Abstract
As the biggest sector of the global economy, an understanding of environmental management in small to medium sized enterprises (SMEs) is necessary for improved sustainability. This paper explores the role of contextual factors for ISO 14001 adoption and improved environmental performance in SMEs. It finds that socio-political factors (e.g. legislation, regulation and legitimation) guide the initial adoption decision. Nevertheless, beyond this, substantive performance improvements (i.e. improved internal processes and procedures) are received, based on symbolic (i.e. legitimacy-based) reasoning. Particularly, operational improvements subsequently lead to improved financial and environmental outcomes, as well as external social performance evaluations. This not only suggests that environmental performance is a multidimensional concept that extends beyond the firm, but also that ISO 14001 adoption in SMEs is based on the interrelation of symbolic and substantive performance effects over time and space that cannot be separated analytically in research practice. The findings are presented as particularly useful for SMEs in terms of highlighting the performance benefits of ISO 14001 adoption.
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