Journal of Small Business & Entrepreneurship

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/rsbe20

Sustainable innovation initiatives by small and

medium enterprises: a systematic literature
review

Meeta Dasgupta

To cite this article: Meeta Dasgupta (2021): Sustainable innovation initiatives by small and
medium enterprises: a systematic literature review, Journal of Small Business & Entrepreneurship,
DOI: 10.1080/08276331.2021.1898177

To link to this article: https://doi.org/10.1080/08276331.2021.1898177

Published online: 30 Mar 2021.

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JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP
https://doi.org/10.1080/08276331.2021.1898177

Sustainable innovation initiatives by small and medium

enterprises: a systematic literature review
Meeta Dasgupta
Strategic Management, Management Development Institute, Gurugram, India

ABSTRACT ARTICLE HISTORY

The scale of environmental and social challenges the world is fac- Received 3 November 2020
ing today requires enterprises, both large and small, to develop Accepted 25 February 2021
sustainable innovative solutions that are economically, environ-
KEYWORDS
mentally and socially viable. The purpose of this paper is to
Sustainable innovation;
understand the sustainable innovation initiatives taken by small small and medium
and medium enterprises (SMEs) and small business entrepreneurs enterprises; environmental
and the impact on performance. The paper presents a systematic innovation; green
literature review of research in the area. 63 publications, drawn innovation; sustainability;
from academic databases, on sustainable innovation initiatives value chain analysis;
taken by SMEs were identified and analyzed. The findings reveal performance
that majority of the initiatives taken by SMEs are related to prod-
uct and process innovations, and focus has been on SMEs in the MOTS CLÉS
manufacturing sector. The review attempts a value chain analysis Innovation durable; petites
that brings out the importance given to activities under opera- et moyennes entreprises;
tions and manufacturing to support the initiatives. The paper innovation environnemen-
highlights the performance measures used to measure and con- tale; innovation verte; revue
syst
ematique de litt
erature;
trol the outcome of the innovation initiatives. Additionally, the durabilit
e; analyse de la
paper highlights broad research themes, links them through a cha^ıne de valeur;
conceptual model and identifies research gaps in this area. The performance; moteurs de
findings of the study will help professionals identify potential l’innovation durable
areas for innovation and allow academics to conduct further
research using the identified research gaps.

RÉSUMÉ
L’ampleur des de
fis environnementaux et sociaux auxquels le
monde est confronte
aujourd’hui exige des entreprises, grandes
et petites, qu’elles d
eveloppent des solutions innovantes et dura-
bles qui soient e
conomiquement,
ecologiquement et socialement
viables. L’objectif de cet article est d’examiner les initiatives inno-
vantes et durables prises par les petites et moyennes entreprises
(PME) et les petits entrepreneurs, ainsi que leur impact sur les
performances. L’article pre
sente une revue syst
ematique de
litt
erature dans ce domaine. Tir
ees de bases de donn
ees universi-
taires, 63 publications sur les initiatives innovantes et durables pri-
ses par les PME ont
et
e identifi
ees et analys
ees. Les r
esultats
r
evelent que la majorit
e des initiatives prises par les PME sont
li
ees aux innovations de produits et de proc
ed
es, et que l’accent
a e
t
e mis sur les PME du secteur manufacturier. La revue tente
une analyse de la cha^ıne de valeur qui met l’accent sur l’impor-
tance accord
ee aux activit
es op
erationnelles et manufacturieres

CONTACT Meeta Dasgupta meetadasgupta@hotmail.com Strategic Management, Management Development

Institute, Mehrauli Road, Sukhrali, Gurugram 122007, India
ß 2021 Journal of the Canadian Council for Small Business and Entrepreneurship/Conseil Canadien de la PME et de l’entrepreneuriat
2 M. DASGUPTA

pour soutenir les initiatives. L’article met en
evidence les mesures

de performance utilis
ees pour mesurer et contro ^ler les r
esultats
des initiatives d’innovation. En outre, il met en lumiere les grands
themes de recherche, les relie par un modele conceptuel et iden-
tifie les lacunes de la recherche dans ce domaine. Les conclusions
de l’e
tude aideront les professionnels a identifier des domaines
potentiels d’innovation et permettront aux universitaires de con-
duire de nouvelles recherches en utilisant les lacunes identifi
ees.

Introduction
Nowadays there is an increasing political and social awareness of the importance of
the development of sustainable innovations, with the European Commission launch-
ing the Eco-Innovation Action Plan (EcoAP) in December 2011 (D
ıaz-Garc
ıa,
Gonz
alez-Moreno, and S
aez-Mart
ınez 2015). The Triple Bottom Line (TBL) concept
has become quite popular both amongst the academicians and practitioners.
However, along with this comes the need to measure the impact of the sustainable
initiatives. Although economic and political drivers at the national and international
level are pivotal for setting the sustainability framework, the key role of individuals
and various stakeholders cannot be ignored in bringing about a change in commun-
ities towards sustainability (Artin and Artin 2019; Cagliano, Worley, and
Caniato 2016).
Emphasis on sustainable business practices has been increasing over the years,
especially amongst the small and medium business managers, executives and practi-
tioners (The Good Company 2005). Small and medium enterprises (SMEs) are recog-
nized universally as the backbone of any economy and the powerhouse of growth,
with a high proportion of enterprises around the world classified as small and
medium enterprises (Anand 2015). Also they are recognized as the seedbed of invent-
iveness, creativity and innovation (as cited in Oxborrow and Brindley (2013)). The
definition of SMEs varies across geographies; the criteria used for their classification
being number of employees or the investment made by the enterprises in plant and
machinery or equipment. Researchers, therefore, have an opportunity to study a field
that has the potential to impact business processes and decisions. However, what is
lacking is an understanding of the various sustainable innovation initiatives taken by
SMEs and their impact on performance.
The systematic literature review (SLR) process outlined by Transfield, Denyer, and
Smart (2003) has been employed to synthesize and assess the existing literature on
sustainable innovation in SMEs. The purpose was to explore the various sustainable
innovation initiatives taken by SMEs and the impact on performance. Mentioned
below are the questions that guided the study:

1. What are the various sustainable innovation initiatives taken by SMEs?

2. How is the impact on performance measured?
3. How are the various initiatives leading to increased performance (analysis
through the value chain)?
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 3

The sections of the paper are organized as follows. Firstly, how the study defines
sustainable innovation has been given. Next a detail on the methodology adopted for
identification of the papers for the literature review is presented. This is followed by
a synthesis of the analysis of the identified papers by presenting the various sustain-
able initiatives taken by the SMEs, the metrics used to measure the impact on per-
formance, a value chain analysis of the activities modified to support the initiatives,
the evident broad themes around which the research can be presented, and a concep-
tual model proposed. The paper ends with highlighting the research gaps evident
through the SLR and directions for future research.

