Why Do SMEs Go Green? An Analysis of Wine Firms in South Africa

Abstract

Studies on why small and medium enterprises (SMEs) engage in pro-environmental behavior suggest that managers’ environmental responsibility plays a relatively greater role than competitiveness and legitimacy-seeking. These categories of drivers are mostly considered independent of each other. Using survey data and comparative case studies of wine firms in South Africa, this study finds that managers’ environmental responsibility is indeed the key driver in a context where state regulation hardly plays any role in regulating dispersed, rural firms. However, especially proactive firms are also characterized by expectations of competitiveness gains. The authors thus emphasize the role of institutional context and potential interaction effects between these drivers in explaining the reasons why SMEs engage in pro-environmental behavior in developing countries.

Keywords

environmental responsiveness small and medium enterprises environmental responsibility legitimacy competitiveness wine South Africa

An important question facing business and society scholars is why companies do or do not adopt social and environmental policies and practices. This topic has profound policy implications and lends itself well to analytical and theoretically informed investigation. Bansal and Roth (2000) developed a model of ecological responsiveness that has provided an important platform for subsequent efforts to explain why companies “go green.” Indeed, their model has been influential well beyond the specific domain of corporate environmentalism and has been fruitful also in analyses of corporate social responsibility (CSR), more broadly (Aguinis & Glavas, 2012). Bansal and Roth identified three categories of firm motivations—competitiveness, legitimation, and ecological responsibility—and describe how these categories are related to firms’ context and particular types of initiatives within the firms.

Bansal and Roth (2000), like many others (Carroll, 1999; Hart, 1995; Hart & Dowell, 2011; Hoffman, 1999; Matten & Crane, 2005; McWilliams & Siegel, 2001; Orlitzky, Siegel, & Waldman, 2011; Shrivastava & Hart, 1995), focus on large corporations, as is implicit in the labels corporate social and environmental responsibility. Yet understanding why and how small and medium enterprises (SMEs) respond to environmental and social concerns is vital. SMEs play an important role in economic development and employment creation (Baumann-Pauly, Wickert, Spence, & Scherer, 2013; Raynard & Forstater, 2002; Wennekers, Van Stel, Thurik, & Reynolds, 2005). Furthermore, while not as much in the spotlight of non-governmental organization (NGO) and media attention as large corporations (Spar, 1998), SMEs are increasingly expected to respond to social and environmental concerns associated with their activities (Spence, 2007; Weissbrodt & Kruger, 2003), in developed and developing countries (Luken & Stares, 2005; Raynard & Forstater, 2002).

In this context, theories and arguments developed on the basis of analyses of large corporations cannot necessarily be applied to SMEs. As noted by Mayson (2011, p. 697), “SMEs are not simply small large firms.” At the very least, theories originally premised on large firms require adaptation that takes into account SMEs’ “unique characteristics, contexts, and logics” (Mayson, 2011, p. 697). This point is also emphasized with specific reference to CSR by Murillo and Lozano (2006), Spence (2007), Morsing and Perrini (2009), and Baumann-Pauly et al. (2013), among others (see also introductory article in this edition).

An analysis of SMEs’ environmental responsiveness should also account for the institutional context. An institutional and contextual analysis of corporate strategy and in particular CSR and environmental responsiveness is becoming increasingly prominent (Campbell, 2007; Hoffman, 1999, 2001; Husted & Allen, 2006; Jennings & Zandbergen, 1995; Matten & Moon, 2008). Bansal and Roth (2000), in fact, assert that the investigation of institutional context is an important avenue for research that builds from their ecological responsiveness model. This view has been brought to bear with particular emphasis on the institutional conditions influencing CSR in developing or emerging economies (Jamali & Neville, 2011). However, the link between institutional context and firm’s environmental responsiveness has also been investigated primarily with regard to large corporations (Campbell, 2007; Hoffman, 1999; Jennings & Zandbergen, 1995). This emphasis is despite research that suggests that local context is particularly important in influencing pro-environmental behavior in SMEs (Williams & Schaefer, 2013) and family-owned businesses (Berrone, Cruz, Gomez-Mejia, & Larraza-Kintana, 2010). It is therefore important to consider how the institutional context influences SMEs’ environmental responsiveness, especially in the relatively under-researched context of developing and emerging economies (Jamali, Zanhour, & Keshishian, 2009).

In this article, the authors seek to respond to these research opportunities by studying SMEs in an emerging economy context, specifically wine makers in South Africa. With this theoretical ambition and empirical focus on an emerging economy context, we also seek to complement previous studies on the wine makers’ environmental practices in developed economies (Cordano, Marshall, & Silverman, 2010; Marshall, Akoorie, Hamann, & Sinha, 2010). The wine industry is a fruitful sector for such an analysis, because despite significant consolidation there remain a large number of small producers (Hussaina, Cholettea, & Castaldia, 2008). Among them there is much diversity with regard to size, marketing strategies, export orientation, and other attributes (Marshall et al., 2010). Furthermore, while the wine industry has not traditionally been associated with environmental problems, there is growing pressure on the industry to respond to issues such as the use of pesticides, water, and energy (Christ & Burritt, 2013).

Using survey data and comparative case studies of South African wine firms, the authors consider the degree to which the three categories of drivers identified by Bansal and Roth (2000) apply among SMEs. We find that managers’ environmental responsibility is the primary driver, based also on managers’ significant influence over firm behavior and organizational culture due to the small size and informal management practices in these firms. State regulation plays a very minor role and at first sight competitiveness drivers are also insignificant. However, our case studies suggest that the most proactive firms are characterized not only by managers’ sense of environmental stewardship, but also perceived opportunities for competitiveness gains. In the context of literature considering Bansal and Roth’s (2000) categories mostly independent of each other, we thus emphasize the need to consider potential interaction effects between drivers of environmental responsiveness.

The next section reviews the literature on drivers of ecological responsiveness, taking into account the literature on large companies, SMEs, and the wine industry in particular. The third section is a brief description of environmental initiatives in the South African wine industry. The fourth section is an overview of the authors’ methods, followed by a description of our findings in both the survey data and the comparative case studies. In the sixth section, we provide a discussion of our combined analysis and the last section offers conclusions.

Theoretical Backdrop

The question of why companies adopt environmental practices has received much attention (Aragón-Correa, 1998; Aragon-Correa & Sharma, 2003; Bansal, 2005; Bansal & Roth, 2000; Christmann, 2000; Esty & Winston, 2009; Hart, 1995; Hart & Dowell, 2011; Hoffman, 1999; Jennings & Zandbergen, 1995; Porter & van der Linde, 1995; Russo & Fouts, 1997; Sharma, 2000; Sharma & Vredenburg, 1998; Shrivastava, 1995; Starik & Rands, 1995). One of the most influential contributions has been Bansal and Roth (2000). They provide a useful point of departure for our analysis also because of its comprehensive scope, covering dimensions that are considered elsewhere often in isolation of each other.

