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Business Strategy and the Environment Bus. Strat. Env. 12, 26–35 (2003) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/bse.347 UK ENVIRONMENTAL POLICY AND THE SMALL FIRM: BROADENING THE FOCUS Andrea Revell* and Robert Rutherfoord Kingston University, UK The poor environmental performance of small and medium-sized enterprises (SMEs) in the UK has been attributed to a wide range of barriers, both internal and external to the firm. However, the debate has seldom considered the interplay of factors beyond ‘the firm’. In order for the debate to progress we emphasize the importance of situating the environmental practices of small firms within a context of national policy arrangements. A lack of institutional enfranchisement for SMEs in the UK is a key factor in understanding why environmental policies have yet to be successful in encouraging more environmentally proactive behaviour within this sector. Copyright 2003 John Wiley & Sons, Ltd and ERP Environment. Received 26 February 2002 Revised 31 July 2002 Accepted 3 September 2002 * Correspondence to: Andrea Revell, Small Business Research Centre, Kingston University, Kingston Hill, Kingston, Surrey KT2 7LB, UK. E-mail: [email protected] Copyright 2003 John Wiley & Sons, Ltd and ERP Environment. INTRODUCTION T he importance of small and medium- sized enterprises (SMEs) to the economy and the environment is now well estab- lished. The vast numbers of small firms mean that on aggregate they undoubtedly have a sig- nificant impact on ecological systems. The Mar- shall Report (1998), which originally endorsed proposals for a climate change levy, estimated that as much as 60% of carbon dioxide emis- sions from business result from the activities of SMEs. Most research in this area has, however, focused on large firms and their impact on the environment, whilst the impact of small firms continues to be an under-researched area. Much of the work conducted on SMEs and environmental issues has to date focused on describing the obstacles these firms face in adopting environmental best practice. Empir- ical studies have found a lack of engage- ment with environmental issues amongst owner–managers. This disengagement has been attributed to the following factors. (i) Business owners’ feelings of limited responsibility towards the environment, due to a belief that (a) the environmen- tal ‘footprint’ of small firms is negligi- ble (Hillary, 1995; Holland and Gibbon, 1997; Smith and Kemp, 1998; Rutherfoord and Spence, 1998) and (b) the government

UK environmental policy and the small firm: broadening the focus

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Business Strategy and the EnvironmentBus. Strat. Env. 12, 26–35 (2003)Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/bse.347

UK ENVIRONMENTAL POLICYAND THE SMALL FIRM:BROADENING THE FOCUS

Andrea Revell* and Robert Rutherfoord

Kingston University, UK

The poor environmental performance ofsmall and medium-sized enterprises(SMEs) in the UK has been attributed to awide range of barriers, both internal andexternal to the firm. However, the debatehas seldom considered the interplay offactors beyond ‘the firm’. In order for thedebate to progress we emphasize theimportance of situating the environmentalpractices of small firms within a context ofnational policy arrangements. A lack ofinstitutional enfranchisement for SMEs inthe UK is a key factor in understandingwhy environmental policies have yet to besuccessful in encouraging moreenvironmentally proactive behaviourwithin this sector. Copyright 2003 JohnWiley & Sons, Ltd and ERP Environment.

Received 26 February 2002Revised 31 July 2002Accepted 3 September 2002

* Correspondence to: Andrea Revell, Small Business ResearchCentre, Kingston University, Kingston Hill, Kingston, SurreyKT2 7LB, UK. E-mail: [email protected]

Copyright 2003 John Wiley & Sons, Ltd and ERP Environment.

INTRODUCTION

The importance of small and medium-sized enterprises (SMEs) to the economyand the environment is now well estab-

lished. The vast numbers of small firms meanthat on aggregate they undoubtedly have a sig-nificant impact on ecological systems. The Mar-shall Report (1998), which originally endorsedproposals for a climate change levy, estimatedthat as much as 60% of carbon dioxide emis-sions from business result from the activities ofSMEs. Most research in this area has, however,focused on large firms and their impact on theenvironment, whilst the impact of small firmscontinues to be an under-researched area.