What are sustainable innovation initiatives?

Before we answer this question it becomes important to understand how has the con-
cept of innovation been approached in this paper. According to many scholars and
practitioners, the term “innovation” is used to denote new products and artefacts,
new services, new manufacturing and business processes and new organizational
structures, procedures, business models and strategies (as cited in Podmetina et al.
(2018)). Organizations might have the ability to execute and carry out an innovation
through its own system, leading to new products, services or processes. Or organiza-
tions might have the ability to use new ideas from outside the organization, adapt
those ideas to execute change in their management system or the relationships among
the components of the system (Jin, Hewitt-Dundas, and Thompson 2004). Rothwell
and Gardiner (1985) state that “ … .Innovation does not necessary imply the commer-
cialization of only a major advance in the technological state of art (a radical innov-
ation), but it includes also the utilization of even small-scale changes in technological
know-how (an improvement or incremental innovation)” (as cited Tidd, Bessant, and
Pavitt 2005, p. 66). According to Aiken and Hage (1979) and Nord and Tucker
(1987), an innovation might not be new to the entire world; rather it should be the
first use of an idea within an organization, whether or not the idea has been adopted
by other organizations already (as cited Khalil 2009).
In literature innovations that have reduced negative impact on the environment
have been described through various terms like “green”, “environmental” and
“sustainable” innovation (Harc 2018). According to the Bruntdland Report (1987,
p. 24), sustainable innovation is that meets “the needs of the present without compro-
mising the ability of future generation to meet their own needs. The concept of sus-
tainable development does imply limits—not absolute limits but limitations imposed
by the present state of technology and social organization on environmental resources
and the ability of the biosphere to absorb the effects of human activities” (as cited in
D
ıaz-Garc
ıa, Gonz
alez-Moreno, and S
aez-Mart
ınez (2015)).

Methodology
The purpose of this research is to identify, evaluate and synthesize the existing litera-
ture on sustainable innovation initiatives by SMEs. Reviewing the literature in the
area has helped to identify the common research methodologies used by researchers,
4 M. DASGUPTA

the spread of research in the field geographically and industry-wise, the types of
research in focus, that is product, process, services etc. and the interventions dis-
cussed in various value chain activities. Additionally, the study has helped to identify
different performance parameters used to measure the outcome of various sustainabil-
ity initiatives, the themes/trends in the area and the research gaps.
The procedure outlined by Transfield, Denyer, and Smart (2003) was used to con-
duct the SLR. The process consisted of three stages: planning for the SLR, execution
and reporting. Defining the objectives of the research and detailing the different steps
followed in identifying the relevant literature for the study was the first step. The risk
of error and potential bias for data collection was reduced by clearly defining the
search strategy and the inclusion and exclusion criteria.
Collecting and organizing the data was part of the second stage. Predefined search
words and search criteria regarding the publication year of the paper, the language,
and the nature of paper were used. In order to make the process replicable a system-
atic approach was followed. Firstly, academic search boundary was set to the use of
electronic journal databases as it is believed that these databases have considerably
improved the accessibility and dissemination of journal articles. Secondly, as the pur-
pose was not to limit the literature search to specific category of journals say, those
appearing in ABS or ABDC or any other, an extended search using the keywords
identified was conducted using the electronic databases Business Source Complete,
ABI/Inform (Proquest) and Emerald Insight to reach a saturation with respect to new
papers getting picked up by the search. The search was limited to peer-reviewed aca-
demic articles written in English language. The period selected for the study was
restricted to the years 2000 to 2019. Search words “Sustainable innovation and
SMEs,” “green innovation and SMEs,” and “environmental innovation and SMEs”
were used to identify the papers. The initial search resulted in 6631 papers. After
applying the exclusion criteria as detailed in the methodology (Figure 1), a total of 67
papers were shortlisted. An additional 5 papers were identified by going through the
references of the selected papers. Of the 72 papers, 63 empirical papers qualified for
the in-depth analysis. The research questions guided the selection of papers for in-
depth analysis:

 Is an SME/SMEs the unit of analysis in the research?

 Does the paper discuss a sustainable innovation initiative taken by the SME, that
is an innovation initiative that has an impact beyond just economic sustainability?
In other words, does the research explore and discuss the impact on social and
environmental sustainability?
 Does the research explore one or various value chain activities modified to support
the initiative?

Papers that did not meet all the inclusion criteria, that is, did not have a SME as
the unit of analysis and did not discuss a sustainable innovation initiative taken by a
SME and did not explore value chain activities modified to support the initiative
leading to improved performance were not subject to the analysis. As the nine con-
ceptual papers did not qualify the above mentioned criteria, they too were not subject
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 5

Figure 1. Methodology of paper selection.

to the analysis. Papers making a passing reference to the concept of sustainability

were excluded.
Excel spreadsheets were created at different stages. The initial spreadsheet, gener-
ated from the electronic database listed all the papers. After applying the inclusion
and exclusion criteria a final spreadsheet was created to keep track of the selected
papers. Duplicate records were deleted. This spreadsheet captured information with
respect to the specifics of the paper, that would aid in the in-depth analysis of
the research.
According to Transfield, Denyer, and Smart (2003), the third stage of the SLR con-
sists of analyzing and synthesizing the collated data. The analysis of the data included
the geographic location and the industries where the studies were carried out, the
research methodology used, the type of innovation initiative, the value chain activities
that were modified to support the innovation initiative, an analysis of how perform-
ance outcome was being measured. Additionally, the broad/prominent themes of
research were identified and research gaps explored.