The focus of Bansal and Roth’s (2000) study is on large companies. Their framework has also been applied to SMEs (Williams & Schaefer, 2013), though empirical support for its relevance or adaptability to the SME context is limited. How does it apply to the global wine industry, which is dominated, in terms of producer numbers, by SMEs, many of which are family-owned? The broader question is whether smaller firms’ environmental practices are motivated by different pressures or drivers from those affecting larger businesses (Baumann-Pauly et al., 2013). A related question pertains to whether family-ownership makes a difference (Berrone et al., 2010)—pertinently most SMEs (especially in the South African wine industry) are family-owned, and most family-owned businesses are SMEs.

Firm size and ownership are key variables considered in some of the classics of the organizational theory literature (Blau, 1970; O. Williamson, 1967). More recently, these key variables feature prominently again in studies focusing on firms’ environmental responsiveness (Baumann-Pauly et al., 2013; Berrone et al., 2010). Baumann-Pauly and colleagues (2013) argue that contrary to the impressions gained from surveys of CSR, SMEs “are not necessarily less advanced in implementing CSR practices than [multinational corporations].” Whereas large companies have more resources available for communicating their CSR policies and practices, SMEs benefit from a more coherent identity and informal communication among their members, and thus lower coordination costs in the implementation of CSR practices.

Similarly, Berrone et al. (2010) highlight the role of identity in family-owned firms:

Family owners will be more willing to invest in prime environmental actions, and accept the threat this poses to their financial well-being, when resisting institutional pressures may lead to loss of family status, a tarnished identity, poor reputation, shame directed at family members, and the like. (p. 89)

Family-owned firms, according to Berrone and colleagues, are also more likely to engage in pro-environmental behavior because the owners are more likely to have a longer-term orientation and commitment to the firm and its reputation, and they can apply more direct influence and discretion. Similar arguments for SMEs’ proclivity to engage in environmental or social behaviors are offered by E.-M. Hamann, Habisch, and Pechlaner (2009) and Jenkins (2004).

On the other hand, a number of authors have highlighted the constraints to SMEs’ proactively engaging in environmental and social responsiveness, emphasizing in particular their dependence on particular income streams and limited financial, human, and other resources (E.-M. Hamann et al., 2009; Spence, 2007), as well as a relatively smaller sensitivity to reputation concerns (D. Williamson, Lynch-Wood, & Ramsay, 2006). In this context of seemingly opposing tendencies identified in the literature, we suggest that a disaggregated consideration of the drivers and obstacles for SMEs’ environmental responsiveness may be helpful. To provide a foundation for this analysis, we consider in the remainder of this section each of Bansal and Roth’s (2000) three categories of motivations, and how they might apply to SMEs and to wineries.

Bansal and Roth (2000) propose three overarching motivations for ecological responsiveness—legitimation, competiveness, and environmental responsibility—and relate these motivations to particular drivers and likely firm initiatives (see Table 1 for an overview). The legitimation category is largely framed in terms of institutional theory, with specific emphasis on Scott’s (1995) regulatory pillar. That is, firms face significant drivers for environmental responsiveness due to the growing array of government laws and regulations in areas such as water and air pollution. In addition, such drivers are also related to private regulation, such as rules and guidelines specified by retailers or by industry associations, as well as more intangible social norms. Bansal and Roth (2000) argue that legitimation is associated in particular with initiatives related to regulatory compliance, networking with environmental groups, and impression management. If firms are solely motivated by a need for legitimation and fail to identify other motives (Bansal & Roth, 2000; Porter & van der Linde, 1995), there would be little incentive for them to incur the additional costs associated with moving beyond the minimum legislative requirements.

Table 1.

Overview of Bansal and Roth’s (2000) Categories of Motives for Firms’ Environmental Responsiveness (First Three Columns) and Studies Focused on SMEs (Fourth Column).

Category of motives	Specific drivers	Associated company activities	Studies focused on SMEs
Competitiveness	Cost savings due to reduced energy and material inputs and wasteImproved market access due to green consumer expectations	Process intensificationGreen marketingGreen products	Awareness of process intensification opportunities and willingness to make corresponding investments are generally low (Hillary, 2004; D. Williamson, Lynch-Wood, & Ramsay, 2006)
			SMEs are exposed to relatively low environmental expectations from customers (D. Williamson et al., 2006), even in the wine industry (Marshall, Akoorie, Hamann, & Sinha, 2010; Marshall, Cordano, & Silverman, 2005)

Legitimacy	Government laws and regulationPrivate regulation (e.g., retailers’ standards)Social norms	Regulatory complianceNetworking with environmental groupsImpression management	Contradictory findings regarding regulatory compliance: identified as particularly important by D. Williamson et al. (2006) but less significant due to constraints to regulatory enforcement by Wilson, Williams, and Kemp (2011)
Legitimacy			Contradictory findings regarding compliance with social norms and reputation: identified as particularly important in family-owned firms by Berrone, Cruz, Gomez-Mejia, and Larraza-Kintana (2010), but less significant by D. Williamson et al. (2006)
Responsibility	Managers’ personal conviction and sense of stewardship	Donations to environmental causesUnpublicized initiativesLife cycle analysis	Managers’ personal values identified as particularly important in SMEs, also because of owner-managers’ greater control and discretion in such firms (Marshall et al., 2005; Williams & Schaefer, 2013; see also Berrone et al., 2010); managers’ values not identified as an important motive by D. Williamson et al. (2006)

Note. SMEs = small and medium enterprises.

The way in which regulatory institutions influence SMEs may well be different to the way in which they pertain to larger corporations. In particular, Wilson, Williams, and Kemp (2011) find that regulatory enforcement is likely to be lower and thus regulation is a less effective motivation for SMEs. On the other hand, D. Williamson and colleagues (2006) argue on the basis of their study on manufacturing SMEs that regulation is the primary motivation for pro-environmental behavior because regulation induces compliance. Regulation is necessary as, according to their analysis, SME owner-managers face few “business case” motivations related to their reputation and face supply-chain pressures that militate against environmental behaviors beyond compliance. D. Williamson and colleagues’ (2006) finding that reputation and social norms play relatively small roles in SMEs thus contradicts Berrone and colleagues’ (2010) emphasis on the role of identity and reputation in family-owned firms.

