Abstract
High-quality development under environmental objective constraints represents a paradigm shift from perceiving environmental constraints as mere external pressures to embracing them as endogenous catalysts for progress. This shift, however, mandates considerable technological advancements, resource reallocations, and managerial overhauls, all requiring substantial capital investments. Chinese manufacturing SMEs, despite their efforts to adapt, often face challenges that hinder this transformation. To effectively facilitate this transition, it is crucial to pinpoint the barriers and craft tailored strategies to mitigate their inhibitory effects. Through a combination of theoretical deductions and on-the-ground research, this study not only identifies these barriers but also employs the ISM-MICMAC methodology to unpack their hierarchical and influential nature. Remarkably, the findings highlight that overcome technological and political barriers loom large, while the often-discussed economic and organizational barriers seem comparatively less formidable.
Keywords
Introduction
The intricate relationship between industrialization and the environment has garnered significant academic attention (Dangelico & Pontrandolfo, 2015). Over the years, studies have endeavored to determine whether sound environmental management can result in a win-win situation for both manufacturing enterprises and the environment (Jabbour et al., 2012). In neoclassical economics, there are two views on the impacts of environmental regulations on manufacturing development. One perspective, the compliance costs of environmental regulations holds that environmental regulations inevitably increase production costs (Blok et al., 2015), which in turn divert funds away from R&D and innovation (Liu & Xie, 2020; Xie et al., 2017), and ultimately impeding enterprise development. In contrast, the Porter hypothesis argues that well-designed environmental regulations can result in a positive innovation compensation effect (Porter & van der Linde, 1995), thereby promoting high-quality development. Meanwhile, the impact of manufacturing growth on the environment remains a subject of debate. While it is commonly held that industrialization is a primary factor of the widespread environmental degradation observed globally (Hawken, 1994; World Economic Forum, 2018), the environmental Kuznets curve (EKC) hypothesis points out that as economies develop, environmental degradation initially worsens but eventually improves (Grossman & Krueger, 1991; Hettige et al., 2000; Sarkodie & Strezov, 2019). This trend has been observed in China’s trajectory of high-quality economic and manufacturing development.
Rapid industrialization has contributed to China’s remarkable economic development (Xu & Lin, 2017). However, the extensive development model has relegated the Chinese manufacturing industry, especially manufacturing SMEs, to the low-end of the global value chain. Simultaneously, it has exacerbated resource exploitation and environmental degradation (Dong et al., 2016; Li et al., 2019). To ensure sustainable socio-economic development for future generations, President Xi Jinping emphasized during the Nineteenth National Congress of the Communist Party of China that the Chinese economy needs to shift from a rapid growth stage to a high-quality development stage (Xi, 2017). This shift is not seen as an either-or proposition but rather a dialectical unity, that is, the pursuit of high-quality development now encompasses not just economic growth but also social equity, environmental protection, and renewal (Gu et al., 2021). Consequently, the advancement of the manufacturing sector towards high-quality standards constitutes a pivotal aspect of the new normal economy. This transformation prioritizes technological innovation, profitable growth, resource conservation, and environmental sustainability, thereby paving the way for a more balanced and sustainable future.
Despite the consensus on green development reached by China’s manufacturing industry at the macro-level (Marquis et al., 2011), Chinese manufacturing SMEs still prioritize economic aspects of high-quality development over achieving an environmental-economic balance, which is primarily due to the challenges they face in obtaining preferential policies, resources, and external support (Marquis & Qian, 2013; Zeng et al., 2010). However, with the promulgation of the Thirteenth Five-Year Plan for Ecological Environmental Protection, the environment has been explicitly identified as a specific and measurable constraint target for the first time (Xinhua, 2016). This shift has been further emphasized by Premier Li Keqiang in the 2020 Report on the Work of the Government, where he stated that China must persist in promoting high-quality development while resolutely protecting the environment (Li, 2020). This emphasis signifies that environmental protection is no longer just a vague moral requirement but rather a mandatory constraint. As such, under the constraints of environmental objectives, it becomes imperative to integrate ecological considerations into every facet of high-quality development for Chinese manufacturing SMEs.
The research conducted by developed countries into models for high-quality development of manufacturing industry is well-advanced, whereas developing countries are still at the initial stage (Awan et al., 2017; Gandhi et al., 2018). Currently, most manufacturing enterprises in developing countries engage in superficial green practices primarily to evade legal repercussions. Interestingly, recent scholarly attention has shifted towards identifying incentives that can encourage these enterprises to adopt sustainable practices (Raut et al., 2017; Siyal et al., 2023; Zhan et al., 2018). China, as the world’s largest transitioning economy and a global manufacturing hub, faces heightened expectations from the international community regarding its high-quality development (Qin et al., 2019). Compared with developed countries, China’s market mechanisms often suffer from inefficiencies, and its legal system is not yet perfect (Luo et al., 2020), which has impeded the swift progress of high-quality development in China’s manufacturing industry. To achieve high-quality development, it is imperative to overcome the reliance on traditional, extensive growth models and address the multifaceted barriers—policy, economic, social, and technological—that stand in the way (García-Quevedo et al., 2020). However, as manufacturing SMEs generally have relatively simple organizational structures, they are usually more flexible, can provide quick feedback, and have short decision-making chains (Liu et al., 2017), which positions them advantageously for faster transformation. In order to paving the way for the transformation, identifying specific barriers to high-quality development of manufacturing SMEs could provide a practical basis for government policies to focus on solving enterprise difficulties, and efficient matching of internal and external environments for corporate high-quality strategy.
Until now, few studies have identified the green manufacturing barriers to high-quality development nor has a theoretical framework for barrier identification been developed. de Jesus and Mendonça (2018); Govindan and Hasanagic (2018) pointed out that greater attention should be paid to theoretical and empirical research on high-quality development barriers. To fill this gap, this paper first scientifically and systematically identifies the barriers of high-quality development under environment objective constraints from the perspectives of theoretical deduction and practical exploration, ensuring that the extracted barriers have both theoretical support and practical verification. Then, the ISM-MICMAC method is matched to analyze the hierarchical topological relationship of barriers and determine key barriers. Finally, the calculation results provide data support for helping governments and enterprises to implement appropriate policies and strategies.
