The Impact of Firm Characteristics on Adoption of Environmental Management Practices among Russian SMEs

The main goal of the study is to estimate the impact that firm characteristics have on the comprehensiveness of adoption of environmental management practices among Russian SMEs. Such firm characteristics as size, age, innovation propensity, and foreign ownership are considered, and their effect on the degree to which SMEs are involved in environmental management practices is measured. The study uses secondary data collected through the EBRD-EIB-World Bank Group Enterprise Survey in the Russian Federation in 2019. The data are analysed with descriptive and bivariate statistics, as well as ordinal regression analysis to test which firm characteristics are significant predictors of engagement in environmental management practices (EMPs). The results indicate that one third of Russian SMEs have adopted least one environmental practice, with the most widespread practices being the ones that do not require substantial investment and provide clear cost benefits. The regression analysis further demonstrates that larger firms are more likely to adopt EMPs, which, according to resource-based view, is explained primarily by their ability to allocate slack financial and human resources towards environmental management. SMEs with larger share of foreign ownership were also found to be more likely to engage in environmental management. Additionally, the results showed a profound effect of innovation on adoption of EMPs. It was found that SMEs that have engaged in a product or process innovation in the last three years were more likely to adopt EMPs. At the same time, the results demonstrated that the largest effect on adoption of EMPs was exerted by legislative and customer pressures, which suggests that stakeholder theory might have more explanatory power over resource-based view, when it comes to SMEs’ environmental engagement. The results have important implication for policy and mangers.