Bansal and Roth’s (2000) second category is competiveness, which relates to “the potential for ecological responsiveness to improve long-term profitability” (p. 724). They make reference in this regard to the resource-based view of the firm (Barney, 1991) and in particular Hart’s (1995) natural-resource-based view of the firm (see also Hart & Dowell, 2011). In this vein, Porter (1980, 1996), Porter and van der Linde (1995), and Hart (1995) emphasize in particular the opportunities for product differentiation and thus enhanced market share, as well as cost efficiencies related to reduced expenditures on energy and material inputs and waste disposal. Building on these previous arguments, Bansal and Roth (2000) suggest that competiveness is associated with process intensification, green marketing, and green products.

Studies suggest that the pertinence of these motives and opportunities to SMEs is limited. Hillary (2004) finds that customers exert little pressure on SMEs with regard to environmental concerns, and SME managers have low levels of interest or knowledge about the possible economic benefits of implementing environmental management systems. D. Williamson et al. (2006) find that environmental initiatives beyond compliance are only likely when demanded by customers or when fairly obvious and direct cost reductions are attainable.

Bansal and Roth’s (2000) third category, environmental responsibility, is based on their finding that “[f]irms acted out of a sense of obligation, responsibility, or philanthropy rather than out of self-interest” (p. 728). They argue that this driver gives rise to initiatives including donations to environmental causes, unpublicized initiatives, and life cycle analysis. Environmental responsibility is associated directly with managers’ attitudes, which in turn are likely to be influenced by managers’ prior education and ethical orientation, as well as the firm’s organizational culture (Marshall et al., 2010). Environmentally responsive firms devote time and resources to developing a “corporate environmental ethic” (Henriques & Sadorsky, 1999, p. 97), with empirical support from the U.S. metal-finishing industry (Flannery & May, 2000) and the Canadian oil and gas industry (Sharma, 2000). Environmental training and education are likely to be important because the situations faced by managers rarely offer an unambiguous ethical choice, but rather present a range of possible risks and trade-offs between various external stakeholders (Flannery & May, 2000).

Empirical work focusing on SMEs and the links between managerial attitudes and organizational culture has been sparser, though Kearins, Collins, & Tregidga (2010) illustrate the profound impact that managerial attitudes to nature can have in the SME context. Williams and Schaefer (2013) find in their study of SMEs that all three of Bansal and Roth’s (2000) categories of motivations played a role, but environmental responsibility was particularly important: “The role of personal values, and the need for a fit between personal and professional values, was essential in underpinning respondents’ engagement with climate change and encouraging a sense of personal responsibility” (p. 183). The environmental responsibility category has been identified as being crucial also in a number of studies focusing on wineries, most of which prioritize internal factors, such as managers’ attitudes and organizational culture, relative to external ones, such as customer demand or regulatory pressure (Marshall et al., 2010; Marshall, Cordano, & Silverman, 2005; Silverman, Marshall, & Cordano, 2005). Investigating “proactive environmentalism” within the U.S. wine industry, Marshall et al. (2005, p. 106) found that regulatory compliance is a motive, but personal attitudes of winery managers play a more “critical role.”

In conclusion, recent research suggests that SMEs’ small size and the fact that they are likely family-owned are likely to contribute to especially significant commitments to pro-environmental behavior. Yet other studies have argued that SMEs face a number of constraints in this regard and also have less motivation associated with their reputation. There seems to be some agreement in the literature that competitiveness drivers play a relatively lesser role in SMEs. But there is disagreement in the prevalence of the other two categories identified by Bansal and Roth (2000). Some highlight the role of managers’ personal values and responsiveness to social norms and expectations, whereas others argue that state regulation is the primary motive.

Environmental Initiatives in the South African Wine Industry

There are about 3,800 grape-farmers—mostly mixed farming SMEs—and just over 500 private wine cellars in South Africa (South African Waste Information System [SAWIS], 2013), most of which are in the Western Cape province in the south-west of the country. Historically, the first wine was made in the mid-17th century and wine was the primary export of the colony in the early 19th century. For most of the 20th century, the industry was dominated by a small number of cooperatives, statutorily regulating the industry by setting minimum prices, controlling production, “surplus removal,” and monopolizing exports. The colonial and apartheid political systems also made a significant mark on the production and labor practices in the wine industry (Ewert & du Toit, 2005).

Since the political transition and first democratic elections in 1994, the industry has had to respond to market changes with a shift away from its traditional structure dominated by cooperatives and its emphasis on the production of bulk wine. Deregulation of the industry and an increase in competition has led to some degree of concentration and integration, as well as significant diversification based on an increase in the number of independent, often smaller winemakers. There has also been a shift to higher quality wines and more sophisticated marketing and branding strategies, motivated in part by the need to capitalize on the significant growth in South African exports following the end of sanctions (Cusmano, Morrison, & Rabellotti, 2010).¹

A key South African initiative emphasizing the importance of sound environmental practices is the Integrated Production of Wine (IPW) scheme, a technical production guideline that was introduced in 1998 (Integrated Production of Wine [IPW], 2006). IPW enjoys industry-wide support with about three quarters of South African wineries as members and about 95% of national wine production taking place according to its principles (interview, IPW director). It consists of a set of guidelines encompassing 15 aspects of viticulture and 13 for cellars. The emphasis is on an integrated approach to the value chain from soil preparation to recycling of packaging materials, and much like other environmental management systems it emphasizes continuous improvement. A scoring process determines compliance to the schemes’ guidelines, and certification is awarded provided a minimum total score is reached. Each producer must fill in self-evaluation forms yearly, and external audits are also conducted on a random sample of producers each year. The initiative is privately funded by members; primary producers (farmers) pay a fixed cost whereas cellar costs are determined according to a per-tonnage sliding scale (IPW, 2006). It may be interpreted as a private collective initiative to compensate for the state’s limited capacity to enforce progressive environmental legislation (R. Hamann, Booth, & O’Riordan, 2000). It also exceeds regulatory requirements specifically with wine-related process and affect standards, such as a system of chemicals coding.

In addition to the standard environmental issues associated with wine production, such as water consumption and pollution, South African producers have a unique local environmental situation to manage: Ninety-five percent of the country’s wine lands are situated in the Cape Floral Kingdom, the smallest and most diverse floral kingdom in the world (Biodiversity & Wine Initiative, n.d.). In response, the Biodiversity and Wine Initiative was formed in 2004 with the aim of preserving as much endangered local flora as possible. Its members adhere to the IPW guidelines and furthermore commit to preserving a significant proportion of natural vegetation on their farms. The initiative has achieved some notable success, with more than 126,000 hectares of natural land having been preserved in its first 4 years (Biodiversity & Wine Initiative, n.d.). The IPW scheme and the Biodiversity and Wine Initiative have formed an alliance with the industry’s official marketing body, suggesting that industry stakeholders identify a key role for environmental issues in the industry’s future.