The remainder of this paper is organized as follows. Section 2 presents the research findings of associated literature. Then, Section 3 confirms the barriers to the high-quality development under environment objective constraints of Chinese manufacturing SMEs based on the theoretical model and practical exploration. Section 4 outlines the study methodology, Section 5 applies the ISM-MICMAC to calculate and hierarchically analyze the identified barriers. Finally, Section 6 discusses the management implications of this paper from three aspects: theory, policy, and enterprise practice.
Literature Review
High-Quality Development
Growth and development research has traditionally focused on factors such as economic output level and growth rate, whether at the micro or macroeconomic level (Masoud, 2014). This emphasis on economic performance is understandable given that it is a direct result of productive capital growth, development, and efficiency (Delai & Takahashi, 2013), Consequently, it has served as the primary metric for assessing long-term sustainable enterprise and national development (Gotschol et al., 2014). While economic performance underscores development, history and practice have proven that high-speed development cannot create positive societal externalities because it lacks inclusivity, which is fundamental for sustainable high-quality growth.
Inclusive development, as outlined by Spence and Lewis (2009), embraced fairness, equal opportunity, market transformation, and stable employment. Similarly, Rabah et al. (2012) argued that inclusive growth facilitates improvements in productive employment. Anand et al. (2013) further defined inclusive growth as a sustainable growth mode effective at reducing poverty. Mlachila et al. (2017) emphasized that achieving inclusive high-quality development necessitates a focus on good quality growth being lasting and socially friendly.
In recent years, the escalating environmental degradation has rendered the notion of regarding a green environment, natural resources, and fresh air as non-competitive environmental resources obsolete. Without the non-rivalry assumption, environmental resources can no longer be considered public goods as they are more like non-excludability commons. Hardin (1968) claimed that the excessive use of environmental resources would lead to a tragedy of the commons, resulting in market failure and a subsequent loss of social benefits. In an interdependent and resource-constrained world, however, corporate environmental initiatives have emerged as a critical competitive advantage (Lucas & Noordewier, 2016), that is, high-quality inclusive development embraces the need to also guarantee environmental quality.
As early as 1998, Elkington (1998) formally introduced the triple bottom line (TBL) into the field of management, challenging the traditional focus on corporate accounting profits as the sole measure of success. The theoretical TBL framework posited that enterprises should evaluate their high-quality development holistically, integrating environmental, social, and economic objectives to create both societal and enterprise value (Ashby, 2012). These ideas aligned with stakeholder theory, which emphasizes the importance of considering the interests of all stakeholders in business decisions (Freeman & Reed, 1983; Wang et al., 2015). Therefore, drawing from stakeholder theory, TBL, and inclusive growth theory, high-quality development involves the transformation of production input factors that harmonizes economic growth, environmental protection and social welfare.
Environmental Objective Constraints
Environmental objective constraints can be categorized into natural environment constraints, policy environment constraints, social environment constraints, and enterprise environment constraints. Samuelson (1954) classified environmental resources, such as water, air, soil, native flora, and fauna, as public goods due to their non-competitive, non-exclusive characteristics. However, the rapid developments in China’s manufacturing industry have led to serious environmental degradation, transforming these resources into non-excludable commons (Hardin, 1968; Qin et al., 2019). Without environmental constraints unrestricted exploitation of environmental resources could lead to a tragedy of the commons (Hardin, 1968).
Enterprises face both exogenous and endogenous environmental pressures. Institutional theory, stakeholder theory, and legitimacy theory provide frameworks for understanding these exogenous environmental pressures (Lenssen et al., 2011; Wei-Feng Guoa et al., 2015; Yang, 2018). DiMaggio and Powell (1983) identified three primary pressures within institutional theory, that is, coercive pressure, normative pressure, and mimetic pressure, which influence enterprises to mitigate negative environmental impacts. Coercive pressure, imposed by administrative or regulatory agencies, compels enterprises to adopt green practices. In China, institutional theory sheds lights on the external pressures shaping enterprise operations (Yang et al., 2015). Given the commons attribute of the environment, achieving sustainability solely through market mechanisms is challenging. Thus, government intervention is crucial for balancing economic development and environmental protection. Consequently, Chinese governments at national, regional, and local levels have sought to restrict enterprise emissions by regulating their production activities and promoting green practices (Shuai & Fan, 2020).
Unlike government-imposed constraints, social pressure from stakeholders and the general public significantly impacts enterprise operations, especially in polluting industries, which in turn can damage corporate reputations and undermine competitive advantage (Melo & Garrido-Morgado, 2012). For example, the constant haze and air pollution in China have heightened public awareness on environmental issues (Liao et al., 2019), reflecting a desire to protect health and ensure a sustainable future for the next generation (Sun et al., 2016). As a result, pressures from customers, suppliers, non-government organizations, and other members of the public influence enterprises to modify their operational and production behaviors (Schrettle et al., 2014) and actively implement environmental management, regulation, and governance systems.
Strategic change can only be achieved when all people are committed (Waddock & Graves, 1998). The rising environmental consciousness among the public has led to psychological motivation among top managers to implement green practices to maintain operational legitimacy (Bansal & Roth, 2000). However, to fully implement enterprise-wide green behavior requires organizational cultural change, necessitating a shared commitment to environmental values among all levels of management (Ghazilla et al., 2015). This, in turn, requires the support of employees through the implementation of green human resource management systems (Zhu & Sarkis, 2016). Employees with strong environmental ethos are more likely to recognize the environmental consequences of their actions and support green initiatives Luo et al. (2020). When employees identify with the green strategy of their enterprise, they become agents of positive change, facilitating the transition to greener practices (Kumar et al., 2019).