Results and discussion

Although a total of 72 papers were identified, 67 from the initial search and 5 from
the preliminary analysis of the papers selected, the SLR was based on 63 empirical
papers. 9 papers were conceptual papers and were not subject to in-depth analysis.
6 M. DASGUPTA

Figure 2. Geographical spread of research (number of papers).

The time period of the search was divided into two 2000–2010 and 2011–2019. The
data reveals that the last decade has seen a huge jump in the interest in the
research area.
As is evident from Figure 2, Canada and South America rank the lowest with
respect to publications in the area (1 publication each). Both Asia and Europe have
significantly more papers published (19 and 17 respectively).

Commonly adopted methodologies in research on sustainable innovation

initiatives
The data analysis shows that majority of the researchers have adopted quantitative
research methods, 62 percent, to explore the area of research (Figure 3). Under the
quantitative research methods, tools like structural equation modeling, probit and
bivariate probit, multinomial logit regression, partial least squares method, correlation
and regression analysis have been used. Under the qualitative research methods, pre-
dominantly, case studies have been used as a tool to explore. Very few researchers (3
percent) have used a combination of qualitative and quantitative techniques.

Industry focus
As is evident from Figure 4 majority of the research (around 65 percent) has focused
on exploring the sustainable innovation initiatives taken by the SMEs in the manufac-
turing sector. Focus on studying initiatives taken by SMEs in the services sector is
relatively low (around 11 percent). Around 16 percent of the papers involve a cross-
sector study.

Pillars of sustainability
Although sustainability encompasses an impact on all the three pillars of environmen-
tal, social and economic, the data analysis shows that around 51 percent of the papers
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 7

Figure 3. Research methodology mix (in percentage).

Figure 4. Industry focus (in percentage).

have explored the innovation initiatives that have an impact on the environment and
the financials of the SME. Only 40 percent of the papers exhibit initiatives that have
an impact on all the three pillars of sustainability. The SLR resonates the findings of
Mupfasoni, Kessler, and Lans (2018), that in organizations awareness of environmen-
tal sustainability is better developed than their social and economic sustainability
(Figure 5).

Types of innovation
The data analysis (Table 1) shows that majority of the sustainable innovation initia-
tives taken by the SMEs are with respect to products and processes. Firms have also
innovated with respect to the services given to customers, organizational practices,
their business models, and use of technology.
8 M. DASGUPTA

Figure 5. Pillars of sustainability (in percentage).

With respect to innovation in products, SMEs have made investment in the pro-
duction of green products using raw materials and components that are non-toxic
and biodegradable and have lesser impact on the environment, have designed prod-
ucts requiring lesser or recycled raw materials, that leave lesser residual waste prod-
ucts and that can be easily recycled, conceptualized products that consume lesser
energy during the development process, and have devised ways of reducing the size
and weight of product packaging.
Sustainable process innovations in SMEs get exhibited in the form of production
processes that are eco-friendly and consume less raw material, reduce waste and
emissions, are energy efficient, consume less water, coal or oil, have lesser environ-
mental risks because of accidents, spills and releases, and have increased safety. They
may involve change in procedures or replacement of inefficient equipment.
Very few papers, 4 in number, have discussed sustainable innovation initiatives taken
in services. Most of the new services introduced have been discussed from the point of
view of the benefits created for the society in the form of providing education/awareness
for protection of the environment or providing consulting in the form of waste manage-
ment. 12 papers have talked about initiatives taken by SMEs to modify their organiza-
tional practices. Modifications have happened with respect to new programs introduced
for reducing energy consumption, a new cost accounting system being introduced, new
marketing or HR practices being introduced to promote adoption of green manage-
ment. SMEs have made investment in cleaner technology or in robots to increase the
efficiency in manufacturing. There is only one paper that explores the business model
of the SME. The business model of the SME built on strategic partnerships helps the
firm achieve economic, environmental and social viability.

Value chain analysis

A value chain perspective, through its focus on both downstream and upstream activ-
ities, integrates internal and external stakeholders in the value creation process. More
and more customers and suppliers have now become demanding with respect to sus-
tainable practices of an organization.
Table 1. Type of innovation and value chain analysis.
Product Infra
Product/ Org. Business Inbound Outbound Marketing After-sales and and
Title of the paper packaging Process Service practices Technology model logistics Operations logistics and sales support Procurement tech dev HRM planning
Comparing internal and external impacts of sustainable innovation: 冑 冑 冑 冑 冑 冑 冑 冑
an exploratory study
Driving factors for the success of the green innovation market: a 冑 冑 冑 冑 冑 冑 冑 冑
relationship system proposal
Eco-innovations in Croatia: exploring entrepreneurs’ motivation 冑 冑 冑 冑 冑 冑 冑
From intuitive programming of robotic systems to business 冑 冑 冑 冑
sustainability of manufacturing SMEs
Green entrepreneurship and green innovation for SME development 冑 冑 冑 冑 冑
in market turbulence
Success factors of environmentally sustainable product innovation: 冑 冑 冑 冑 冑 冑
a systematic literature review
Public support for environmental innovation in SMEs: the role of 冑 冑 冑 冑
the “young researchers for the economy” programme
Strategic orientations, sustainable supply chain initiatives, and 冑 冑 冑 冑 冑 冑
reverse logistics
Sustainable value creation in SMEs: a case study 冑 冑 冑 冑 冑 冑 冑
The role of an SME’s green strategy in public-private eco- 冑 冑 冑
innovation initiatives: the case of ecoprofit
A comparison of repaired, remanufactured and new compressors 冑 冑 冑
used in Western Australian small- and medium-sized enterprises
in terms of global warming
Adoption of “eco-advantage” by SMEs: emerging opportunities and 冑 冑 冑 冑 冑
constraints
Application of activity-based costing to green industry for 冑 冑 冑 冑
profitability and performance enhancement—recycling of blast
furnace slag as an example
Barriers to environmental innovation in SMEs : empirical evidence 冑 冑 – – – 冑
from French firms
Benchmarking green logistics performance with a composite index 冑 冑 冑 冑 冑 冑 冑
Conceptualization, development and validation of green marketing 冑 冑 冑 冑 冑 冑 冑
orientation (GMO) of SMEs in India
Developing green innovation performance by fostering of 冑 冑 冑 冑
organizational knowledge and coopetitive relations
Drivers and enablers that foster environmental management 冑 冑 冑 冑 冑 冑
capabilities in small- and medium-sized suppliers in
supply chains
Drivers for the participation of small and medium-sized suppliers in 冑 冑 冑 冑 冑
green supply chain initiatives
JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP

