industries. The next era was
driven by industries where they realized that prevention was cheaper than control.
Formalized environmental management system set the standards and differentiated
the leaders and followers. The next stage saw design for the environment, life
4
cycle assessment and green positioning of companies. This stage of sustainability
era is where we are now. Today, the world is more or less in agreement that the
magnitude of environmental problems may snuff out life on this planet. There is
growing pressure from the public institutions, scientists, markets and NGOs
demanding that industries improve their environmental performance. In a way,
improvement in the environmental performance resulted in savings for companies.
Competitive pressures on cost of production increased and companies were driven
to produce more efficiently and use fewer raw materials. Reducing the use of
energy, water and minerals certainly helped profits. New and more efficient
technologies produced similar results. Recycling was used to the advantage for
reducing material usage leading to savings. While these actions helped businesses
in increasing their efficiencies, they certainly benefitted the environment.
Improvements in the environment were apparent in most industrialised countries
as stricter compliances and voluntary measures resulted in lower pollution levels.
Many large companies have come forward since then and willingly pursued
ambitious sustainability initiatives. These are the companies who have realized
that these actions could be a source of competitive advantage. Taking such
initiatives ahead, some companies have an environmental strategic management
process in place which benefits its competitiveness while achieving public good.
The imperative strategic choice improves the company performance towards
sustenance in the environment. The growing environmental risks in the form of
government actions, competitive orientations, public outrage, employee issues and
customers focus, are leading to the opportunity for the sustainability approach.

Need for the research

Specific estimates of MSMEs‘ environmental impact range from 60% to

70% (Calogirou et al. 2010; Hilary 2004) of all industrial pollution, demonstrating
that while each MSME‘s individual impact may be limited, collectively, the sector
has considerable potential for making cuts to meet government commitments on

5
carbon emissions and the use of energy. Although there are clearly some important
business and competitive advantages to be gained, the literature on environmental
management and green innovation shows that most MSMEs have been slow to
adopt environment-related improvements.A crucial factor in engaging MSMEs in
sustainability debate and practice will be the role of the owner-manager, bearing in
mind that most small businesses are both owned and managed by the same
individual. The next level of green business practices is lied on the involvement of
the owners and top level managers of the MSMEs to understand about the benefits
of green business practices and its impact on profit margins. Research has
demonstrated that for MSMEs, the owner-manager‘s personal motivations for
taking socially responsible initiatives are more important than for example,
marketing, strategic, or public relations approaches (jenkins 2004), in the name of
motivating the large scale enterprises.. Hence, initiatives that aim to increase the
interest and uptake of sustainability in MSMEs need to be able to engage owner-
managers directly with a thorough understanding of their motivations. Fortunately,
ACCA‘s research among the world‘s most promising high-growth MSMEs shows
that many high-impact entrepreneurs (47%) are motivated by the need to make a
difference in the world, and that this drastic change in the mindset of the
entrepreneurs will correlate the good environmental practice further down the line.
It‘s the high time to revive the functions of MSEs towards the sustainable green
business practices to show a massive impact positively in the environment.

Scope of the research

Sustainability is defined in different ways throughout industries (Jones,

Hiller, Comfort, & Eastwood, 2005). Marshal and Brown (2003)gave the most
acceptable definition of sustainability as ―the ability of current generations to meet
their needs without compromising theability of future generations to meet theirs.‖
Sustainability, which includes environmental qualityand preservation as well as
meeting the stress of emissions reductions, is rapidly becoming an important issue

6
for business and also for public policy (Wooley, T. D., 2010). The term
sustainability is considered in the form of green business practices in this research.
Organizations need to implement new strategies to reduce harmful environmental
impact of theiroutput (Lewis and Gretsakis, 2001; Sarkis, 1995, 2001). The reason
behind this is ―awareness of the consumers about possible environment problems
has forced businesses, government and every household to buy green products‖
(Shultz and Holbrook, 1999). The green business practices in Micro and Small
enterprises are explored in this research by considering the following main areas.

The enterprises considered are only organized Micro and Small

enterprises where the enterprises are able to be located with all the
business features

The enterprises are considered for the research only if they are located
in Tamilnadu state and not confined with any other region.

The research covers the attributes such as awareness, preference,

government legal support, technological impact, pushing and pulling
factors for green business practices .and the influence of thenine
parameters given by CII for Green Co. Award that are listed below:

 Energy Efficiency

 Water Conservation

 Renewable Energy

 GHG Emission Reduction

 Material Conservation, Recycling & Recyclables

 Waste Management

 Green Supply Chain

 Product stewardship

7
  Life cycle assessment

Limitations of the Research:

No research is escaped from the word of limitation. It is good to make the

limitations to be known by the researcher to avoid further more misperception.
The following are the limitations of the research identified by the researcher:

1. The inferences and conclusions are drawn for the organized MSEs
registered only in Tamilnadu state and not to be generalized for other states.