Barriers to High-Quality Development
Protecting the environment is inherent linked to China’s enterprises focus on high-quality development. As such, environmental objective constraints can serve as a catalyst, prompting enterprises to embrace a mindset geared towards high-quality development progress. This entails striking a harmonious balance between economic, social, and environmental benefits, thereby ensuring that all facets of high-quality development carry environmental significance: ecological-economic benefits, ecological-social benefits, and ecological-environmental benefits. While high-quality development is the goal for Chinese manufacturing SMEs, the imposition of environmental objective constraints has posed operational challenges. It is worth noting that although certain factors hindering high-quality development may be industry-specific, there exist universal barriers restricting SMEs across multiple industry sectors (Zhu, 2016).
Theoretical Deduction of Barriers
To comprehensively explore the barriers to the high-quality development of Chinese manufacturing SMEs, a multi-dimensional approach is imperative. These SMEs have demonstrated reluctance or compliance challenges by the environmental objective constraints associated with high-quality development, thus encountering a dual dilemma of balancing corporate expansion with ecological preservation. Despite their aspirations for high-quality development, some barriers prevent them from achieve win-win situation of environmental protection and high-quality development. Therefore, as shown in Figure 1, this study delves into four possible resistance points to systematically deduce the dimensions involved in the barriers confronting Chinese manufacturing SMEs in their pursuit of high-quality development under environmental objective constraints. Theoretical deduction model for the barriers encountered by Chinese manufacturing SMEs in pursuing high-quality development under environmental objective constraints.
To stop the continued abuse of environmental resources by free-riding behavior and a possible tragedy of the commons (Hardin, 1968), it is imperative to intensify environmental pressure on enterprises. As previously outlined, institutional theory (DiMaggio & Powell, 1983), stakeholder theory (Shocker & Sethi, 1973; Woodward et al., 1996), and legitimacy theory (Meyer & Rowan, 1977) converge in their assertion that environmental objective constraints must be imposed on enterprises by governments, society, and consumers. Nevertheless, the absence of intervention from any one of these moderating forces could potentially send negative signals, thereby heightening the resistance of Chinese manufacturing SMEs towards achieving high-quality development in the context of environmental objective constraints.
High-quality development requires an inclusive growth strategy that satisfies the diverse needs of all stakeholders. Freeman (1984) classified stakeholders into ownership stakeholders who prioritize the company’s economic benefits, economic dependent stakeholders who focus on economic-social benefits, and social stakeholders who emphasize social-environmental benefits. TBL theory further underscores that economic, social, and environmental benefits constitute the essence of enterprise development quality and serve as the three pillars underpinning sustainable enterprise growth (Elkington, 1994). However, Chinese manufacturing SMEs aspire to achieve sustainable quantitative economic expansion as a pivotal aspect of their high-quality development. Consequently, to effectuate qualitative transformation, these enterprises must harmonize their economic, social, and environmental benefits.
High-quality development can result in endogenous pressure, while environmental objective constraints impose exogenous pressure. For enterprises to achieve high-quality development while adhering to environmental objective constraints, they must demonstrate initiative (Ashforth & Gibbs, 1990) and conformity (DiMaggio & Powell, 1983) by endogenizing external environmental pressures. If Chinese manufacturing SMEs regard environmental objectives as scarce resources (Tornikoski & Newbert, 2007), any environmental protection actions they take could attract government subsidies and enhance consumer recognition. In other words, the hard constraints can be internalized to foster high-quality development. Nevertheless, currently, Chinese manufacturing SMEs perceive environmental protection behaviors as associated with a high cost premium and limited returns (Liu et al., 2017), which hinders their willingness to transform this exogenous pressure into an endogenous power.
High-quality development of Chinese manufacturing SME is characterized by advancements in product quality, augmentation of value, efficient resource utilization, and reduction in pollutant emissions, all of which are contingent upon technological change (Luo et al., 2020). The natural resource-based view emphasizes the significance of resources that are valuable, rare, inimitable, and irreplaceable in securing a competitive edge (Wernerfelt, 1984). Hart (1995) posited that technological innovation, within this framework, should aim to surpass prevalent environmental challenges and establish new benchmarks for clean technology performance. Green technology serves as a safeguard for ecosystem resources and refocuses energy consumption and industrial progress towards sustainable development. However, Chinese manufacturing SMEs face difficulties in acquiring the necessary technology, thereby hindering their pursuit of high-quality development under environmental objective constraints (Cai & Li, 2018; Yu et al., 2019).
Practical Exploration of Barriers
After delving into the theoretical framework surrounding possible barriers to high-quality development under environmental objective constraints, field interviews were meticulously planned and executed to validate research findings. Seven top managers from Chinese manufacturing SMEs were purposefully selected to explore the barriers. To mitigate the risk of preconceived notions and ensure the barriers identified alignment with the authentic challenges faced by Chinese manufacturing SMEs, the seven top managers were prompted to document their personal experiences and challenges encountered in their transformation process prior to engaging in collective discourse.
Lack of financial resources was identified as the main barrier faced by all manufacturing SMEs. To break through the environmental objective constraints, these enterprises must increase investments in research and development, adopt clean technologies, establish environmental management systems, and foster eco-consciousness among employees, leading to elevated operational costs. Notably, these additional expenditures deviate from the conventional operational ethos prevalent in Chinese manufacturing SMEs. Furthermore, the insufficiency of technical knowledge and limited access to cutting-edge technologies pose significant challenges for Chinese manufacturing SMEs from meeting the requirements of environmental objective constraints. To successfully transform to high-quality development, enterprises must expedite the advancement of efficient, low-carbon, clean, recycling technologies to reduce pollution and harmlessly treat waste resources. However, the accessibility of advanced technology, materials and industrial processes remains a daunting hurdle for manufacturing SMEs. Despite government policy endorsements and sufficient financial backing, the dearth of skilled professionals and technical expertise impedes Chinese manufacturing SMEs from innovating green high-tech applications to enhance their operational efficiency.
Barriers Identified by the Chinese Manufacturing SME Managers.
Preliminary Identification of the Barriers
Explanation of the Types and Connotations of Barriers Encountered by Chinese Manufacturing SMEs in Pursuing High-Quality Development Under Environmental Objective Constraints.