Eco-innovation by small and medium-sized firms in Europe: from 冑 冑 冑

end-of-pipe to cleaner technologies
(continued)
9
 10

Table 1. Continued.
Product Infra
Product/ Org. Business Inbound Outbound Marketing After-sales and and
Title of the paper packaging Process Service practices Technology model logistics Operations logistics and sales support Procurement tech dev HRM planning
Ecopreneurship—a new approach to managing the triple 冑 冑 冑
bottom line
Ecopreneurship and green innovation for the success of new 冑 冑 冑 冑 冑
spa products
M. DASGUPTA

Effects of green marketing strategy on firm financial performance. 冑 冑 冑 冑 冑 冑 冑 冑

The moderating role of government policy
Engaging small and medium-sized enterprises (SMEs) in the low 冑 冑 冑
carbon agenda
Environmental compliance and economic and environmental 冑 冑 冑 冑 冑 冑 冑 冑
performance: evidence from handicrafts small businesses
in Mexico
Environmental practices and innovation performance of US small 冑 冑 冑 冑 冑 冑
and medium-sized manufacturers
Environmentally driven technical innovation by Australian 冑 冑 冑 冑 冑
construction SMEs
Extending green supply chain management activities to 冑 冑 冑 冑 冑 冑 冑
manufacturing small and medium enterprises in a
developing economy
Factors influencing green purchasing adoption for small and 冑 冑 冑 冑
medium enterprises (SMEs) in Malaysia
Green human resource practices: implementations and hurdles of 冑 冑
SMEs in Pakistan
Green innovation in Germany: a comparison by business size 冑 冑 冑 冑 冑
Green IT empowerment, social capital, creativity and innovation: a 冑 冑 冑 冑 冑
case study of creative city, Bantul, Yogyakarta, Indonesia
Green marketing innovations in small Indian firms 冑 冑 冑 冑 冑
Green marketing orientation (GMO) and performance of SMEs 冑 冑 冑 冑 冑
in Ghana
Green supply chain management and organizational performance 冑 冑 冑 冑 冑
Green supply chain management practice adoption in Ugandan 冑 冑 冑 冑
SME manufacturing firms: The role of enviropreneurial
orientation
How do small and medium enterprises go “green”? A study of 冑 冑 冑 冑 冑
environmental management programs in the U.S. wine industry
Implementing environmental practices within the Greek dairy 冑 冑 冑 冑 冑 冑 冑
supply chain: drivers and barriers for SMEs
Interdependence analysis of lean-green implementation challenges: 冑 冑 冑 冑 冑 冑 冑
a case of Indian SMEs: IMS
Intermediaries driving eco-innovation in SMEs: a qualitative 冑 冑 冑 冑 冑 冑 冑
investigation
(continued)
Table 1. Continued.
Product Infra
Product/ Org. Business Inbound Outbound Marketing After-sales and and
Title of the paper packaging Process Service practices Technology model logistics Operations logistics and sales support Procurement tech dev HRM planning
The impact of human resource management on environmental 冑 冑 冑 冑 冑 冑
performance: an employee level study
Knowledge management view of environmental sustainability in 冑 冑 冑 冑 冑 冑 冑
manufacturing SMEs in the Philippines
Lean manufacturing practices in Indian manufacturing SMEs and 冑 冑 冑 冑 冑 冑
their effect on sustainability performance
Modeling the barriers of green supply chain management in small 冑
and medium enterprises
Proactive and reactive corporate social responsibility: antecedent 冑 冑 冑 冑
and consequence
Pursuing quality and environmental performance 冑 冑 冑 冑 冑 冑 冑 冑
Reusing industrial robots to achieve sustainability in small and 冑 冑 冑
medium-sized enterprises (SMEs)
Social and environmental performance at SMEs: considering 冑 冑 冑 冑 冑 冑
motivations, capabilities, and instrumentalism
Stakeholder relations and sustainability practices of US small and 冑 冑 冑 冑 冑
medium-sized manufacturers
Sustainability orientation, supply chain integration, and SMEs 冑 冑 冑 冑 冑 冑 冑 冑
performance: a causal analysis
Sustainable development practices adopted by SMEs in a 冑 冑 冑
developing economy: an empirical study
The driver of green innovation and green image—green 冑 冑 冑 冑 冑 冑
core competence
The impact of green supply chain management in small to medium 冑 冑 冑 冑 冑 冑
enterprises: cross-sectional evidence
The positive effect of green intellectual capital on competitive 冑 冑 冑 冑 冑 冑 冑 冑 冑 冑
advantages of firms
Why and how to adopt green management into business 冑 冑 冑 冑 冑 冑 冑
organizations?: The case study of Korean SMEs in
manufacturing industry
Working on a dream: sustainable organizational change in SMEs 冑 冑 冑 冑 冑 冑 冑 冑 冑
using the example of the Austrian wine industry
Strategic intent in the management of the green environment 冑 冑 冑 冑
within SMEs
Pollution prevention in small and medium-sized enterprises: 冑 冑 冑 冑 冑
evoking structural changes through partnerships
Barriers and stimuli for eco design in SMEs 冑 冑 冑 冑 冑
An empirical study of environmental awareness and practices
JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP

