Corporate Social Responsiveness and Environmental Performance of Small and Medium Enterprises : An Empirical Study

This research examined the existence of environmental accounting and environmental management practices within private limited manufacturing companies in Malaysia, and its impact on corporate environmental performance. The study examined some relevant quality concepts that include environmental leadership, environmental process management, top management commitment, employee involvement, reward and recognition, environmental quality management programs, and pollution prevention technologies, and their relationship towards corporate environmental performance. Besides that, the study also examined environmental auditing and environmental costs and reporting. The research objectives are: (1) To identify whether corporate environmental performance is influenced by firm size. (2) To determine the relationship between environmental quality cost management of a firm and the corporate environmental performance. (3) To investigate the relationship between the firms' environmental management elements and corporate environmental performance. (4) To investigate the extent of corporate social responsiveness that is, environmental quality cost management and environmental management elements influencing corporate environmental performance. This research has advanced the survey research strategy as an alternative research strategy, within the field of environmental management. Questionnaires were sent to 700 private limited companies listed in the FMM 2002 directory, and the response rate was 28 percent. These research findings indicate that: (1) the companies response to environmental agenda by practicing environmental accounting, such as incurred the activities that involved external failure costs (realized). The companies also realized the importance of environmental cost reporting, and the effect on environmental performance. (2) The companies had environmental management elements in their everyday operations to undertake the problems of environment, for example top management commitment, environmental process management, reward and recognition, environmental auditing, environmental leadership, environmental quality management program, and pollution prevention technologies. However, employee involvement was not a concern to environmental performance improvement. (3) Size has no relationship or has no effect on the improvement of environmental performance. Variable environmental consciousness too, has inverse relationship to corporate environmental performance. (4) The examination of the above three indicates that there is a high prevalence by the companies to operate within the environmental accounting and environmental management dimensions. What is also significant is that although the companies show relatively higher degree of emphasis towards corporate social responsiveness, the companies preferred the 'end-of-pipe' approach in solving environmental issues. The companies are not interested in incurring activities that involved either pollution prevention or the detection level. They seem preferred to be more 'reactive' rather than 'proactive' companies. Hence, the main contributions of this research are: (1) the importance and usefulness of the survey research strategy in investigating environmental accounting and environmental management practices within the manufacturers; (2) the significance of responding to environmental agenda by having environmental management elements in the everyday operations; (3) the significance of responding to environmental agenda by incurring costs of environmental activities in the everyday operations; (4) although not many companies are certified with the formal IS0 14001 standards, this thesis has confirmed the existence of informal environmental management within the private limited manufacturing companies in Malaysia; and (5) the environmental law should be stricter since the companies oblige to the rules and regulations (on paper only).