Much of the work conducted on SMEs andenvironmental issues has to date focused ondescribing the obstacles these firms face inadopting environmental best practice. Empir-ical studies have found a lack of engage-ment with environmental issues amongstowner–managers. This disengagement hasbeen attributed to the following factors.

(i) Business owners’ feelings of limitedresponsibility towards the environment,due to a belief that (a) the environmen-tal ‘footprint’ of small firms is negligi-ble (Hillary, 1995; Holland and Gibbon,1997; Smith and Kemp, 1998; Rutherfoordand Spence, 1998) and (b) the government

UK ENVIRONMENTAL POLICY AND THE SMALL FIRM

should take the leading role in environ-mental management (Rutherfoord andSpence, 1998; Lloyds Bank/SBRT, 1999;Tilley, 2000; Ludevid Anglada, 2000).

(ii) Low levels of ‘eco-literacy’, a lack ofexpertise and understanding in tacklingenvironmental issues, resulting in reac-tive rather than proactive responses toenvironmental issues (Gerstenfeld andRoberts, 2000; Hutchinson and Hutchin-son, 1997).

(iii) A ‘shallow’ environmental ethic amongstowner–managers, who tend to favoureconomic interests over social or environ-mental considerations (Tilley, 2000).

(iv) A perception amongst SMEs that leg-islative compliance is costly (Petts et al.,1999), hence regulation is resisted due toits perceived impact on profits.

(v) Low levels of compliance amongst smallfirms due to a lack of awareness of exist-ing environmental regulation, combinedwith a lack of ability to interpret how leg-islation might affect them (Hillary, 1995;Gerstenfeld and Roberts, 2000; Hutchin-son and Chaston, 1994).

(vi) Resistance to voluntary initiatives thatpromote self-regulation due to fears of‘free riders’ and a lack of a ‘levelplaying field’ (Tilley, 2000; LudevidAnglada, 2000).

(vii) Low levels of uptake of environmentalmanagement systems due to a lack oftime, a lack of technical knowledge, alack of awareness of benefits, a nega-tive perception of bureaucracy, high costof implementation, resistance to changewithin the company culture and littleexternal pressure from stakeholders suchas customers and suppliers to adopt EMSs(Hillary, 2000, p. 140).

A persistent theme running through much ofthe existing literature is that small businesseslack the characteristics that would otherwiseenable them to engage effectively with the ‘sus-tainable development’ agenda. Clearly, there

are numerous obstacles that owner–managershave towards making environmental improve-ments – it could even be tempting to assumethat these barriers are somehow an intrinsicpart of small firm culture.

We argue that there are wider issues toconsider, however; governance structures andpolicy arrangements play an equally importantpart in influencing the environmental practicesof small firms. Yet little has been written aboutthe structural factors that influence small firmenvironmental practices. The environmentalperformance of small businesses cannot besolely attributed to characteristics inherentwithin them; it is also related to the wayin which societies influence and engage withbusiness – and the way in which business isincorporated into the environmental policyagenda. There is therefore a need to focus notjust on the internal world of owner–managersand their reasons for responding in a certainway towards environmental pressures but alsoon the contextual, structural factors that haveshaped their experience of reality.

While the characteristics of small busi-ness populations throughout the industrializedworld are often similar, different institutionalstructures linking business, the state and civilsociety are clearly evident across nations. Thesevarying social and political arrangements canhave quite different outcomes in relation tothe environmental behaviour of firms. Com-parative research can be particularly useful inhighlighting the influence of different nationalpolicy contexts on the environmental practicesof small firms. In the following sections weconsider the differing environmental policycontexts of the UK and the Netherlands to illus-trate how structural factors can crucially influ-ence the individual responses of small firmowner–managers to environmental pressures.