Research Methodology
To identify the barriers, previous studies have primarily relied on literature review or field research (Jaeger & Upadhyay, 2020), constructing corresponding theoretical models and hypotheses (Chauhan et al., 2021). While these approaches have employed large sample statistical analysis methods, such as structural equation modeling, to test the validity of their models and hypotheses (Siyal et al., 2023), the complexity of the barrier system faced by Chinese manufacturing SMEs in pursuing high-quality development of under environmental objective constraints demands a more nuanced approach. Currently, research in both academic and practical domains remains in exploratory stages. Solely relying on large sample statistical analysis to unpack the causal relationships between these barriers and development outcomes proves insufficient for efficient resource allocation by governments and enterprises, and this limitation renders it challenging to achieve Pareto optimality in corresponding environmental governance and business operations (Singh & Rathi, 2021).
Therefore, to provide a more scientific basis for policy formulation and business decision-making, it is imperative to clarify the hierarchical relationships within the complex system and pinpoint key barriers. The integrated application of Interpretive Structural Modeling (ISM) and the Cross-Impact Matrix Multiplication Applied to Classification (MICMAC) methods offers a promising avenue (Kamble et al., 2018; Usmani et al., 2023). ISM facilitates a swift understanding of the resistance paths associated with various barriers, presenting a clear and intuitive topological hierarchy diagram that reveals correlation and dependency relationships (Sarvari et al., 2024). Complementing this, MICMAC builds upon ISM calculations to deliver more quantitative insights, precisely identifying the factors with the most significant resistance impact and elucidating how their interactions influence the overall system (Hussain et al., 2023).
Drawing from the aforementioned research demands and upon elucidating the barriers to the high-quality development of Chinese manufacturing SMEs under environmental objective constraints, the study resorted to ISM -MICMAC methodology to assess the reciprocal impacts among these barriers and pinpoint the pivotal influencing factors.
ISM Method
ISM has proven itself over time as a robust modeling technology, particularly adept at tackling intricate issues. It embodies an interactive learning approach that weaves diverse yet interconnected elements into a cohesive system model (Warfield, 1974). Leveraging the practical experience and system knowledge of experts, along with computer-aided functionalities, ISM adeptly dissects complex systems into manageable subsystems (elements), ultimately culminating in a hierarchical structure model.
The hallmark of ISM lies in its four defining characteristics. Firstly, it excels in explanatory power, relying on expert judgment to discern the relationships among various elements. Secondly, these relationships are inherently structural, emerging from a maze of complex variables to reveal an underlying structure. Thirdly, it is a modeling technique, delineating both specific relationships and the overall structure within a digraph model. Lastly, it clarifies the sequence and directionality of interconnections among system elements, effectively streamlining complex systems (Raj et al., 2008). Given its proficiency in simplifying and structuring complex problems, ISM emerges as an ideal tool for classifying and analyzing the intricacies of complex social problems.
The primary steps employed in ISM for the assessing the barriers to the high-quality development of Chinese manufacturing SMEs under environmental objectives are delineated as follows: Step 1.1: Identify the barriers related to the research issues through field research or a literature review, and then use the Delphi method to further screen the barriers (Table 2). Step 1.2: Establish the contextual relationships between the barriers through expert data collection. Step 1.3: Clarify the pair-wise relationships between the barriers to establish a structural self-interaction matrix (SSIM). In general, the ISM method uses four symbols to explain the relationships between the matrix elements: “O” = there is no relationship between barriers; “X” = there is an interaction between barrier Step 1.4: Establish the adjacency matrix based on the SSIM. The principle for transforming SSIM into an adjacency matrix (a) If the entry in SSIM is “V,” the value in adjacency matrix (b) If the entry in SSIM is “A,” the value in adjacency matrix (c) If the entry in SSIM is “X,” the value in adjacency matrices (d) If the item in SSIM is “O,” the value in adjacency matrices Step 1.5: Develop a reachability matrix. The ISM adjacency matrix calculation principle follows Boolean operation rules, with the operation principle for each element in the matrix being:
Then
Therefore, Step 1.6: Using the final reachability matrix Step 1.7: The final directed graph is drawn by generating the directed graph and deleting the transitive links. Step 1.8: The ISM model is then developed by transforming the barrier nodes into statements. Step 1.9: The model is then reviewed to check for conceptual inconsistencies and make necessary modifications.
MICMAC Method
MICMAC analysis involves constructing a graph that classifies factors based on driving power and dependence power (Mandal, 1994). Owing to its operational principle, it is usually used in combination with the ISM method to classify interrelated elements. This analysis specifically identifies the driving power (i.e., the extent of influence exerted on other factors) and the dependent power (i.e., the extent of influence received from other factors) for each element within a system. Therefore, MICMAC is employed to determine the key barriers hindering high-quality development of Chinese manufacturing SMEs under environmental objective constraints. When combined with the ISM results, the MICMAC analysis comprise two steps. Step 2.1: Calculation of forces. Specifically, the driving force for each barrier is calculated by summing the values in each row of the final reachability matrix, and the dependent force is calculated by summing the values in each column of the final reachability matrix. Step 2.2: MICMAC diagram construction. Subsequently, A MICMAC coordinate system diagram is drawn, in which the abscissa represents the dependent force of the barrier, while the ordinate denotes its driving force. Utilizing these forces as the basis, the barriers are segregated into four categories: autonomous, dependent, linkage, and driving.
Evaluating the Barriers
This section details the data collection and applies the ISM-MICMAC to evaluate the key barriers.
Data Sources
The ISM method relies mainly on expert judgment. To this end, this study reached out to 19 experts via email, WeChat, telephone, or in-person interview. These experts encompassed a diverse range of professionals: researchers from universities and scientific institutions deeply invested in to the development of manufacturing SMEs, with a focus on sustainable development and green manufacturing; staff from government and industry development associations affiliated with manufacturing development, SME development, and green manufacturing; and top managers from manufacturing SMEs directly involved in the company operations, whose enterprises had either undergone or were pursuing high-quality transformation. Among the 19 experts contacted, 12 expressed keen interest in this study. Specifically, 6 from universities and scientific research institutions, 4 from manufacturing SMEs, and 2 from government and industry associations. Based on their respective expertise and interests, the 12 experts were divided into three expert groups.