冑 冑 冑 冑 冑
in SMEs
Environmental management in SMEs in the UK: practices, pressures 冑 冑 冑 冑 冑 冑 冑
and perceived benefits UK: practices, pressures and
11

perceived benefits
35 55 4 12 3 1 19 56 13 16 7 25 56 15 14
12 M. DASGUPTA

The data analysis (Table 1) exhibits the activities across the value chain that have
been modified to support the sustainable innovation initiatives. As is evident opera-
tions have been modified in most of the SMEs. Operations have been modified with
respect to the manufacturing processes or change in the packaging activities or by
ensuring greater control over the quality of products manufactured so that they meet
the benchmarks set for environmental control. The product and technology develop-
ment activities have also played an active role with respect to support in design/
redesign of the products and processes and in conducting research and development
activities to support the various initiatives.
Relatively fewer papers have exhibited the change in other value chain activities.
For instance, 19 papers have discussed the change in inbound logistics to support the
sustainable innovation initiatives of the SMEs. Change in inbound logistics has been
discussed with respect to greater quality control on raw materials received with strin-
gent supplier compliance audits being conducted. On the other hand, just 13 papers
have discussed the interventions made in outbound logistics to support the initiatives.
Outbound logistics has been primarily discussed with respect to use of green trans-
portation that reduces fuel consumption and reduces pollution, use of reusable con-
tainers in logistics, and packaging of the finished goods that reduces the size and
weight of the packaging. Papers have also discussed efforts made by SMEs for reverse
logistics in order to retrieve used products from customers to ensure their proper dis-
posal. 16 papers have discussed the interventions made in marketing and sales,
whereas 7 papers have discussed interventions in after-sales support to support the
initiatives. These get exhibited in the form of establishing relationships with custom-
ers and educating them to promote recycling of products, incorporating environmen-
tal messages in packaging and promotions, and competitive pricing of green
products. 25 papers have discussed changes in procurement activities. These are pri-
marily with respect to management of suppliers to ensure they meet the environmen-
tal compliance requirements, conducting audit of their internal processes, conducting
training and education programmes for the suppliers, undertaking collaborative
research for cleaner processes, for substituting raw materials or for removing hazard-
ous materials from the production process. Around 15 papers have discussed the role
played by human resource management in the various initiatives. The role is with
respect to conducting training of employees to build their competencies in environ-
mental protection and green issues, running employee awareness campaigns, intro-
ducing rewards and incentives for green initiatives, and linking employee promotions
to adoption of green management. Around 14 papers have discussed the role of infra-
structure and environmental planning to support the initiatives. The role is with
respect to encouraging collaboration across departments, introduction of various
practices within the firms, undertaking construction that promotes sustainability, and
facilitating a green IT or logistics infrastructure.

Performance outcome/control measures

In order to survive competition, it is important for organizations to continuously
review performance of the various initiatives taken. The triple bottom line (TBL)
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 13

approach describes sustainability in terms of three components, the natural environ-

ment, society (social) and economic performance (Elkington 1998). Therefore, the
outcome or performance of the various sustainable innovation initiatives taken by
SMEs must be measured through indicators that reflect the effect on the environ-
ment, society and the economic indicators.
The data analysis (Table 2) lists the various indicators used by the SMEs to meas-
ure and control the performance of the various sustainable innovation initiatives.

Broad themes of research under sustainable innovation initiatives

While the SLR shows the broad expanse of research in the area of sustainable innov-
ation initiatives, there are certain broad themes that emerge. Table 3 illustrates the
broad themes identified.
The themes have been linked together in the form of a conceptual framework
(Figure 6).

Drivers leading to sustainable innovation initiatives

Environmental regulation and policies stimulate innovation, thus leading to a win-
win situation by reducing environmental pollution and increasing the competitiveness
of firms. According to Porter and van der Linde, 1995, a stringent and well-crafted
government regulation must warranty more competitive advantage than a less strin-
gent regulation (as cited in Triguero, Moreno-Mond
ejar, and Davia (2015)). A less
stringent regulation or an ineffective enforcement may lead to negative perceptions
and further negative response from the SMEs. It is, therefore, important that the
SME perceives the Government regulation as an opportunity and not as a threat to
evoke a positive response (Namagembe, Sridharan, and Ryan2016). According to
Brouillat and Oltra (2012) instruments like recycling fees, tax subsidy and various
other stringent norms can lead to radical innovations and remarkable changes in
product designs. Regulations, in fact, may be more important for encouraging eco-
innovation in less innovative firms (Kesidou and Demirel 2012).
Market turbulence that reflects the changes in the preferences of customers for
products and services drive organizations to innovate to meet and satisfy the evolving
needs of the customers and thereby create competitive advantage. Customers are the
most important stakeholders and customer pressure is one of the critical factors that
drive companies to adopt sustainable practices. The market opportunity helps compa-
nies to develop their innovative capabilities for a “green growth” (Oxborrow and
Brindley 2013; Ramakrishnan, Haron, and Goh 2015; Ebrahimi and Mirbargkar
2017). According to Volery (2002, 110), “Never before has there been such an oppor-
tunity and need for innovation that meets the needs of consumers without damaging
the planet’s natural resource base” (as cited in Robinson and Stubberud (2013)).
Expectations of family members, customers, suppliers and community members
motivate small businesses to take pro-environmental measures as they perceive that
these initiatives help them to increase visibility in the community (Lynn, McNeill,
and Warren-Smith 2013).
14 M. DASGUPTA

Table 2. Performance measures.