ENVIRONMENTAL POLICY ANDSMES IN THE NETHERLANDS

A comparative study on SMEs and environ-mental issues found that small firms in the

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UK and the Netherlands differed strongly intheir environmental performance and mostimportantly in their attitudes to environmen-tal issues (Rutherfoord and Spence, 1998;Spence et al., 2000; Rutherfoord et al., 2000).In contrast to their UK counterparts, Dutchowner–managers were actively engaged inenvironmental measures and emphasized theroles and responsibilities of individuals, indus-try and government in addressing environ-mental issues. Whilst this can be partly con-tributed to social attitudes, Rutherfoord andSpence (1998) argue that the consensual wayin which environmental policy has been con-structed and the way it has been enforced inthe Netherlands has played a crucial role.

At a macro level, Dutch SMEs have beenactively targeted both by legislation, licensingand voluntary initiatives. Firms have to obtainan environmental permit in order to trade, andthis legislative context fosters compliance asenvironmental action is seen as a legitimatebusiness cost for all. This legal frameworkis reinforced by a context characterized byshared social responsibility and a consensualstyle of governance in which co-operation anddialogue is fostered amongst trade associa-tions, local government, support providers andbusinesses (both large and small). Moreover,membership of trade associations is almost uni-versal (Rutherfoord et al., 2000).

Recent work by De Bruijn and Lulofs (2000)confirms this analysis, arguing that the ‘indi-rect, consensual, steering model’ in which pol-icy networks play a crucial role has beenlargely successful in implementing change inthe Netherlands. They explain that the cor-nerstone of Dutch environmental policy, theNational Environmental Policy Plan (NEPP),in 1989 set in motion plans for radical changeto reduce environmental impacts. This pol-icy framework took a thematic, ‘target group’approach to tackling environmental problems,whereby policy themes (e.g. climate change)were set ambitious targets (e.g. reduction ofcarbon dioxide emissions by 20–30%) andthen assigned specific target groups who were

charged with the responsibility for achiev-ing those targets (e.g. industry, transport,consumers). The target groups were heavilyinvolved in a consultative process, which cre-ated a context of consensual support for thepolicy strategy and reflected the contributionof the target sector to the solution. Critically,industry representatives such as trade associa-tions were heavily involved in the negotiationand implementation of these decisions (Glas-bergen and Driessen, 1994).

Dense policy networks were actively eng-aged in the policy process. The NEPP andits successors planned to implement policieswith the use of intermediary networks, whichincluded trade associations, industrial environ-mental agencies, local authorities, employeeorganizations and consulting firms. These net-works provided support and information tofacilitate the uptake of environmental man-agement strategies. They played a crucial rolein influencing industry and small firms tomake changes, and they supported proactiveresponses whilst repressing the behaviour oflaggards (De Bruijn and Lulofs, 2000).

The overall strategy for environmentalreform included an effective mix of voluntaryagreements backed up by a strong regulatoryand licensing system. Companies that failedto live up to the voluntary agreements weregiven ‘supplementary conditions’ on their per-mit to trade and were also subject to morestringent inspections, thus forcing ‘free riders’to address their ‘laggard’ status. The threatof direct legislative action provided a strongmotivator to achieve the targets agreed in thevoluntary agreements.

De Bruijn and Lulofs (2000) argue thatthis policy context had many positive out-comes. Networks were fortified and stake-holder partnerships nurtured, thus strengthen-ing the Dutch tradition of governance throughmanaged consensus. The policy mix enabledthe government to co-operate with proactivecompanies whilst maintaining strictness withlaggards and resulted in an improvement ofattitudes and behaviour within industry.

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ENVIRONMENTAL POLICY ANDSMES IN THE UK

The comparative study by Rutherfoord andSpence (1998) found that UK small firms, incontrast to Dutch SMEs, did not see environ-mental protection as a relevant business issuefor their firms. Cost was a major barrier tomore proactive environmental behaviour, withowner managers perceiving little financial ben-efit from environmental investments. Respon-sibility for the environment was ascribed tothe government, whilst individual efforts wereseen as more or less ineffectual in the faceof structural barriers. Rutherfoord and Spenceargue that the institutional context in the UK isa key reason for the low engagement of smallfirms. They contend that there is not yet a sub-stantial national structure in place which forcesthe environment on to the business agenda ofSMEs, and because of this it is very easy forUK owner–managers to ignore environmen-tal issues.

