Conditions to Diffuse Green Management into SMEs and the Role of Knowledge Support: Agent-Based Modeling

Abstract

Spreading green management among Small and Medium-sized Enterprises (SMEs) is an important environmental policy issue. The objective herein is to design an agent-based model to analyze the conditions that need to be met for the diffusion of green management into SMEs. Our model belongs to the agentbased models related to the diffusion of innovation. One remarkable feature of the basic model is that it includes two related markets for a product and its component, in which there are transactions between consumers and Large Enterprises (LEs) and between LEs and SMEs. Although the basic model is not concerned with a specific product, settings of the model are based on the existing empirical researches on SMEs in machine & metal and plastic processing industries. Simulation results of the basic model reveal effective strategies of enterprises. LEs which raise eco-levels faster than others can acquire profits. SMEs which lower prices faster than others can also improve financial resource. The sensitivity analysis shows that the cost condition is an important factor for the diffusion of green management into SMEs. We suggest that knowledge support to SMEs can take a role in order to reduce environmental cost, based on the results of previous empirical research. An applied model concerning knowledge support is also presented. Simulation results of the applied model reveal that information provision from the external organizations to SMEs could be effective for the diffusion of green management.