Measures
Economic  Creation/opening of a new market for a product (Chahal, Dangwal, and
Raina 2014; Ebrahimi and Mirbargkar 2017)
 Reduction in company costs/costs of production (Lynn, McNeill, and Warren-
Smith 2013; Oxborrow and Brindley 2013; Chin-Chun, Tan, and Suhaiza 2016;
Ebrahimi and Mirbargkar 2017)
 Increased revenue/sales/market share from green product (Roy, Boiral, and
Paill
e 2013; Ebrahimi and Mirbargkar 2017)
 Reduction in the need for government regulation/regulatory compliance
(Roy, Boiral, and Paill
e 2013; Abaza 2017)
 Receiving public recognition/award (Abaza 2017)
 Increased customer satisfaction (Abaza 2017)
 Stability and future growth prospects (Ekawati et al. 2017)
 Acquisition of new customers (Brankov, Ivaskovic, and Cater 2012)
 Sale of used, unsold, or returned products in secondary markets (Chin-Chun,
Tan, and Suhaiza 2016)
 Investments in machinery and technology (investments/revenue) (%)
(Ciasullo and Troisi 2013)
 Investments in product development and innovation (R&D/revenue) (%)
(Ciasullo and Troisi 2013)
 Simplified production processes, reducing costs (Ekawati et al. 2017)
 Improved reputation (Klewitz, Zeyen, and Hansen 2012; Sajan et al. 2017)
 Decreased customer complaints (Sajan et al. 2017)
 Return on sales
 Reduction in fee for waste discharge (Klewitz, Zeyen, and Hansen 2012)
Environmental  Reduction in amount of environmentally harmful waste created or disposed
(Klewitz, Zeyen, and Hansen 2012; Oxborrow and Brindley 2013; Abaza 2017)
 Clean energy alternative provided to a population or area (Abaza 2017)
 Reduced use of materials and energy (Ekawati et al. 2017)
 Reduced pollution and CO2 footprint (Lynn, McNeill, and Warren-Smith 2013)
 Increased recycling after use (Bozi
c and Botri
c 2017; Mafini and Loury-
Okoumba 2018)
 Energy consumed (Lynn, McNeill, and Warren-Smith 2013)
 Volume of waste water (Klewitz, Zeyen, and Hansen 2012; Sajan et al. 2017)
 Quantity of Cardboard scarps (Ciasullo and Troisi 2013)
 Total waste (Dixon and Clifford 2007)
 Transport In (Ciasullo and Troisi 2013)
 Transport Out (Ciasullo and Troisi 2013)
 Reduce material inputs for leaner manufacturing (Ciasullo and Troisi 2013)
 Reduction in solid waste (Klewitz, Zeyen, and Hansen 2012; Sajan
et al. 2017)
 Replaced materials with less polluting or hazardous substitutes (Robinson
and Stubberud 2013; S
anchez-Medina et al. 2015; Shashi et al. 2018)
 Reduced purchases of non-renewable materials, chemicals, and components
(Paille et al. 2014)
 Reduced the risk of environmental accidents, spills, and releases (Paille
et al. 2014)
 Reduction of environmental accidents
Social  Increase in likelihood of job placements due to training provided
(Muafi 2015
 Improvement in the health of a group of people (Abaza 2017)
 Improvement in quality of workforce (Sajan et al. 2017)
 Better quality of life (Rosca, Reedy, and Bendul 2017)
 Increased safety and security (S
anchez-Medina et al. 2015)
 Growth of complementary green industries
 Improvement in quality of water consumed by households (Brankov,
Ivaskovic, and Cater 2012)
 Index of computerization (PC/number of employees) (Ciasullo and
Troisi 2013)
 Reduction in risk of several injuries (S
anchez-Medina et al. 2015)
 Better relationship with labour (S
anchez-Medina et al. 2015; Sajan et al. 2017)
 Increased training and education (Roy, Boiral, and Paill
e 2013; Ebrahimi and
Mirbargkar 2017)
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 15

Table 3. Research themes.

Themes Description
Drivers (external)  Governmental regulations (existing and future; actual and perceived) (van
Hemel and Cramer 2002; Worthington and Patton 2005; Triguero, Moreno-
Mond
ejar, and Davia 2015; Hardie, Allen, and Newell 2013a, 2013b; S
anchez-
Medina et al. 2015; Kumar 2015; Ramakrishnan, Haron, and Goh 2015;
Namagembe, Sridharan, and Ryan 2016; Bozi
c and Botri
c 2017; Maheswari,
Nandagopal, and Kavitha 2018)
 Market turbulence (Changes in market and technology opportunity)
(Ebrahimi and Mirbargkar 2017)
 Pressure from buyer/customers/stakeholders (Oxborrow and Brindley 2013;
Triguero, Moreno-Mond
ejar, and Davia 2015; Hardie, Allen, and Newell
2013a, 2013b; Lee 2008; Theyel and Hofmann 2012; Triguero, Moreno-
Mond
ejar, and Davia 2015)
 Perceived pressure from external networks (Lynn, McNeill, and Warren-
Smith 2013)
 Expectations of stakeholders (van Hemel and Cramer2002; Gadenne,
Kennedy, and McKeiver 2009)
Drivers (internal)  Perceived benefits (Ramakrishnan, Haron, and Goh 2015)
 Attitudes (Hatak, Floh, and Zauner 2015)
 Pressures from internal stakeholders (Cordano, Marshall, and Silverman 2010)
 Established environmental management programmes 9 (Shashi et al. 2018)
 Organizational culture (Chang 2015)
 Sustainability orientation and commitment towards environmental protection
(Brammer, Hoejmose, and Marchant 2012)
Barriers  Perception of barriers (van Hemel and Cramer 2002; Pinget, Bocquet, and
Mothe 2015)
 Lack of resources (Pinget, Bocquet, and Mothe 2015; Conway 2015)
 Poor market structure (Ghadge et al. 2017)
 Lack of appropriate logistics infrastructure (Ghadge et al. 2017)
 Demanding warehouses and distribution process (Ghadge et al. 2017)
 Unorganized returns management (Ghadge et al. 2017)
 Lack of government support (Conway 2015)
 Lack of consumer support (Majumdar and Sinha 2018)
Enablers (external)  Availability of public funds for engaging in eco-innovation activities (Thanki
and Thakkar 2018)
 Government support (Dixon and Clifford 2007; Klewitz, Zeyen, and Hansen
2012; Bozi
c and Botri
c 2017; Thanki and Thakkar 2018)
 Availability of technology to reduce energy consumption (Biswas et al. 2013;
Bi et al. 2015; Mocan et al. 2016)
 Market/public-support/community views (Lynn, McNeill, and Warren-Smith
2013; Brankov, Ivaskovic, and Cater 2012; Medeiros, Ribeiro, and
Cortimiglia 2014)
 Law & regulation/government policy(Lynn, McNeill, and Warren-Smith 2013;
Bozi
c and Botri
c 2017; Eneizan et al. 2019)
 Cost accounting as a means (Yang and Chang 2018)
Enablers (internal)  Knowledge/innovation-oriented learning (Roxas and Chadee 2016)
 R&D Investments (Medeiros, Ribeiro, and Cortimiglia 2014)
 Inter-functional collaboration (Medeiros, Ribeiro, and Cortimiglia 2014)
 Eco-innovation strategic orientation (Chin-Chun, Tan, and Suhaiza 2016)
 Ethics and value systems (Ciasullo and Troisi 2013)
 Use of green marketing (Chahal, Dangwal, and Raina 2014)
 Slack resources (Lee 2008)
 Organizational capabilities/competence(Chen 2008; Lee 2008; Lee 2009;
Arend 2014; Thanki and Thakkar 2018)
 Size of the firm (Gregory and Hofmann 2015; Triguero, Moreno-Mond
ejar,
and Davia 2015)
 Age of organizational practices (Gregory and Hofmann 2015
 Personal views (Lynn, McNeill, and Warren-Smith 2013)
 Training and development initiatives (Cheema et al. 2015)
 Empowering SMEs/employees (Muafi 2015; Namagembe, Sridharan, and
Ryan 2016)
 Commitment, motivation and leadership (Roy, Boiral, and Paill
e 2013;
Kumar 2015)
(continued)
16 M. DASGUPTA