2. The green business practices of MSEs are analysed on the basis of

management perspective and not included the employees‘ and consumers‘
perspectives.

Implication of the problem

It is a boon to have a sustainable green business environment with a

strategy of waste to wealth. Greening the environment is considered as a best
opportunity to the environment to sustain itself by the way of getting everything
right and learning from failure. The sustainability is considered as an image issue
for micro and small enterprises to show their futuristic view about their natural
wealth and its safety. The sustainability is a turnkey concept for micro and small
business firms to have growth agenda as green giants with the factor of efficiency
in operations. The matter of greening is considered as an obsession for the
employees as they thought it is a new attempt for which they have to learn a lot.
This kind of approach makes the effects on the environment very least. But
resources can stretch only so far the new industrialists are identified this
opportunity for better performance. The important parameters are identified and
the level of sustainability of each and every aspect of the Indian society need to be
concerted and amendments are recommended in those parameters to improve the
green business practices of micro and small enterprises in Tamilnadu. Throughout

8
this study, the terms environment-friendly, eco-friendly, sustainable and green is
used interchangeably.

Research Question

It is a great challenge to conglomerate the business performance with the

social responsibility of business. The knowledge related to green business
practices are tested in the society through the sustainability level of the enterprises.
It is now realized as the green business practices are not considered as a challenge
but it is an opportunity to make use of it in the form of nine parameters given by
CII for green evaluation of an enterprise viz.,Energy Efficiency, Water
Conservation, Renewable Energy, GHG Emission Reduction, Material
Conservation, Recycling & Recyclables, Waste Management, Green Supply
Chain, Product stewardship and Life cycle assessment. It is a thought provoking
process that how the management of micro and small enterprises perceive these
green business practices. The research has been focused on the following
questions and based on these questions the questionnaire has been framed by the
researcher.

1. How far the micro and small enterprises are aware about the green business
practices?

2. What kind of impact the factors created in the environment in favour of

green business practices as pulling or pushing in its operations?

3. Whether technology plays a role in sustenance of business or not?

Objectives of the study

1. To know about awareness of Micro and Small enterprises towards green

business practices with special reference to Tamilnadu

2. To find out the preference of Micro and Small enterprises towards green
business practices with special reference to Tamilnadu

9
 3. To explore the attitude of Micro and Small enterprises towards the legal
support rendered by the government for green business practices

4. To explore the relationship between the demographic factors of Micro and

Small enterprises and their preference towards green business practices

5. To find out the most influencing parameter of green business practices in

Micro and small enterprises

6. To find out the impact of technology, micro and macro environmental

factors in green business practices in of Micro and Small enterprises

7. To find out the impact of benefits generated in green business practices and
the capital investment made in Micro and small enterprises

Hypothesis development

1. Ho - There is no significant difference between the mean scores of type

of the firmwith respect to the awareness towards the green business
practices in micro and small enterprises.

2. Ho -There is no significant difference between the mean scores of type

of firmwith respect to the preference towards the importance of green
business practices in micro and small enterprises.

3. Ho -There is no significant difference between the mean scores of type

of firmwith respect to the attitude towards the legal support rendered by
the government on green business practices in micro and small
enterprises.

4. Ho -There is no significant difference between the mean scores of type

of firmwith respect to the impact of technology on green business
practices in micro and small enterprises.

5. Ho -There is no significant difference between the mean scores of type

of firm with respect to the criticality of parameters towards the green
business practices in micro and small enterprises.

10
 6. Ho -There is no significant difference between the mean scores of type
of firmwith respect to the pushing factors towards the green business
practices in micro and small enterprises.

7. Ho -There is no significant difference between the mean scores of type

of firm with respect to the pulling factors towards the green business
practices in micro and small enterprises.

Research Methodology
The research methodology is exhibited through Research design, sample,
survey instrument and tools for analysis.

Research Design
The descriptive research design is suitable for this research since it analyzes
the present environment as it is without making any manipulation in the present
status. Descriptive research is research used to ―describe‖ a situation, subject,
behavior, or phenomenon. It is used to answer questions of who, what, when,
where, and how associated with a particular research question or problem.
Descriptive studies are often described as studies that are concerned with finding
out ―what is‖. It attempts to gather quantifiable information that can be used to
statistically analyze a target audience or a particular subject.

Sample
To test the hypothesis, the survey is conducted in the organized micro and
small enterprises in Tamilnadu with management point of view of the green
business practices in the organization. Totally 500 enterprises are considered for
data collection using stratified random sampling method with the criteria of 250
micro enterprises and 250 small enterprises. For having an insight of covering the
entire Tamilnadu state, the state is categorized into four regions on the basis of
geographical location. The northern region is segregated with the capital of
Tamilnadu, Chennai, the sourthern region is headed with Madurai city, the western

11
region is headed with Coimbatore and the eastern part is with Tirchy city. The
entire research is associated with Management point of view and hence each
company has been distributed with single questionnaire and it is responded by the
Top Management representative. The samples are distributed evenly in all the four
divisions and collected based upon stratified random sampling method. The
sample distribution is stated in Table 1.3.