In addition to these country-specific initiatives, international environmental initiatives have also had an impact, though to a much lesser extent. These initiatives include in particular ISO14001 environmental management system certification and organic certification. ISO14001 was introduced in 1996. No wineries had implemented it in 1999 (Knowles & Hill, 2001) and even in 2013 there are only a handful of companies that are certified.² In line with Marshall and colleagues’(2010) expectations, these include primarily the largest wine companies or estates. More prominent from a marketing point of view has been organic certification, which involves strict requirements on using as little fertilizers and pesticides as possible, among other things. No organic certification exists in South Africa, so foreign certification is sought to gain international market access. The most significant is the European organic standard, to which 15 South African wine producers were certified in 2010 (V. Sannier, personal communication, 2 October 2010 [Sannier conducted her Master’s research on environmental certification systems in the South African wine industry]).

Method

This study involved two analyses: A survey of a sample of 500 wine firms with 55 respondents, and a subsequent comparative case study analysis of 7 wine firms to allow for a more detailed and contextualized investigation.

In the first component, the authors generated data in a survey conducted among managers with operational decision-making responsibilities of 500 wineries, including general managers, winery managers, and company presidents. There were 55 responses (11% response rate). These data were used to measure independent variables related to the motives for pro-environmental behavior and dependent variables associated with pro-environmental behavior, along with several control variables. We validated the scales used to measure the independent and dependent variables using exploratory factor analyses of the survey items. Finally, we conducted ordinary least squares regression analysis. On average, sample wineries employed 21 people, produced approximately 52,000 cases of wine per year, and had been in existence for 40 years.

The authors relied on previous research on U.S. wine producers to generate items to measure “managerial attitudes,” “legitimacy-seeking,” and “competitiveness” drivers of environmental responsiveness. We used a 10-item scale developed by Cordano, Marshall, and Silverman (2010), shown in the Appendix. To measure environmental responsiveness, we relied on a 9-item scale developed by Marshall and colleagues (2010) to measure the extent to which wineries deployed practices that conserved natural resources (“conservation”), monitored environmental performance (“monitoring”), and recycled waste (“recycling”). Each item used a 7-point Likert-type scale which ranged from 1 (strongly disagree) to 7 (strongly agree). Higher scores on each item imply stronger motivations to deploy environmentally responsible practices, or greater degrees of environmental responsiveness. (Items 8 and 9 were reverse-coded as they assess motivations to avoid organic farming.) To calculate the measures from the survey responses, we averaged the Likert-type scores of the items associated with each construct. As control variables, we included winery size (number of employees) and export orientation (percentage of production), based on findings by Marshall and colleagues (2010).³

Two separate Exploratory Factor Analyses (EFA) with varimax rotation assessed the validity of the measures of the drivers of environmental responsiveness and resultant environmental responsiveness, respectively. The analysis of the drivers of environmental responsiveness indicated that Items 1 to 10 reflected three distinct constructs with eigenvalues of greater than 1.0, with significant factor loadings (p < .05) ranging from 0.42 to 0.83. In addition, the scales for each construct produced Cronbach’s alpha scores of 0.69 or greater, indicating that they were generally reliable. Table 2 contains the factor solution obtained from this analysis. The analysis of the measures of environmental responsiveness indicated that Items 11 to 19 reflected three distinct constructs with eigenvalues of greater than 1.0, with significant factor loadings (p < .05) ranging from 0.34 to 0.81. In addition, the scales for each construct produced Cronbach’s alpha scores of 0.72 or greater, indicating that they were generally reliable. Table 3 contains the factor solution obtained from this analysis.

Table 2.

Factors Solution of the Drivers of South African Wineries’ Commitment to Environmental Responsibility.

Items	Managerial attitudes (eigenvalue = 1.97)	Legitimacy-seeking (eigenvalue = 1.42)	Organic competitiveness (eigenvalue = 1.37)
1. Personal obligation to minimize environmental harm	0.83
2. Personal obligation to minimize pollution	0.82
3. Personal obligation to exceed environmental regulations	0.68
4. Need to comply with environmental regulations		0.75
5. Desire to limit growth of environmental regulations		0.60
6. Environmental initiatives lead to less regulatory oversight		0.42
7. Our desire to maintain a reputable company image		0.53
8. Organic viticulture is more work than it is worth (reverse)			0.66
9. Organic viticulture is too labor-intensive (reverse)			0.71
10. Organic viticulture leads to increased consumer demand			0.53

Table 3.

Factors Solution of the Environmental Responsiveness of South African Wineries.

Items	Natural resource conservation (eigenvalue = 1.94)	Monitoring environmental performance (eigenvalue = 1.67)	Recycling (eigenvalue = 1.42)
11. Success in implementing initiatives to reduce energy use.	0.83
12. Success in implementing initiatives to reduce water use.	0.82
13. Success in implementing initiatives to solid waste.	0.68
14. Success in measuring and monitoring water use.		0.75
15. Success in measuring and monitoring energy use for process cooling.		0.60
16. Success in measuring and monitoring energy use for heating, ventilation and air conditioning facilities.		0.42
17. Success in recycling polyethylene.			0.66
18. Success in recycling cardboard packaging			0.71
19. Success in recycling pallets			0.53

The second research component involved comparative case studies of purposefully sampled wineries (Eisenhardt, 1989; Eisenhardt & Graebner, 2007). The selected wineries exhibited some variation in the degree to which they proactively implemented diverse environmental initiatives—this variation will be discussed in the findings below. They also displayed some variation in terms of age, size, export orientation, and geographic location. These case study characteristics are outlined in Table 4. All the case study wineries showed some level of environmental responsiveness, as indicated by a review of companies’ websites and preliminary discussions with industry association representatives. This website review was to ensure that there would be sufficient interest and engagement in the in-depth interviews. The implication is that this second research component focuses attention on what might underlie differentiation between wineries that have made some environmental commitments and those that are particularly committed and innovative.

Table 4.

Overview of Case Study Farms’ Characteristics.

Case study winery	Size (thousands of cases produced annually)	Age (years since first bottling)	Export orientation (%)	Wine growing region
A	<10	20	35	Durbanville
B	>100	30	40	Stellenbosch
C	30-50	20	65	Stellenbosch
D	30-50	>200	70	Stellenbosch
E	10-20	13	60	Franschhoek
F	<10	28	60	Franschhoek
G	10-20	8	25	Cape Peninsula

Data collection was principally based on semi-structured interviews with key personnel at each estate. Due to the relatively small size of the respondents’ operations, the interviewees often performed multiple functions, which meant that they had a good overall understanding of the various practices being followed on their estates. The research also made use of publicly available information, for example producer websites and trade magazines. In addition, to gain an industry perspective, elite interviews—interviews conducted with significant or notable participants (Holloway, 1997)—were conducted with senior representatives of the IPW initiative, the Biodiversity and Wine Initiative, and the national wine marketing association. An overview of the interviewees is presented in Table 5.