Table 3. Continued.
Themes
Partnerships/collaborations
Description
 Relational efficiency (Lee, Kim, and Choi 2012)
 Organization citizenship behavior/Organization culture (Lee, Kim, and Choi
2012; Lynn, McNeill, and Warren-Smith 2013; Paille et al. 2014; Chang 2015)
 Knowledge management system to harness knowledge residing in networks
(Roxas and Chadee 2016)
 Lean management practices (Sajan et al. 2017)
 Availability of resources (Mafini and Muposhi 2017)
 Public-private partnerships (Hansen and Klewitz 2012)
 To build green innovation knowledge base (Gema et al. 2018)
 Buyer-supplier relationships (Lee and Klassen 2008; Gregory and Hofmann
2015; Ekawati et al. 2017; Mafini and Loury-Okoumba 2018)
 With universities and research agencies (Triguero, Moreno-Mond
ejar, and
Davia 2015)
 With community and social partners (Dixon and Clifford 2007; Paille et al.
2014; Gema et al. 2018)
 With upstream and downstream partners (de Bruijn and Hofman 2000;
Kumar 2015; Mafini and Muposhi 2017)
 Presence of networks (Klewitz, Zeyen, and Hansen 2012)

Barriers to sustainable innovation initiatives

The firm’s perception of barriers has a significant impact on the initiatives taken by
SMEs; with it being noticed that environmentally innovative firms perceive barriers
more intensively than non-innovative firms. The perception of barriers in SMEs can
be related to the cost of innovation, lack of external and internal financial sourcing,
lack of information about technologies and markets, lack of skilled employees or
potential partners for collaboration and, uncertainty of demand (Pinget, Bocquet, and
Mothe 2015). Lack of technological, economic and human resources and expertise,
lack of flexibility to switch over to green systems, limited investment in green tech-
nology or lack of environmental policies can also pose as barriers to firms and deter
them from adopting various green practices (Lau 2011; Thanki and Thakkar 2018).
Lack of market structure for protecting environmental practices, lack of appropri-
ate infrastructure for the operation of electric vehicles, lack of sufficient support pro-
vided by the Government or inadequate warehousing and distribution processes can
further deter the SMEs from taking various initiatives that promote sustainability
(Ghadge et al. 2017). Lack of support from consumers, lack of green materials and
technology, competition and uncertainty of the outcomes of the green initiatives are
some of the other barriers to the implementation of green practices in SMEs
(Majumdar and Sinha 2018).

Partnerships/collaborations for sustainable innovation initiatives

Being part of a network helps organizations get new ideas of sustainable and eco
innovation continuously and stay on top of various issues. Public private partnerships
stimulate companies to adapt their green innovation strategies (Hansen and Klewitz
2012). Being part of collaborative networks can also act as a booster for small firms
that lack resources to access environmental friendly technologies (Triguero, Moreno-
Mond
ejar, and Davia 2015). Establishment of various collaborative ventures with sup-
pliers, clients, competitors, and other partners like universities and public and private
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 17

Figure 6. Conceptual model.

research agencies help organizations to share complementary resources and capabil-

ities, thus improving the basis of green organizational innovativeness. Relationship
learning helps to improve the knowledge base on green innovation performance of
the organizations (Gema et al. 2018). Symbiotic relationships with corporate donors,
community partners and franchisees help in the success of business models that offer
economic, environmental and social outcomes (Dixon and Clifford 2007).
Synergistic buyer supplier relationship is a crucial factor for developing the envir-
onmental capabilities of suppliers of SMEs in terms of product, process, organiza-
tional, supply chain and external relationships. Increased green procurement impacts
the entire supply chain by pressurizing first-tier suppliers to consider various environ-
mental factors in their own supply chain (Lee and Klassen 2008). Collaborative efforts
and engagements amongst the supply chain partners contributes to a rapid improve-
ment in operational activities (Mafini and Loury-Okoumba 2018). Strategic partner-
ships also enable SMEs to attain leadership positions in innovations that maintain a
balance between economic growth and environmental sustainability (Kumar 2015).

