Developing an environmental sustainability index (EnvSI) for small and medium-sized enterprises (SMEs) in the United States: The case of West Texas

Small and Medium-sized Enterprises (SMEs) are the backbone of most world economies. The large number of SMEs poses environmental problems as many are not regulated and do not have an environmental management system. They are frequently not proactive and sometimes are not aware of their environmental impact. SMEs face various problems in implementing sustainable practices and being proactive. The common barriers to implementing environmentally sustainable practices are finance, lack of expertise, and lack of information. On the other hand, SMEs have found motivation to implement sustainable practices through legislation, cost reduction, customer demand, and company image. Removal of barriers and enhancing motivation will lead to better and more widespread sustainable practices by SMEs. This research is a case study conducted with manufacturing SMEs located in the West Texas region of the United States. Based on a thorough literature review, an environmental sustainability five-force model was developed, analogous to Porter’s five forces model of industrial competition. Using this theoretical basis, an Environmental Sustainability Index (EnvSI) was developed. A survey of over 800 SMEs was conducted to apply this model. Results were analyzed using factor analysis and regression analysis. As a result, a revised Environmental Sustainability Index (EnvSI) was calculated, in which all factors were valid, reliable, and explained over 70% of the variance each. This revised EnvSI represents a significant tool to explain environmentally sustainable performance. A follow-on open-ended survey provided further understanding and insight into the perceptions that SME owners have with respect to sustainability and green products. This indicates the need to continue the work on an Environmental Sustainability Perception Index (ESPI).