Table 5.

Overview of Interviews.

Respondent	Number of interviews	Participant position
A	2	Estate owner, winemaker
B	1	Director/viticulturalist
C	1	Director/viticulturalist
D	1	Winemaker
E	1	Farm manager/winemaker
F	1	Owner/winemaker/viticulturalist
G	1	Winemaker
The Biodiversity & Wine Initiative	2	Extension officer
IPW	1	Director
Wines of South Africa	1	CEO

Note. IPW = Integrated Production of Wine.

The interviews were guided by a protocol that commenced with broad questions, to initially allow respondents much scope to respond with their own emphases, followed by more specific questions to probe themes that might not have been raised by the respondent, but which were identified in the literature review. The protocol broadly covered the three categories of drivers identified by Bansal and Roth (2000), as well as the role of the South African and international environmental initiatives mentioned in the previous section. Interviews were conducted face-to-face, were between 60 and 90 min long, and were recorded. The interview data were analyzed through a coding process that sought to make use of both the respondents’ and researchers’ “voices” (Gioia, Corley, & Hamilton, 2013). It identified the emphases of the interviewees, as well as responses or combinations of themes that align with the categories identified by Bansal and Roth (2000) and discussed above.

Findings

The Quantitative Analysis

Table 6 contains the correlations among the variables used in the ordinary least squares analysis. Table 7 contains the results of that analysis. In each of the three models, where natural resource conservation, monitoring environmental performance, and recycling were the respective dependent variables, only managerial attitudes was a consistent predictor of better environmental performance. More specifically, it was positively and significantly related to efforts at natural resource conservation (b = 0.39, p < .01), monitoring environmental performance (b = 0.48, p < .01), and recycling (b = 0.32, p < .10). Legitimacy-seeking and competitiveness motivations, on the other hand, did not appear to drive improvements in the three measures of environmental responsiveness.

Table 6.

Correlations Between Variables in the Ordinary Least Squares Regression Model.

Variable	1	2	3	4	5	6	7	8
1. Conservation practices	1
2. Monitoring practices	.43*	1
3. Recycling practices	.38*	.34*	1
4. Attitudes	.44*	.31*	.14	1
5. Legitimacy	−.02	.12	−.01	.04	1
6. Competitiveness	−.12	.05	.03	−.36*	.14	1
7. Employees	−.21	.04	.21	−.34*	.15	.24	1
8. Export orientation	−.27*	−.08	.04	−.25	−.02	.02	.18	1

Table 7.

Ordinary Least Squares Regressions Results of Drivers of Environmental Responsiveness.

Variable	Natural resource conservation	Monitoring environmental performance	Recycling
Managerial attitudes	0.39**	0.48**	0.32^†
Legitimacy-seeking	−0.07	0.10	−0.15
Competitiveness	0.07	0.23	0.14
Size (employees)	0.00	0.01	0.02*
Export orientation	−0.01	0.00	0.00
Intercept	3.45*	0.46	3.07
F test	2.29*	1.44	1.88^†
R ²	.26	.15	.19

Note. n = 55.

†

p < .10. *p < .05. **p < .01. ***p < .001.

The Qualitative Analysis

Table 8 categorizes the case study firms in terms of their environmental responsiveness. As noted, all of the case studies are characterized by some level of responsiveness, but some stand out in terms of the proactive and innovative initiatives they implemented. Three categories are identified: The first includes just one winery that excels in terms of the breadth and depth of its environmental initiatives, and it was also identified as such by two other interviewees; the second includes three firms that are also very proactive, but do not excel as much as the category “1” company; the third category includes three firms that have some environmental initiatives and ambitions, but emphasize constraints in implementing far-reaching changes.

Table 8.

Categories and Instances of Case Study Firms’ Environmental Responsiveness.

Case study winery	Category ranking^a	Instances of proactive pro-environmental behavior	Self-assessment (and assessment by others where available)
A	3	Minimizes spraying in vineyards and limited use of chemicals in wineryEnvironmental staff trainingMember of IPW	Self-identifies as passionate about environmental issues but constrained by small size


B	1	No insecticides used in the past 10 years	Self-identifies as a passionate leader on environmental issues
		Introduction and maintenance of pecking ducks for natural pest control	Identified by other winemakers (interviewees) as a leading company and as an inspiration
		Implementation of a large-scale greening project, involving the planting of more than 70,000 indigenous trees
		Proactive water conservation program
		Extensive recycling program
		Implementation of solar energy generation to cover substantial proportion of total energy needs
		Environmental staff training
		Member of IPW and BWI
C	2	Organic certification and related strict program to minimize the use of pesticides and fertilizers	Self-identifies as a leader in environmental issues, with specific emphasis on organic production
		Member of IPW and BWI	Identified by other winemakers (interviewees) as a leader specifically with regard to organic production
D	3	Limited use of chemicalsEnvironmental staff trainingMember of IPW and BWI	Self-identifies as taking environmental issues seriously but within constraints of business practice
E	2	Limits insecticide use “as far as possible”Energy-saving effortsUse of lighter wine bottlesMember of IPW and BWI	Self-identifies as an innovative leader in environmental issuesIdentified by other winemakers (interviewees) as proactive and innovative



F	3	Minimizes spraying in vineyards and limited use of chemicals in wineryEnvironmental staff trainingWaste management programs	Self-identifies as passionate about environmental issues but constrained by small size


G	2	Minimizes spraying in vineyards and use of chemicals in wineryParticipates in a local wildlife conservation programMember of BWI	Self-identifies as being engaged especially in environmental conservation

Note. IPW = Integrated Production of Wine; BWI = Biodiversity and Wine Initiative

Categories: 1 = excels in proactive environmental initiatives and is recognized by peers; 2 = implements a range of proactive environmental behaviors beyond compliance; 3 = exhibits some proactive behavior, but identifies constraints.

Table 9 provides an overview of interviewees’ responses and document analysis findings with regard to how each of the case study firms related to the three categories of environmental responsiveness identified by Bansal and Roth (2000). Table 10 summarizes these findings by indicating the prevalence of the respective drivers identified by the case study interviewees. Two ticks indicate that this category of motives was emphatically highlighted by the interviewee; one tick represents a positive mention, but less emphatic. A cross represents the absence of any mention or a mild denial, whereas two crosses indicate an emphatic denial. In most cells of this table there is only one sign, which shows that this assessment cuts across dimensions within the category, that is, Case A involved a strongly negative assessment of the role of both marketing and cost-saving opportunities in the competitiveness category, whereas Case B offered emphatic support for both. Where there was some divergence between two dimensions, these are noted separately; for instance, Case G identified opportunities for cost savings, but not in marketing.