While the Dutch government has takena ‘target group’ approach and developedspecific strategies for engaging SMEs, thechoice of policy instruments in the UK hastended to ignore the special case of smallfirms. In the White Paper A Better Qualityof Life (DETR, 1999), the UK governmentadopted a sectoral rather than size approachto improving the environmental performanceof industry, encouraging the development ofvoluntary ‘sectoral sustainability strategies’ viaorganizations that arguably tend to representthe interests of large firms (such as manytrade associations). The climate change levyis also in the process of being implemented,which may have a variable and in some casesdiscriminatory impact on small firms.

UK policy-makers have thus encouragedvoluntary, sectoral initiatives from industry toaddress environmental problems. This empha-sis on voluntary action has meant that theenvironment has not been forced onto the busi-ness agenda of small firms, whilst the sectoral

emphasis has precluded SMEs from being tar-geted specifically, arguably encouraging fur-ther resistance from this sector.

The fact that there has been no attemptto foster the direct involvement of smallfirms in such environmental initiatives is sur-prising given the numerous obstacles thatowner–managers have towards adopting envi-ronmental best practice and their apparentdistrust of self-regulation. The typically lowengagement of small firms with environmentalagendas makes this sector distinct from largefirms. Although big business has been widelycriticized for appropriating environmental dis-courses and presenting them in terms thatfavour its own interests (Eden, 1997), largefirms have at least integrated environmentalmanagement to some degree within their cor-porate strategies. The same cannot be said forsmall firms.

The few government initiatives that have tar-geted small firms specifically in the UK havetended to focus on the provision of informa-tion and advice through the environmentalbest practice programmes. At a more local levelthere are a number of fragmented waste min-imization and environment–business clubsoperating in the UK, which work to encourageefficiency gains.

There is little evidence of a formal strategy tospecifically build upon these small beginnings.It appears that dealing with the laggardSME sector is seen by policy-makers as toodifficult a task. The onus has thus been putalmost entirely on the shoulders of largefirms, whom it is hoped will start a processof ‘greening the supply chain’ by exertingpressure on small firms to improve theirenvironmental performance. Yet studies haveshown that, as yet, there exists little supplychain pressure and even less collaborationamongst stakeholders within the supply chainto encourage environmentally sound practicesamongst SMEs (Hillary, 2000; Wycherly, 1999;Merrit, 1998).

So why is it that UK policy-makers appearto be so weary of targeting environmental

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strategies at small firms? What makes thissector so difficult to reach? We suggest thata key reason for the disengaged and laggardlyUK SME lies in the structure of environmentalpolicy networks that have emerged as a resultof processes of ‘political modernization’ withinthe UK polity.

Before we develop this argument further, itis necessary to give the discussion a more the-oretical foundation by summarizing the con-tribution of ecological modernization theoryto an understanding of processes of ‘politicalmodernization’ and emerging environmentalpolicy arrangements.

ECOLOGICAL MODERNIZATION,POLITICAL MODERNIZATION ANDENVIRONMENTAL POLICY

Ecological modernization (EM) theory hasemerged as an influential theory explainingsocial and environmental change within indus-trialized nations. Although EM theory hasbeen pieced together from many sources – andtherefore different authors have used the con-cept in different ways – the major contributorsto the theory have found broad agreement onsome key themes. A central focus of the the-ory is the decoupling of economic growth fromenvironmental degradation; empirical studiesare cited that suggest that from the mid-1990sonwards there has been a delinking of mate-rial from economic flows in many industrialeconomies (Gouldson and Murphy, 1997).