In clarifying the research object, top managers from manufacturing in resource-intensive, labor-intensive, and capital-technology-intensive sectors were engaged. The resource-intensive industry, exemplified by the agricultural and sideline food processing industry, plays a pivotal role in public life due to its close association with high-quality economic development and subsequent rise in living standards, leading to heightened public awareness of food quality. However, the industry’s relatively backward processing technology hinders its ability to meet escalating customer demands for quality. Meanwhile, the furniture manufacturing industry serves as a proxy of the labor-intensive sector. Because of the intense Chinese interest in real estate, this industry has witnessed soaring sales. Nevertheless, as living standards and education attainment rise, there is a growing preference for environmentally friendly and high-quality furniture and building materials. The capital-technology-intensive sector was represented by the metal products and pharmaceutical manufacturing industries. The metal products industry, being China’s largest energy consumer (Yu et al., 2017), has traditionally prioritized low-value-added growth. Yet, in recent years, environmental policies have shifted the focus to green, high-quality improvements presenting both significant potential and challenges for transformation (Orji, 2019). Similarly, the pharmaceutical industry, spurred by the public’s quest for a healthier lifestyle, has experienced a surge in demand and market expansion. However, small and medium-sized pharmaceutical companies in China, often associated with low-end pharmaceutical operations, struggle with providing high-quality medicines high resource usage, and environmental pollution issues. As regulatory bodies like the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment, the National Health Commission, and the State Food and Drug Administration enforce stricter standards for the industry’s transformation, innovative drug research and enhanced environmental responsibility become imperative.
Based on the ISM algorithm, a questionnaire was compiled and distributed disseminated among various expert group. This questionnaire was designed to elicit their evaluations of the interrelationships among the barriers. To mitigate potential issues stemming from cognitive disparities arising from diverse expert domains, the first questionnaire evaluation round was completed independently by each expert within their respective group. Following the collation and analysis of the questionnaire data, a subsequent interview phase was conducted with to delve into the underlying rationales behind any evaluations deemed controversial, the results from which were fed back to the remaining experts within the group.
Utilizing the Delphi method, consensus was achieved within each expert group. Specifically, the university and government expert group converged on a unanimous decision after 3 and 2 rounds of negotiations, respectively. Conversely, the enterprise expert group went through 7 rounds of negotiations to arrive at a final agreement. This difference can be attributed to the broader exposure of university and government experts to diverse high-quality development practices across enterprises. Their macro-level perspective on the challenges of achieving high-quality development under environmental objective constraints facilitated a more uniform questionnaire outcome. In contrast, the enterprise experts’ discussions were influenced by their professional backgrounds, resulting in significant industry and enterprise heterogeneity in their opinions. Consequently, several rounds of discussion were necessary for a comprehensive exchange of ideas and integration of conclusions.
After receiving feedbacks from three expert groups, this study invited one representative from each group to engage in a subsequent round-table discussion. These representatives were tasked with presenting the culmination of their group discussions to the broader panel of experts. Adhering to the Delphi method, the initial three rounds of discussion proved challenging in achieving consensus, particularly pertaining to the assessment of barriers at both the technical and policy levels. In bolster the scientific rigor of the questionnaire findings, a review of pertinent policy documents and practical cases studies was conducted on-site, as suggested by the experts. After two additional rounds of discussion, ultimately culminating in the refinement and finalization of the questionnaire.
Data Analysis and Results
ISM Analysis
Structural Self-Interaction Matrix (SSIM).
Adjacency Matrix.
Initial Reachability Matrix.
Final Reachability Matrix.
The reachability set and the antecedent set for each barrier were determined from the final reachability matrix. The reachability set comprised the barrier itself along with all other barriers impacted by it, whereas the antecedent set encompassed the barrier and all those influencing it. When the reachability set and antecedent set intersection was determined, the top-level barriers in the ISM hierarchy were assigned to the barriers that had the same reachability and antecedent sets or the barriers where the reachability set was subordinate to the antecedent set. Essentially, these barriers were solely influenced by other barriers and did not exert any influence on others. Once the top-level barriers were identified, they were removed from the final reachability matrix. This iterative process was repeated until only the final barrier remained, thereby revealing the hierarchical barrier structure.
Hierarchy of Barriers.
Then, based on these hierarchical ISM calculation results, the structural relationships between the high-quality development barriers of Chinese manufacturing SMEs under environmental objective constraints were visualized (Figure 2). Hierarchical structure of the barriers encountered by Chinese manufacturing SMEs in pursuing high-quality development under environmental objective constraints.
The ISM framework diagram revealed that the unsmooth industry-university-institute cooperation channel was the most fundamental barrier to the high-quality development of Chinese manufacturing SMEs under environmental objective constraints, and this barrier serves as the cornerstone for the entire framework’s layer structure. This was because high-quality development requires high value-added products that use novel materials, renewable energy sources, and other environmental friendly technologies to improve resource and energy efficiency, minimize raw material usage, mitigate potential pollutants during the production process, and guarantee the safe disposal of pollutants Consequently, a substantial amount of high-tech and green technological support is crucial. However, a prevalent challenge faced by Chinese manufacturing SMEs is their limited R&D capabilities and the elevated risks associated R&D endeavors, which hinder their ability to independently pursue R&D activities. Therefore, as poor industry-university-institute cooperation channels have directly obstructs the technological advancement of Chinese manufacturing SMEs, governments and universities must take the lead and encourage SMEs to participate in high-tech green technology innovation activities.