Table 1.3
Sample size and its distribution among the regions in Tamilnadu

No. of samples
S.No. Region
Micro enterprises Small enterprises

1. Northern region 62 62

2. Southern region 63 63

3. Eastern region 62 62

4. Western region 63 63

Total 250 250

Source: Primary Data

The sample size comprises both Micro and Small enterprises separately and
equal concentration is given for both Micro and Small enterprises for sample
determination in the research.

Survey Instrument

With reference to the literature review and intensive study on green

business practices, a structured undisguised questionnaire has been developed
which comprising three parts in it. First part is conveying information about the
organization and its details. The second one is composed with organizational
attitude and perception and the last part is about the influence of critical

12
parameters on the green business practices in the organization. The Pilot study of
the questionnaire has been done by taking a sample of 10% from the sample size
of the research (500 respondents) by taking 25 micro enterprises and 25 small
enterprises and the questionnaire has been distributed with covering letter, the
respondents are asked to fill the questionnaire. The suggestions about the
questionnaire have been received from them and those suggestions are updated in
the questionnaire and finalized for further research. The Questionnaire is
distributed to 500enterprises in India and Stratified Random sampling method is
used to collect data. The primary data are collected through Mailed Questionnaire
method and through Enumerators.

Period of Study

The Field work for data collection has been carried by the researcher for the
period from June 2015 to December 2018.

Reliability Analysis - Internal consistency testing

The reliability of the factors are identified using internal consistency testing
in which the alpha value is ranges from 0.61 – 0.93. This reliability testing
indicate whether all the items included will come under same set or not, with
limited degree of variability.

Analysis Framework

The primary data collected from the Micro and Small enterprises are
analyzed based on the objectives of the research. Confirmatory Factor analysis,
One way ANOVA, Independent ‗t‘ test, Comparative Mean analysis, Garret
ranking method,percentage analysis, Multiple Regression analysis and karlpearson
correlation analysis are used in this research for analysis.

13
Structure and content of the thesis

The present study, ―Green Business practices in Micro and Small

enterprises with special reference to Tamilnadu‖ has been organized into seven
chapters.

The first chapter deals with the Introduction comprising Introduction,

Micro and Small enterprises,Green Business Practices, Significance of the Study,
Statement of the Problem, Objectives of the Study, Hypothesis, Research
Methodology, Need for the study, Scope of the study, Limitations and Structure
and content of the thesis..

The Second chapter explains the Review of Literature and it gives a

detailed description of Theories, Concepts, Models and Factors determining Green
Business practices in an organization.

The Third Chapter examines the theoretical background about the green
business, environmental issues, green company, need for green business practices,
green business strategy mix and certifications & audit.

The Fourth Chapter analyses the demographic factors of the companies,

factors influencing the green business practices, awareness towards the green
business practices in micro and small enterprises and also the preference towards
the importance of green business practices in micro and small enterprises.(Based
on Primary data)

The Fifth Chapter analyses the attitude towards the legal support rendered
by the government on green business practices in micro and small enterprises and
the impact of technology on green business practices in micro and small
enterprises.(Based on Primary data).

The Sixth Chapter estimates the criticality of parameters towards the green
business practices in micro and small enterprises along with the factors
14
influencing the Micro and Macro environment of micro and small enterprises
towards their green business practices.(Based on Primary data).

The Seventh chapter includes the Summation of research, Findings, Scope

for further Research, and Recommendations. The other relevant details about the
thesis that are not included in the main part of the thesis are furnished in the
appendices.

Conclusion

Green companies focus on the principles and practices that protect the
livelihood of our planet. They challenge themselves to bring the goals of social
and economic justice, environmental sustainability, as well as community health
and development, into all of the activities — from production to employee
relations and customer service. Green businesses ensure they don‘t use sweatshop
or child labor. The every industrial unit that works for the betterment of the
economy with healthy practices through green concepts and applications can serve
its corporate social responsibility. Green businesses ensure that they use the safest
ingredients, to keep their customers and clients and their families healthy. They
are concerned with the safety of the environment by maintaining clean energy and
efficiency, fair trade, healthy air, clean water, and more. And they reduce, reuse
and recycle, setting a good example. Along with ensuring their facilities aren‘t
polluting their local communities, many green businesses take steps to make the
places that they call home better. Green businesses often spring up in marginalized
communities—inner cities, rural and indigenous communities. Most of the
companies started thinking about it but they have to find the know-how to
implement their thoughts.

15