Table 9.

Overview of Findings, with Illustrative Quotes, on Case Study Firms’ Motives for Environmental Responsiveness.

Case study winery	Category ranking*	Competitiveness	Legitimacy-seeking	Environmental responsibility
A	3	No identification of marketing opportunities: “I don’t see [environmental responsiveness] as a marketing opportunity.”On product quality: “The issue about producing a better product is that you have got to think about all the elements of good stewardship.”No identification of cost savings: “The first thing that goes out of the window when you run out of cash is the eco-friendliness.”	Government regulation not seen as playing a role: “The department [of agriculture] doesn’t have the resources to [monitor producers’ environmental compliance].”Important role for the IPW scheme: “I see it as absolutely the minimum that is required of us.”	Strong sense of stewardship: “This land must be as good, if not better, when I leave as when I got here.”


B	1	Product differentiation has allowed desired retail business.Opportunities for cost savings prioritize investment: “Sustainability means that you should be able to produce for less . . . The payback on [environmental technology] is often unbelievably quick.”	Government regulation not seen as playing a positive role: “my feeling is that [the local municipality] is normally obstructionist.”Important role for the IPW scheme: “IPW is definitely moving [the industry] in the direction we should be going.”	Strong environmental ethic: “If we want to do something we ask ourselves the question, ‘What’s the right thing to do here?’”

C	2	Organic seen as an opportunity for differentiation, but not as important as price: “I don’t think if you put a wine in a bottle and it’s organic, it will [necessarily] sell.”	Government regulations not recognized as playing a role.Biodiversity and Wine Initiative seen as playing a limited role: “It’s just an add-on.”	Personal commitment to organic, but this is downplayed relative to commercial concerns.
		Emphasizes initial costs and risks: “In the beginning [organic] is expensive, but it gets cheaper the longer you do it . . . [but] you can lose your whole crop.”
D	3	Product differentiation is seen as a possibility, but “not a huge driver.”Potential costs savings related to “health of the vineyards” are identified but not realized.	Government regulations not recognized as playing a role.IPW seen as important: “Most of the [guidelines] are common sense; there are one or two items which are a little bit more difficult to comply with, but we can see the value of it so we’re happy to comply.”	Personal stewardship: “I would do it purely for environmental reasons, even if there was absolutely no commercial reason.”

E	2	Product differentiation along sustainability lines seen as a possibility at an industry level, but not for individual firms: “I think for our global South African wine industry, yes, it can mean something; but for individual small firms, not so much.”No potential cost savings identified.	Government regulations not recognized as playing a role.IPW seen as a recognized norm: “Whether we’re a member of IPW, or not a member, I’ll still carry on using those practices.”Education and information sharing among local winemakers’ association recognized.	Environmental responsibility identified as important: “We’re doing it because we feel it’s the right thing to do, not necessarily to sell more wine.”


F	3	Product differentiation not identified: “I’m not convinced that most people buy sustainably.”Costs savings seen as a possibility but not as important.	Government regulations not recognized as playing a role.Not a member of IPW, but does experience some peer-pressure, especially in local winemakers’ association.	Environmental responsibility identified as playing a role: “This is a world-wide need.”

G	2	Product differentiation not identified: “An IPW or BWI sticker will have . . . almost zero impact on the sales of wine.”	Government regulations not recognized as playing a role.Biodiversity of Wine Initiative identified as playing a role: “It creates awareness. It just makes you think a little bit, and as soon as you make someone think they’ll hopefully act on it.”	Environmental responsibility identified as playing a role, but framed by pragmatism
		Costs savings identified as possible

Table 10.

Summary of Case Study Findings with Regard to Relative Emphasis on Firms’ Motives for Environmental Responsiveness.

Case study winery	Category ranking*	Competitiveness	Legitimacy-seeking	Environmental responsibility
A	3	××	Government: ××	✓✓
			Private: ✓	✓✓
B	1	✓✓	Government: ××	✓✓
			Private: ✓	✓✓
C	2	✓	Government: ××	✓
			Private: ×	✓
D	3	×	Government: ××	✓
			Private: ✓	✓
E	2	×	Government: ××	✓✓
			Private: ✓	✓✓
F	3	×	Government: ××	✓
			Private: ×	✓
G	2	Marketing: ××	Government: ××	✓
		Cost savings: ✓	Private: ✓	✓

The summary in Table 10 shows that all of the case study firms were characterized by owners and/or managers that expressed personal beliefs and attitudes in support of proactive environmental behaviors. Interviewees demonstrated a clear appreciation of and concern for the impact that their farming activities had on their land and the local environment. In some respondents, a particularly strong sense of environmental stewardship and high levels of environmental awareness and knowledge were discernible. For instance, respondent B was able to provide detailed descriptions of the various environmental issues facing his operations’ viticultural and oenological practices, and he stated that he had “always been environmentally aware” as a person and that “[adopting environmental practices] is the right thing to do.” He also emphasized the corresponding need for managers to educate themselves on environmental concerns: “Anyone who hasn’t read what’s happening environmentally, and what we need to do, and isn’t taking steps to reduce their effect on the environment . . . deserves what they get.”

Interviewees also suggested that as managers they have a significant direct influence on “how things are done around here” (Interviewee D), and that this influence on organizational culture was more important than explicit policies. This direct influence diminishes as the organization grows in size, with Interviewee B being the only respondent pointing to a need for environmental management systems. Respondents also linked the notion of environmental stewardship to a long-term orientation, which was perhaps best captured by Interviewee A’s view that “[t]his land must be as good, if not better, when I leave as when I got here.” Environmental stewardship was also associated specifically with the practice and outcome of wine making: “A lot of what we do in the wine industry is driven by the fact that we try and produce a better product—the issue about producing a better product is that you have got to think about all the elements of good stewardship” (Interviewee A).

That all of the case study firms engaged in some pro-environmental behavior and that the other categories of motives (competitiveness and legitimacy-seeking) were either absent or strongly denied in a number of cases (specifically Cases A, D, E, and F) suggests that indeed managers’ sense of environmental stewardship has a strong influence on firms’ environmental responsiveness. This argument is also congruent with the findings of the survey data.

There is also much consistency in interviewees’ responses regarding legitimacy-seeking. There was a remarkable agreement among interviewees that government regulation plays no meaningful role in motivating pro-environmental behavior. In some cases (as in B), government regulation was even identified as a negative influence, in that it restricted pro-environmental initiatives through bureaucratic requirements. With regard to private regulation, there was also a surprising absence of a role ascribed to environmental standards imposed by retailers.