Enablers
Public support and funding encourages sustainable innovation in companies. In fact,
public funding stimulates private funding for sustainable innovation initiatives, which
further improves a company’s financial performance (Brankov, Ivaskovic, and Cater
2012). Government support in the form of subsidies and rebates for improved envir-
onmental performance can be helpful during the establishment period of the technical
innovation (Hardie, Allen, and Newell 2013a, 2013b). Empowering SMEs can improve
the creative potential of SMEs in producing environment friendly products and can
also play an important role in improving the social capital (Muafi 2015).
A firm’s ecological strategic orientation and its value systems influence the choices
the decisions makers make with respect to adoption of sustainable practices. These
choices also determine the resources the firm is willing to commit for the sustainable
innovation initiatives. Limited resources and capabilities available within many SMEs
hinder an effective response to pressures from the external environment (Ciasullo
and Troisi 2013; Chin-Chun, Tan, and Suhaiza 2016).
18 M. DASGUPTA

Size of the organization impacts capabilities with respect to time and the number
of staff available for taking various sustainability initiatives (Oxborrow and Brindley
2013). Large firms are not only in a position to get easy access to financial resources,
they are also in a position to spread the fixed costs of R&D over a larger sales volume
and get economies of scale and scope (as cited in Triguero, Moreno-Mond
ejar, and
Davia (2015)).
In fact, adoption of activity based accounting helps organizations to calculate cost
more accurately, review the set of activities and eliminate waste, thus enhancing the
competitiveness of the firm (Yang and Chang 2018). Implementation of green human
resource practices involving training and development of employees and initiating
rewards and incentives for green initiatives go a long way in building a culture that
promotes sustainability and helps organizations in attaining long term goals (Cheema
et al. 2015). Roxas and Chadee (2016) have brought out the importance of developing
an organizational capability to engage in knowledge management to adopt sustainable
business practices.

Research gaps in literature and areas for future research

The SLR highlights a number of research gaps in the existing literature on sustainable
innovation in SMEs.

Studies located primarily in Europe and Asia

The current literature is dominated by studies done in Europe and in Asia. Efforts
can be made by researchers in other geographies to study the sustainable innovation
initiatives taken by SMEs.

Quantitative techniques dominate research in the area

Researchers have popularly used various quantitative techniques to study the context
in the domain of SMEs, thus leaving the field open for researchers to employ qualita-
tive research technique to study and deep dive into the various sustainable innovation
initiatives taken by SMEs.

Studies focused primarily in the manufacturing sector

The SMEs in the manufacturing sector have been the prime focus of researchers with
respect to studying the various innovation initiatives taken by them to promote sus-
tainability. The services and the other sectors have been ignored by researchers.
Future researchers can endeavor to study the sustainable innovation initiatives taken
by SMEs in the services sector.

Studies combining economic, environmental and social sustainability

As is evident more emphasis should be given by SMEs in taking initiatives that com-
bine economic, environmental and social sustainability. Also, it is important that
 JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP 19

researchers empirically investigate the innovation initiatives taken by SMEs that have
an impact not only on environmental sustainability but also on economic and social
sustainability.

Product and process innovations have been the focus of study

Product and process innovations have predominated the research focus of most of
the researchers. It is not surprising as these two domains have given SMEs the max-
imum scope to innovate with respect to meeting the sustainability objectives. Efforts
can be made to explore other areas that have a potential for sustainable innovation.

Operations and product/technology development in the value chain have been

the focus of study
Similarly, activities related to operations and product/technology development been
the focus of study and documentation in majority of the research. How other activ-
ities in the value chain be modified so as to complement the sustainable innovation
initiative can also be explored. A focus on other activities in the value chain will help
to identify the activities/practices that can contribute to the organization being envir-
onmentally, socially and financially viable. It will also drive actors across the value
chain to join forces to develop sustainable solutions.

Studies on sustainable innovation initiatives taken by the SMEs

Although the study of sustainability initiatives taken by companies has become very
popular, still there is a vacuum with respect to research exploring the various sustain-
able innovation initiatives taken by the SMEs. As the SMEs contribute a sizable
amount to the GDP of any economy, researchers should make a conscious effort to
study the various innovation initiatives taken by them to promote sustainability.

Focus on the process of sustainable innovation and not only the outcome
The outcome of the sustainable innovation initiatives has been the focus of most of
the research. Exploring the process of innovation so as to ensure that in addition to
the outcome the process also meets sustainability benchmarks can be an interesting
area of study.

Barriers to sustainable innovation initiatives—a positive or a negative impact

The extant literature brings out the positive and negative impact of barriers on sus-
tainable innovation initiatives. It would be interesting to explore in depth the nature
of impact of barriers on sustainable innovation initiatives.
20 M. DASGUPTA

Collaborations for sustainable innovation initiatives

The research on sustainable innovation in SMEs has brought out the positive role collabo-
rations play in sustainable innovation initiatives. Why would SMEs still not prefer to
collaborate for various innovation initiatives is a field of study that deserves exploration.

Conclusion
Sustainable innovations can improve the competitiveness of firms. A focus on the
three pillars of sustainability will help SMEs to bring together both monetary and
non-monetary values. It will help them to devise solutions that do not trade-off the
interests of one set of stakeholders to benefit the other. By bringing together the
thoughts and expectations of the different stakeholders attached to the three pillars,
SMEs can speed up the innovation process.
In the past decade there has been an increased focus by companies with respect to
investing in various initiatives that contribute to the environment, society and to their
profitability. Likewise, there has been an increased interest amongst researchers to
explore and document the various sustainable initiatives taken by organizations.
Although the scope of the current paper was limited to SMEs, these points become
very evident from the analysis of research done in the domain.
The paper has highlighted some of the broad themes around which research has
been done in the area. Additionally, the paper has highlighted some of the prominent
innovation initiatives that have been taken by SMEs in order to meet their environ-
mental, economic and social objectives. A value chain analysis of the various activities
complementing the sustainable innovation initiatives is an attempt by the paper that
is different from other SLRs. The paper has also highlighted the various control meas-
ures that can be used by SMEs for measuring the performance of their sustainable
innovation initiatives.
Finally, the systematic literature review has highlighted some research gaps. The
author hopes that the arguments presented in this paper and the research gaps high-
lighted will providing interesting ideas to researchers and academicians to take for-
ward in the future years.

Disclosure statement
No potential conflict of interest was reported by the author(s).

Notes on contributor
Dr. Meeta Dasgupta is an assistant professor in the area of Strategic Management. Her
research interests are in the areas of innovation management and strategies, strategic alliances
and joint ventures, corporate/business strategy and competitiveness of firms.

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