Starting from level V, the barriers were divided into two subsystems. The first subsystem encompassed policy and social barriers, which arose due to the imperfection environmental legal system. The second subsystem comprised economic and technological barriers, stemming from poor technology introduction channels and the lack of demonstration projects. The imperfections in the environmental legal system d had a direct impact on the certification system, rendering it incomplete. In the absence of a systematic certification process, the government, society, and enterprises alike found it challenging to ascertain whether the manufacturing SMEs were achieving the environmental objectives, meeting the prerequisites for high-quality SME development, or requiring assistance due to non-compliance. Consequently, the government’s inability to accurately distinguish enterprises’ environmental performance hindered the effective implementation of environmental laws and regulations, resulting in legal uncertainty. These future legal uncertainties, coupled with the income uncertainty arising from subdued consumer demand for environmentally friendly, high-quality products, therefore, posed significant barriers to the high-quality SME transformation. Furthermore, the lack of consistent and positive legal guidance failed to stimulate a notable surge in consumer demand for sustainable products, that is, as the general public remained inadequately informed about environmental protection, the pressure on SMEs from public opinion remained relatively low.
Manufacturing SMEs, owing to their dispersed nature and limited scale, often encounter challenges in forging collaborative ties with universities and scientific institutions (Parker et al., 2009). However, unless SMEs are shown the specific economic benefits that green technologies can bring, such as improved productivity and reduced costs, they will be less willing to invest (Yuan Zhou et al., 2015). Furthermore, these enterprises, constrained by resource limitations and a dearth of demonstrative projects and technical expertise, often have a vague understanding of cutting-edge technological advancements. In the context of China’s new scientific and technological revolution, which prioritizes high-quality socio-economic-environmental development, the integration of novel technologies is crucial for maintaining competitiveness. Nevertheless, when enterprises are either unable or unwilling to embrace new technologies, it sends unfavorable signals to investors, thereby exacerbating their difficulties in securing external funding, government subsidies or tax incentives. This perpetuates a vicious circle wherein the lack of technological access hinders green and high-quality production, which in turn limits external support and further technological acquisition, ultimately impeding the achievement of sustainable growth within manufacturing SMEs.
Level II reveals that the organizational barriers stem directly from challenges such as obtaining external economic support, the unpredictability of income aligned with environmental objectives, and the general public’s limited focus on environmental preservation and quality products. Prior to committing to new ventures or product launches, enterprises typically undertake market research and projections to assess their viability. Before an enterprise decides to implement a new project or develop a new product, to evaluate the feasibility of the decision, it usually conducts market research and forecasts. Consequently, the majority of manufacturing SMEs prioritize their initial investments and anticipated returns. As high-tech R&D, green manufacturing, and high-quality product entail substantial cost premiums with uncertain payoffs (Liu et al., 2017), when the market research indicates price sensitivity among consumers, a lack of interest in corporate environmental practices, and indifference towards whether companies meet environmental standards or product quality, SMEs may adopt a pessimistic outlook toward the market positioning and sales prospects of environmentally friendly high-quality products. Furthermore, the production of ecologically sustainable, high-quality products requires supply chain upgrading from raw materials to the manufacturing process. Securing the requisite resources for such upgrades is often a formidable task. As a result, the combination of substantial investment costs, uncertain future benefits, and limited external financial financing poses a significant cost-benefit dilemma for Chinese manufacturing SMEs pursuing high-quality development under environmental objective constraints.
The top five barriers were all organizational. The hierarchal diagram reveals that those organizational barriers were solely influenced by barriers on other levels, without exerting any influence on barriers at any other level. Consequently, given their position as the weakest barriers to the transformation of high-quality Chinese manufacturing SMEs under environmental objective constraints, they emerge as the most susceptible to change. If resistance from another barrier at any level is alleviated, the organizational barriers could be resolved through a leverage effect, specifically, the more substantially the weakening of a barrier, the greater the alleviation of the organizational barrier.
MICMAC Analysis
Utilizing the discerned driving and dependent forces in Table 6, each barrier was positioned within a two-dimensional coordinate system, as shown in Figure 3, where the X-axis represents the dependent force for each barrier, while the Y-axis denotes the corresponding driving force. Commencing from the coordinate point (10,10), the coordinate system was segmented into four quadrants. The first quadrant is reserved for autonomous barriers, characterized by relatively weak driving and dependent forces, exhibiting minimal interaction with other barriers. In contrast, the second quadrant highlights dependent barriers, predominantly featuring a feeble driving force yet exhibiting a profound reliance on external factors, thus, rendering them susceptible to external influences. Moving into the third quadrant, which is called linkage barriers, these barriers are notable for their robust driving forces and considerable dependence, culminating in a highly volatile nature. While they possess the capacity to influence other barriers, they are equally susceptible to feedback effects. Finally, the fourth quadrant is occupied by the driving barriers, boasting formidable driving forces yet maintaining a tenuous dependence, and given their profound impact on other barriers, they warrant significant attention. Quadrant distribution for the barriers encountered by Chinese manufacturing SMEs in pursuing high-quality development under environmental objective constraints.
Figure 3 shows that none of the barriers hindering the high-quality development of Chinese manufacturing SMEs under environmental objective constraints resided in the third quadrant, signifying identified barriers were relatively stable. Notably, the dependent barriers were exclusively rooted in the organizational dimension, aligning with the ISM calculation results. Although these barriers exerted minimal influence on the other barriers, they were heavily contingent upon shifts in those same barriers; hence, their resolution is likely to follow the mitigation of other barriers. This is plausible given that the organizational structure, management systems, and procedures in most SMEs are often streamlined, featuring concise decision-making chains, which allows for agility and swift adaptation to external environmental fluctuations (Liu et al., 2017; Luo et al., 2020). Furthermore, Top management commitment is associated with securing legitimacy for the business operations and balancing the enterprise’s cost-benefit ratio. Both aspects are influenced by the stakeholders’ perceptions of whether the enterprise has fulfilled environmental objectives and produces high-quality products.