Mol (1997) asserts that five key social andinstitutional changes are at the core of suchphysical transformations.

(i) Markets in industrialized nations arerestructuring around ecological principlesin response to market signals, encouragedby innovators, entrepreneurs and othereconomic agents.

(ii) New ideologies are emerging in business,public and political arenas that viewenvironmental interests as increasinglyharmonious with economic interests.

(iii) Science and technology are judged notonly for contributing to environmentalproblems but for their role in curingand preventing them. They are henceseen as central institutions for overcomingenvironmental problems.

(iv) De-radicalized social movements are be-coming increasingly involved in pol-icy prescriptions regarding environmen-tal reform, instead of being relegated tothe periphery of institutional decision-making.

(v) A process of ‘political modernization’ isperceived to be taking place within indus-trialized nation states as centralized, com-mand and control governance structuresare replaced with more decentralized, par-ticipatory and ‘steering’ styles of gover-nance. Blowers (1998) argues that notionsof consensus and negotiation are keyto processes of political modernization,with environmental policy increasinglyseen as a partnership, especially betweenindustry and the state. Stakeholder par-ticipation and negotiated decision-makingare key characteristics of policy networksthat adopt an ecological modernizationapproach (Leroy, 1999).

Mol and Sonnenfeld (2000) contend that somescholars (such as Weale, 1992; Mol, 1995; Spaar-garen, 1997) use these premises as analyticaltools to explore current processes of environ-mental reform and social change in industri-alized nations. Others (such as Christoff, 1996;Dryzek 1997) either propound or dispute theidea that EM is not only useful analyticallybut has normative merit in outlining desirablepaths for future political action. The distinctionbetween EM as a theory of social change andas a political programme is an important one,particularly as it is common in the literaturefor its analytical and prescriptive dimensionsto be confused (Murphy, 2000).

As a political programme for change,proponents of EM approaches conceive ofenvironmental degradation as a challenge

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for socio-technical reform rather than as aninevitable outcome of capitalism or industri-alization, and therefore oppose radical trans-formations of modern institutions. In thisview, capitalism can accommodate environ-mental problems by increasing the ‘envi-ronmental efficiency’ of the economy. Thiscan be done by substituting polluting andnon-renewable materials with environmentallybenign and renewable ones, recycling andminimizing waste and encouraging resourceand energy efficiency (Gouldson and Murphy,1997). Ecological modernization is perceivedto be a potential source of future growth bystimulating innovation, providing new mar-ket opportunities for eco-products and cleantechnology and lowering clean-up costs. Therole of the state is prescribed as ‘enabling’rather than controlling, engendering environ-mental reform within industry via marketmechanisms (where possible) and participa-tive, consensual governance structures ratherthan command and control policies. Processesof political modernization are thus seen as crit-ical in catalysing the ecological modernizationof industry.

A third strand to the ecological modern-ization debate is the role of cultural politicsand discourse. This strand has been developedmainly by Hajer (1995, 1996), who examines‘story-lines’ and discourse coalitions to under-stand the process by which notions of eco-logical modernization are socially constructed.Leroy (1999) develops a critical analysis ofpolitical modernization by arguing that nego-tiated policy environments do not take placein a politically neutral space but are carriedout within policy networks of stakeholders thatconsist of dominant traditions and discourses.He asserts that it is important to look at thepolicy arrangements underlying political (andecological) modernization in order to explorethe assumptions and priorities implicit withinthem, and to assess whether these collaborativenetworks encourage new power relations ormerely reinforce old ones (see also Tattenhoveet al., 2000).

PARTICIPATIVE GOVERNANCE ANDTHE PROBLEM WITH UK POLICYNETWORKS

In line with notions of political moderniza-tion in EM theory, the role of stakeholderdialogue and partnership in policy formula-tion has been increasingly emphasized in theUK. The deregulation and privatization emerg-ing from the Thatcherite revolution during the1980s has engendered a climate of co-operationbetween government and industry and hasallowed business a privileged access to govern-ment policy-making (Blowers, 1998). Despitea highly centralized bureaucracy in the UK,decentralized decision-making occurs in largeareas of public administration via the domi-nance of QUANGOs (quasi-autonomous non-governmental organizations), which are madeup of business people, local government, aca-demics, voluntary and community groups.