However, most interviewees (except C & F) highlighted the benefits they identified with the IPW scheme. It was seen as providing an important set of guidelines that were recognized as “good practice” notwithstanding whether a winery was a member or not. As noted by Interviewee E, “Whether we’re a member of IPW, or not a member, I’ll still carry on using those practices.” It was also identified as an important mechanism for the dissemination of knowledge about pro-environmental behavior. Nevertheless, it was described mostly as a facilitative factor, rather than a necessary or sufficient one. One of the firms is not a member and still engages in pro-environmental behavior (F), and another downplayed its role and has significant environmental programs (C). Furthermore, it is unlikely that it plays a decisive role in motivating strongly proactive environmental behaviors, over and above a basic level of environmental diligence. Interviewees A and C thus argued, respectively, “I see [IPW] as absolutely the minimum that is required of us,” and “it’s just an add-on.”

The category of motives in which there was the most interesting variation is the competitiveness category. This variation is most directly aligned with the variation in companies’ level of pro-environmental behavior. A distinctive feature of the most proactive and innovative wine firm (B) is that it identified and realized opportunities for both pro-environmental marketing and cost savings. A prominent example was the installation of a relatively large-scale solar energy generation facility onsite. Interviewee B noted that some of these investments had been feasible only because of the firm’s relatively large size, which allowed for the bankability of the solar energy project, for example.

Two of the three Category “2” firms also identified competitiveness opportunities, with Case C highlighting longer-term cost savings associated with improved soil fertility in organic vineyards and Case G identifying the need to reduce water and energy costs. Firm C also recognized marketing opportunities, with its decision to go for organic certification motivated at least in part by the need for product differentiation: “you must be different from the rest.” One of the Category “2” firms does not fit this pattern: Firm E, however, is a special case because it is owned by a rich person who identifies environmental issues as being of personal importance, but who explained that he does not have as stringent pressures to generate profits as most other firms.

All of the Category “3” cases (A, D, & F) are characterized by the absence of competitiveness-related motives. So, even though these interviewees expressed strong personal convictions on environmental issues, they did not implement as far-reaching measures as the other firms. In some cases, interviewees explicitly noted that their inability to make environmental initiatives at least cost-neutral in the short- to medium-term severely constrained them in implementing what they wanted to do. This inability is especially so in the particularly small wine firms (A & F). For instance, Interviewee A argued that as a small firm in the context of difficult market conditions, “The first thing that goes out of the window when you run out of cash is the eco-friendliness.” Interviewee D noted that he would like to implement more comprehensive pro-environmental growing practices, which would have long-run cost benefits, but he was constrained in doing so due to the short-term costs. Over and above cost constraints, these interviewees also emphasized the lack of consumer demand for wine with environmental credentials, especially in the wake of the 2008 financial crisis. Interviewee G suggested that “at this stage in the economy I think everyone is going on price.” (Even the interviewee from the national wine marketing association argued, “In the short term, consumers have given up on environmentalism.”)

In combination, the picture that emerges from the survey data and the case studies is that managers’ sense of environmental responsibility is indeed a key motive for wineries’ pro-environmental behavior. Seen in isolation, the other two categories—competitiveness and legitimacy-seeking—play a relatively small role. However, the case studies suggest that these categories need to be seen in combination to better explain variations in firms’ environmental responsiveness. What influences companies to go beyond adopting a diligent approach to environmental issues and toward more proactive and innovative efforts? The case study analysis suggests that managers’ environmental proclivities are important but by themselves may not be enough. Managers also need to recognize potential competitiveness gains from such proactive and innovative pro-environmental initiatives. For some environmental initiatives at least, such opportunities are likely to be more prevalent in larger wineries and in more munificent economic conditions.

Discussion

The survey data and case studies confirm that managers’ environmental responsibility is a vital driver for wineries’ environmental responsiveness. This confirmation adds further support to the findings of previous studies focused on wine firms (Marshall et al., 2005; Williams & Schaefer, 2013). Our interviews underscored some of the reasons why Baumann-Pauly et al. (2013) and Berrone et al. (2010) argue that SMEs and family-owned firms, respectively, are more environmentally responsive. Winery managers noted that they were able to translate their personal environmental proclivities into organizational practices because of the high degree of direct control they have on operations and their influence on the organizational culture in small, informally managed organizations. Because of the inherently long-term nature of investments in vineyards and the importance of the natural environment in a wine’s “terroir” and possible links to product quality (Gabzdylova, Raffensperger, & Castka, 2009; Jackson & Lombard, 1993; Van Leeuwen & Seguin, 2006), our study also suggests that environmental stewardship might be particularly prevalent among winery managers and it might give rise to especially significant motives for corresponding firm behavior.

The survey data and case studies also show that legitimacy-seeking plays only a limited role in motivating wineries’ environmental responsiveness. State regulation is particularly absent as a driver. Although South Africa has relatively comprehensive and progressive environmental legislation, the state’s enforcement capacity is often limited at the local level, as confirmed also by our interviewees. The state’s limited enforcement capacity is likely to be particularly pertinent for wine companies, given that these SMEs are small and dispersed in mostly rural areas, some distance from urban areas and the state enforcement agencies’ offices. Wineries’ rural location also limits the likely role of NGO activism and residents’ complaints. Although enhancing the state’s enforcement capacity remains an important policy imperative, it is unlikely to improve significantly in the near or medium term (see also Koelble & Siddle, 2013). As a result, proponents such as D. Williamson and colleagues (2006) who hope that regulations will become a primary driver of SMEs’ environmental performance may have to wait a while, especially with respect to dispersed, mostly rural firms like wine companies in “areas of limited statehood” (Börzel & Risse, 2010).

This study’s data also suggest a surprising absence of a role for private regulation in international supply chains, despite anecdotal evidence that suggests a formidable impact of environmental, hygiene, and other standards imposed by retailers in South African export markets (see also Ewert & du Toit, 2005). On the other hand, our interviews emphasize the significance of the IPW scheme, a private self-regulation initiative that is credited with codifying and to some extent enforcing good environmental practices, as well as contributing to knowledge sharing. Its guidelines are recognized as an accepted way of operating, beyond any threat of sanction, yet it does not play decisive role in motivating strongly proactive environmental behaviors, over and above a basic level of environmental diligence.

With regard to Bansal and Roth’s (2000) competitiveness category, our survey data suggest an insignificant influence and, if considered in isolation, the case studies also offer a mixed picture. However, if we consider the influence of competitiveness drivers in combination with other categories, a richer picture emerges. In particular, a distinguishing characteristic of those firms that were particularly proactive and innovative was that they not only had managers with a strong environmental ethic, but these managers also recognized opportunities for competitiveness gains. Three of the four most proactive firms identified opportunities for cost savings associated with pro-environmental behavior, and two of these also highlighted marketing benefits. The fourth firm in this category was a special case because its rich owner felt few financial constraints to his environmental ambitions.