The independent barriers were multifaceted and primarily linked to policy and technological dimensions, and the barriers included an imperfect environmental legal system, an imperfect certification system, a lack of demonstration projects, unsmooth channels for industry-university-institution cooperation, and poor technology introduction channels. This was because, in China, the government plays a pivotal role as the foremost institutional stakeholder of manufacturing SMEs, shaping enterprise operations through its policies and regulations, and serving as the main communication conduit. The absence of systematic, effective environmental policies and regulations, undermines the government’s ability to effectively convey its expectations for environmentally responsible, high-quality development among SMEs. Furthermore, without a robust response from enterprises to governmental directive, there is little incentive for them to meet environmentally focused objectives associated with high-quality development. Access to advanced technology is crucial for Chinese manufacturing SMEs to facilitate high-quality and environmentally focused development. However, in the absence of reliable channels for acquiring green high-solutions, these enterprises are hindered in their efforts to transition towards more sustainable practices. Given the interconnected nature of these barriers and their impact on both the government and enterprises, it is imperative that both parties prioritize strategies aimed at overcoming these barriers.
Results
This study sought to explore, identify and categorize the factors hindering high-quality development under environmental objective constraints in Chinese manufacturing SMEs. Through a combination of theoretical deduction and empirical investigation, 19 barriers were pinpointed. Subsequently, ISM-MICMAC methodology was employed to establish a hierarchical structure among these barriers. The ISM-MICMAC analysis revealed that the identified barriers could be segmented into seven distinct levels. Notably, the most significant barrier, requiring immediate attention, was the unsmooth channels of industry-university-institute cooperation in the technical dimension, positioned at the bottom of the hierarchy. Furthermore, barriers related to poor technology introduction channels and asymmetric technology information, located at levels 5 and 4 within the technology dimension, were also found to exert a considerable impact.
The policy dimension barriers were also found to have a significant impact, especially the imperfect environmental legal system and the lack of demonstration projects, both categorized as Level 5 barriers, followed by the imperfect certification system (Level 4), poor environmental law implementation, and uncertainty of future laws (Level 3). Contrary to popular belief, the barriers posing the greatest concern for manufacturing SMEs were not overwhelmingly rooted in the economic dimension, rather, the resistance proved less formidable than anticipated. Akin to the social dimension barriers, these economic belonged to Levels 3 and 2, indicating a relatively lower degree of impedance to high-quality development under environmental objective constraints.
The enterprise organization barriers were at the top of the hierarchy, which indicated that internal organizational resistance was more exogenous than endogenous, that is, the Chinese manufacturing SMEs possess an inherent desire to pursue high-quality development under environmental objective constraints aimed at increasing profits, brand building, and operational legitimacy, despite the potential short-term profit declines. Nevertheless, the execution of balanced economic-environmental business activities remains challenging due to external factors, such as the backward technological environment, imperfect and uncertain policies, and a scarcity of public interest.
Implications
Implications for Theory
This study makes four significant contributions to the existing literature. Firstly, it pioneers the examination of high-quality development of manufacturing enterprises within the context of environmental objective constraints, thereby surpassing the limitations of prior research focused solely on green manufacturing and sustainable development. Secondly, drawing upon institutional theory, stakeholder theory, and the non-competitiveness and non-exclusiveness of environmental resources, this study identifies the sources of the environmental pressure sources and delineates the barriers encountered by enterprises in adhering to environmental objective constraint. Thirdly, taking TBL and stakeholder demands as the starting point, the study clarifies the hallmarks of high-quality development and deduces the barriers impeding its realization in Chinese manufacturing SMEs. Fourthly, this study sheds light on the inherent resistance of enterprises towards high-quality development and environmental protection, elucidating the challenges associated with implementation. Based on these comprehensive examinations, a systematic theoretical framework is established to deduce the barriers to high-quality development under environmental objective constraints.
Implications for Policy
The ISM-MICMAC analysis reveals that technology constitutes a pivotal impediment to high-quality development in Chinese manufacturing SMEs. Despite the favorable economic spillovers and public good nature of environmental friendly technologies, the immature Chinese market mechanism hinders the externalization of green technology R&D costs. Given their limited scale, fragile risk resilience, and scant experience, Manufacturing SMEs face challenges in technological advancement, discouraging them from embracing innovations aligned with the environmental objectives. Drawing from the resource dependence theory, organizations must engage with external parties to secure resources essential for their operations. Chinese manufacturing SMEs, constrained by environmental uncertainties and resource scarcity, cannot solely rely on internal resources for high-quality development. Consequently, forging resource-dependent relationships with external stakeholders becomes imperative. Governments can play a tangible role in this endeavor by spearheading green demonstration projects and other measures that illuminate the benefits of ecological technology. Furthermore, direct policy interventions, such as special reward funds, investment subsidies, loan interest subsidies, and tax incentives, can alleviate the economic burdens associated with technological upgrades. These measures are crucial in enabling Chinese manufacturing SMEs to pursue high-quality development under environmental objective constraints.
Empirical evidence underscores the pivotal role of universities as hubs for technological opportunities (Klevorick et al., 1995). Traditionally, universities have served as the primary fountains of human resources (Martin, 1998). However, contemporary universities have expanded their scope to encompass technology transfer models (Guerrero et al., 2016), involving areas like energy conservation, emission reduction, pollution control, and other areas. Simultaneously, universities, as vital platform for open innovation, foster integration and collaboration among diverse innovation entities, facilitating the R&D, promotion, and application of key green generic technologies (Cao et al., 2023). Given this, governments should orchestrate a coordinated and systematic approach, harnessing the vast potential of universities in talent, technology, information and other innovative resources. This is crucial in positioning universities as the backbone force leading the environmental and technological progress of Manufacturing SMEs. To achieve this, two strategies are paramount: Firstly, establishing a robust mechanism for the transformation and benefit-sharing of research achievements. This enables governments to facilitate the conversion of universities’ knowledge capital in universities into practical productivity. Simultaneously, optimizing the technology trading market and transfer service system to forges a stronger link between universities and manufacturing SMEs. This, in turn, opens avenues for manufacturing SMEs to acquire green technologies, thereby accelerating the implementation and application of green technology research outcomes in manufacturing SMEs. Secondly, fostering a conducive policy environment and public opinion atmosphere. This stimulates the universities’ inherent desire to serve the green development of manufacturing SMEs. Furthermore, by crafting pragmatic and effective incentive policies, governments can guide universities to align their academic discipline and research direction with the green technologies of manufacturing SMEs, so as to ensure that manufacturing SMEs have access to essential human and technological resources required for technology innovation and introduction.