As Leroy (1999) argues, a key issue iswhether these policy networks create newcollaborative structures, which give a voiceto previously marginalized interest groups,or whether they are merely reproducing andreinforcing hegemonic power relations.

We argue the latter: that the environmen-tal policy context in the UK is reinforcingexisting power relations and dominant dis-courses rather than encouraging new ones. Incontrast to other European countries such asthe Netherlands, the UK has not created aninfrastructure that facilitates negotiated dia-logue between all interest groups. As Blow-ers asserts,

[While] power is concentrated amongstpolitical and bureaucratic elites, accessto the power structure is restricted anddecision-making is hidden. Among thegroups enjoying privileged access are busi-ness elites. Although other interests suchas environmental groups gain admittancefrom time to time. . . their access is inter-mittent and specific rather than privilegedand routine (Blowers, 1998, p. 240).

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We argue that it is not just environmentalgroups that remain on the periphery of theseelite networks. Instead of being targeted askey stakeholders, SMEs have been marginal-ized and often omitted from policy dialoguebetween government and industry. Unlike thecase in the Netherlands, there are few for-malized networks of intermediary bodies inthe UK that represent small firms at the gov-ernment level. The business lobby, ostensiblypropounding ‘the view of industry’, has littlereal input from the small firm sector due tolow levels of SME membership in trade associ-ations and local chambers of commerce. Suchintermediary bodies are dominated by largefirms and, arguably, it is their interests that areprimarily put forward in stakeholder dialoguesat the government level.

We argue that it is this lack of institutionalenfranchisement that is the key to understand-ing the reasons behind the seemingly disen-gaged and laggardly UK SME. While smallfirms have so little democratic representation,it is not surprising that the sector has a lowengagement with voluntary agreements madeby big business and policy-makers, which havelittle perceived benefit for individual smallfirms. Proponents of ecological modernizationas a political programme might well argue thatif the UK government is to successfully encour-age the ecological restructuring of industry,‘political modernization’ must be furthered byincorporating the small firm sector within pro-cesses of negotiated decision-making to a muchgreater degree.

Recent research evidence supports this ideathat stakeholder collaboration is an importantfactor in engaging SMEs with environmentaldiscourses. A study of Danish SMEs by Peder-sen (2000) highlights the importance of effec-tive dialogue between small firms and localauthorities as the latter can support the formerwith a wide range of environmental exper-tise. Biondi et al. (1998) assert that co-operationis the most significant factor in encouragingsmall firms to consider eco-management andauditing schemes (EMAS), because it enables

firms to learn from each other and it buildsrelationships with stakeholders. Fanshawe(2000) suggests that greater co-collaborationbetween small firms and stakeholders such asgovernment, regulators, support agencies andtrade associations could help SMEs to under-stand their environmental responsibilities bycreating a framework for more co-ordinatedinformation exchange.

However, is the UK institutional contextcompatible with negotiated policy environ-ments that involve small firms?

THE ROLE OF TRADEASSOCIATIONS: THE MISSING LINK?

UK policy-makers have focused on trade asso-ciations as the primary agent for develop-ing and implementing voluntary ‘sectoral sus-tainability strategies’. Research evidence hasshown that trade associations are a poten-tially effective way to reach small firms(Boleat, 1996; North et al., 1997). This hascertainly been shown to be the case inthe Netherlands. In the UK, trade associ-ations appear to have some potential asproviders of environmental advice and sup-port. Smith and Kemp (1998) reported thatnearly a third of UK SME respondents feltthat trade associations could persuade themto change their environmental practices. Hunt(2000) has also argued that trade associa-tions are a particularly effective way of com-municating environmental messages to SMEsbecause they are able to offer sector spe-cific information.