Many studies investigating drivers of environmental responsiveness, especially in the SME context, have considered categories of drivers either in isolation or as independent of each other (Hillary, 2004; Williams & Schaefer, 2013; D. Williamson et al., 2006; Wilson et al., 2011). This approach may also be due to the perceived incommensurability between theories that emphasize either agency or structure (Pozzebon, 2004), which underlie Bansal and Roth’s (2000) competitiveness and legitimacy-seeking motives, respectively. Our study suggests that it is important to more explicitly consider interaction effects between different motives. More specifically, the authors suggest that environmental responsibility plays a crucial role in motivating SMEs’ pro-environmental behavior, but that this role is positively enhanced by expectations of competitiveness gains, especially cost savings.

Our qualitative study suggests that such expectations are more likely in a munificent environment and in bigger SMEs, because the latter are more likely to achieve economies of scale and cash flow requirements to make environmental investments bankable. So, while SMEs as a category benefit from their smallness relative to large corporations, allowing them to have a more informal, embedded approach to environmental responsiveness (Baumann-Pauly et al., 2013), larger SMEs may benefit from greater opportunities in achieving competitiveness gains through environmental investments. At what point greater size becomes a liability rather than a benefit is one of the questions for further research arising from this study.

Limitations and Opportunities for Future Research

Our survey data are useful in confirming the important role of managers’ environmental responsibility in influencing SMEs’ environmental responsiveness, but they have important limitations in confirming the interaction between environmental responsibility and competitiveness suggested by our case studies. First, as mentioned, two of the measures we used for competitiveness focus on organic viticulture and it is unclear to what extent they capture respondents’ broader views on the opportunities for either improved market access or cost savings due to environmental initiatives. Second, it would be possible to analyze interaction effects between the independent variables in the survey data using hierarchical regression analyses (Cohen, West, & Aiken, 2003), but for this to be feasible a larger sample size will be necessary. Testing the case study propositions surrounding interaction effects between environmental responsibility and competitiveness drivers is thus an avenue for further research.

A second area for further investigation is the role of national and industry context. We have suggested that institutional pressures are particularly weak in the context of dispersed firms in rural settings, in an area characterized by weak regulatory enforcement capacities in the state. Studies in other institutional environments focused on wine firms (Marshall et al., 2005) or other SMEs (Wilson et al., 2011) indicate that the limited role of regulatory pressures and challenges in regulatory enforcement in SMEs apply also in areas with more consolidated states and in other sectors.

With regard to managers’ environmental responsibility, we suggest that this may be a particularly prevalent driver in wine firms, given the close links between this industry and the natural environment. Winery managers’ association between environmental stewardship and their craft as wine makers may also enhance response bias—this is another limitation especially of the survey data, given that in interviews some degree of respondents’ authenticity could be assessed. More generally, it would be interesting to confirm whether SME managers in other sectors are less interested in environmental issues and what implications this may have on their firms’ environmental performance. Given the relatively few studies on environmental responsiveness in SMEs, a comparison across institutional and sectoral contexts is likely to be fruitful.

Finally, the authors suggest that particularly proactive environmental behavior is premised not only on managers’ proclivities but also on perceived opportunities for competitiveness gains. We also suggest that larger SMEs have advantages in developing bankable investments in environmental projects. It emerges that different kinds of environmental initiatives have different kinds of potential competitiveness gains associated with them, and some are more direct and quantifiable than others. Beyond the distinction between market access and cost savings, it would be helpful to develop a more disaggregated, fine-grained, and sector-specific analysis of what kind of environmental initiatives have what kind of competitiveness opportunities, and under what conditions.

Conclusion

This article set out to investigate why SMEs adopt environmental practices. Using survey data and comparative case studies of wine firms in South Africa, we found that managers’ environmental responsibility is the most important driver of environmental behavior. Managers’ personal sense of stewardship was able to influence firm behavior and culture given the small size and informal management practices in the wineries. We also suggest that environmental stewardship is likely to be a particularly prominent driver in the wine industry, given the links between this industry and the natural environment.

Legitimacy-seeking plays only a limited role and state regulation is particularly absent as a driver. We argue that this condition is exacerbated by constraints faced by the South African state in enforcing regulations and the dispersed, rural character of the wine industry. Private regulation in international supply chains also plays hardly a role, but our interviews emphasize the significance of the IPW scheme, a private self-regulation initiative that is credited with setting a minimum standard for at least some viticultural and winery practices.

Our survey data suggest an insignificant influence for competitiveness drivers and, if considered in isolation, the case studies also offer a mixed picture. However, a distinguishing characteristic of those firms that are particularly proactive and innovative is that they not only have managers with a strong environmental ethic, but these managers also recognize opportunities for competitiveness gains. We thus suggest that it is important to more explicitly consider interaction effects between different motives. More specifically, the authors suggest that environmental responsibility plays a crucial role in motivating SMEs’ pro-environmental behavior, but particularly progressive and innovative environmental efforts are brought about when this motive is augmented by expectations of competitiveness gains.

Footnotes

Appendix

The article was accepted during the editorship of Duane Windsor.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was supported by the University of Cape Town Vice-Chancellor’s Strategic Fund and the National Research Foundation of South Africa, as well as Merle Sowman and the University of Cape Town Environmental Evaluation Unit.

Notes

Author Biographies

Ralph Hamann is a professor at the University of Cape Town Graduate School of Business and holds a Research Chair at the UCT African Climate and Development Initiative. He has a PhD in environmental science from the University of East Anglia. His research focuses on organizational innovation in response to complex social-ecological problems. He has published in Development, Journal of Business Ethics, Journal of Cleaner Production, Natural Resources Forum, and Resources Policy, among others.

James Smith is a qualified chartered accountant and has an MBA from the University of Cape Town Graduate School of Business. He has worked as a business analyst in the renewable energy and alcoholic beverage industries, among others.

Pete Tashman is an assistant professor of management with the Portland State University School of Business Administration. He received his PhD from The George Washington University. His research explores organizational responses to ecological and social pressures. His articles have appeared in Business Ethics Quarterly, Corporate Social Responsibility and Environmental Management, International Business Review, Journal of Business Ethics, and Policy Studies Journal.

R. Scott Marshall has a PhD in international strategy from the University of Oregon. He is an associate dean for graduate programs and research at the Portland State University School of Business Administration. His research is in the areas of proactive environmental strategy, corporate governance, and sustainability reporting. He has published in such journals as Business Strategy & Environment, California Management Review, Journal of Business Ethics, Journal of Information Systems, Journal of International Business Studies, Journal of World Business, and Organization & Environment.

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