To assist Chinese manufacturing SMEs in pursuing high-quality development under environmental constraints, well-suited, comprehensive, and effectively enforced policies are crucial. These policies must strike a balance between regulatory measures that compel enterprises to adapt and incentive-based approaches that encourage the internalization of environmental challenges through strategic interventions. By blending these soft and hard policies tools, a stronger impetus can be created for Chinese manufacturing SMEs to implement business practices that harmoniously align with high-quality development and environmental objective. The ISM-MICMAC analysis underscores the importance of broadening policy frameworks to enhance the environmental policy landscape. Beyond the technical dimension, policymakers must also prioritize shaping market consumption patterns and elevating public awareness of environmental issues. Furthermore, the Chinese government should ensure that its new policies, geared towards environmental protection and high-quality development, are characterized by unambiguous legal provisions, expanded coverages, and rigorous standards. This rigor is paramount as it is only when enterprises and markets perceive government policies as consistent, long-term commitments that they are likely to embrace a more positive attitude toward high-quality transformation under environmental objective constraints.
Implications for Practice
The ISM-MICMAC analysis indicated that, among the barriers hindering Chinese manufacturing SMEs’ pursuit of high-quality development under environmental objective constraints, organizational barriers are the weakest and most easily overcome. However, as the main actors, manufacturing SMEs are the source of power for reconciling environmental concerns with their own high-quality development. The ultimate effectiveness of policy regulations, incentives, or public supervision hinges on their compliance. The concept of high-quality development under environmental objective constraints is still nascent within Chinese manufacturing SMEs. As these enterprises grasp the benefits of adopting sustainable management practices, they are likely to proactively adapt their business strategies, organizational structures, and human resource management systems to prioritize green initiatives and align with legal mandates. Achieving this harmonization is a protracted endeavor that necessitates balancing environmental imperatives with enterprise growth objectives. Although the initial investments may temporarily dent profitability, the long-term benefits of a high-quality development trajectory ensure the continued viability of these SMEs. As policies frameworks and legal infrastructures continue to mature, the associated costs and risks of adhering to environmental objectives can be increasingly mitigated.
Drawing from the preceding discussion, top executives in manufacturing SMEs should prioritize stakeholder environmental needs, embedding environmental objectives into both strategic planning and daily operations for high-quality development, and fostering the corporate culture that embraces environmental responsibilities. To enhance their capacity to tackle non-green and substandard production challenges, enterprises must expedite the adoption of green management practices, which includes refining green human resource systems, bolstering employee education and training on environmental stewardship, and engaging employees in decision-making and practices aligned with environmental objectives. Despite the inherently positive externalities of green technology innovation and application, top management must prioritize these endeavors to address fundamental transformational challenges. Ensuring consistency in the formulation and implementation of high-quality development strategies under environmental objective constraints, manufacturing SMEs should actively seek broader cooperation. On the one hand, leveraging industry-university-research cooperation platform, enterprises should tap into universities as their strategic think tanks, exploring flexible cooperation mechanisms such as project outsourcing, technology investment, part-time professors, etc., to harness intellectual capital and optimize resource allocation, striving for Pareto optimality. On the other hand, beyond leveraging policy-driven platforms, manufacturing SMEs should foster enterprise-to-enterprise cooperation, forging technological and business alliances to share resources. By integrating their development efforts with large-scale enterprises, they can harness synergies and accelerate their transition to high-quality transformation under environmental objective constraints.
Conclusions
Focusing on resource conservation, environmental protection, and natural restoration, high-quality development under environmental objective constraints emerges as a novel paradigm for manufacturing SMEs. This approach mandates the internalization of external environmental pressures, transforming them into catalysts for eco-environmental, eco-economic, and eco-social development. However, capital, technological, and information limitations pose barriers to achieving this collaborative high-quality development. This study, grounded in theoretical model deduction and empirical investigation, pinpointed these barriers and utilized ISM-MICMAC for a hierarchical analysis, unveiling the most critical barriers encountered by Chinese manufacturing SMEs in pursuing high-quality development under environmental objective constraints.
In addition to internal organizational barriers, the study revealed that the resistance of economic barriers are relatively minor. Conversely, technical and policy barriers emerged as the most significant impediments. Notably, the most pronounced barrier was identified as the unsmooth industry-university-institute cooperation channels. Given that high-quality development generates positive externalities, the implementation of tailored policies is crucial to attaining elevated technological standards and coordinated high-quality development.
Despite offering valuable insights for the government and Chinese manufacturing SMEs in crafting policies and strategies for high-quality development under environmental objective constraints, this study still had some limitations. Firstly, the targeting of the conclusions is limited as they are drawn from a broader examination of Chinse manufacturing SMEs’ universal barriers, rather than a focused analysis of environmental polluting or particular industries. Secondly, while hierarchical barrier relationships were scrutinized, the underlying barrier mechanisms remained unexplored. Thirdly, neither theoretical nor empirical analyses were conducted to investigate means of mitigating the barrier resistance effects faced by Chinese manufacturing SMEs.
Future research endeavors could enhance the current study’s scope and depth by: narrowing the research focus to specific industries characterized by distinct traits or pollution levels, employing in-depth interviews and text analysis to identify industry-specific barriers; broadening the research boundaries by delving into barrier mechanisms through case studies or qualitative meta-analysis; and examining factors driving high-quality development from a barrier perspective, integrating both barriers and drivers into a unified research framework to elucidate the mechanisms for overcoming barrier resistance.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study is supported by Sichuan Office of Philosophy and Social Science (SC21C053, SCJJ23ND447), Postdoctoral Research Foundation of China (2022M712227) and National Social Science Fund of China (22FGLB062).