However, little can come of attempts bytrade associations to reach SMEs whilstmembership levels within this sector arestill low. If trade associations are to bethe primary tool for government environ-mental initiatives targeting industry, then itis important that these intermediary bod-ies are representative of both large andsmall firms.

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CONCLUSIONS

The relative success of Dutch environmentalpolicy in the late 1990s suggests that theproblems faced by those seeking to incorporateUK small firms into the environmental agendamay not be as intractable as it first appears.Scope for change may be greater than is oftenenvisaged if we are correct in our centralassertion–that the environmental practices ofsmall firm owners are constrained more by alack of consensual governance in the UK thanby anything intrinsic to small business itself.

We suggest that a ‘target group’ approachlike that used in the Netherlands might be anappropriate way of involving a wider rangeof interest groups in UK environmental pol-icy discourses. Whilst a sectoral approach isimportant in understanding the ways in whichstructures and dynamics of different indus-tries affect their response to environmentalpolicy, targeting small firms cross-sectorallyto address environmental problems is vital iftheir common barriers towards environmentalmanagement are to be overcome. If UK smallfirms could be as meaningfully engaged in aconsultative process aimed at stimulating envi-ronmental management as they have been inthe Netherlands, this might create a contextof consensual support for environmental pol-icy strategies and reflect the contribution ofthe SME sector to the solution, thus engender-ing proactive rather than reactive responses toenvironmental problems.

It is vital that UK policy-makers place moreemphasis on maximizing the engagement ofSMEs in initiatives such as the sectoral sustain-ability strategies, rather than passively hopingfor supply chain pressure to catalyse theirinvolvement. It is thus crucial that intermedi-ary networks are strengthened so that they areable to reach and engage SMEs in the policyprocess. Trade associations could potentiallybe key tools in reaching the small firm sector inorder to implement environmental initiatives.Compulsory membership of trade associationsmay be a way of kick-starting the creation of

a formal institutional structure that includesSMEs as well as large firms in the stakeholdernetworks that negotiate environmental policy.This kind of partnership is vital if the UK polityis to stimulate the kind of ‘ecological modern-ization’ of industry that has occurred in theNetherlands.

The extent to which it is appropriate forUK policy-makers to rely primarily on volun-tary agreements and supply chain pressure toreach SMEs without the backing of a robustlegislative system also needs careful analysis.In the Netherlands, covenants with industryorganizations have been made, but impor-tantly policy-makers have not relied solelyon voluntary agreements. The success of theDutch environmental policy can also be con-tributed to a robust legislative, licencing andinspection system, which has encouraged highlevels of compliance (see Spence et al., 2000).Instead of relying so heavily on voluntary sec-toral strategies, a policy environment in theUK that included a more targeted legislativeand inspection system might have greater suc-cess in encouraging environmentally proactivebehaviour from SMEs.

We highlight the need for further research toexplore relations between the state and busi-ness, and particularly how the agendas of var-ious interest groups within the business com-munity (including small firms) are constructedwithin this relationship. Further research isalso needed to explore how a more represen-tative institutional structure might be achievedin the UK: one that actively engages with theinterests of small firms and other marginal-ized parties. Issues of political modernization,enfranchisement, participation and corporatehegemony are key to providing a fuller under-standing of the macro-context in which policydecisions are ultimately made. It is imperativethat we consider these wider power structuresbecause they may explain why UK small firmsat the individual level have come to resist envi-ronmental discourses. Only by looking at thebroader picture might we then come to someunderstanding of how the barriers that SMEs

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have towards embracing environmental goalsmight be constructively removed.

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BIOGRAPHY

Andrea Revell (corresponding author) is atthe Small Business Research Centre, KingstonUniversity, Kingston Hill, Kingston, SurreyKT2 7LB, UK.Tel.: 01883 342 254E-mail: [email protected]

Robert Rutherfoord is also at the Small Busi-ness Research Centre, Kingston University.

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