POSTED: May 30, 2016 |
Blog | Politics & Institutions

Is small still beautiful? SMEs in visions of a ‘green’ economy

b y   F E R G U S   L Y O N
Small and medium sized enterprises are a dominant part of the global economy but get less attention than larger corporates in discussions about environmental issues. This opens up a fascinating debate, Fergus Lyon finds, about their role both within the ‘green growth’ agenda and, of particular interest to CUSP, the vision for ‘post-growth’ or steady state economics.

CC BY 2.0 :: Chad Cooper / Flickr

Is small still beautiful? This was the question posed, at the CEEDR/CUSP seminar at Middlesex University by Richard Blundel, a newly-appointed Honorary Fellow at the ESRC Centre for the Understanding of Sustainable Prosperity. Small and medium sized enterprises (SMEs) are a dominant part of the global economy but get less attention than larger corporates in discussions about environmental issues. This opens up a fascinating debate about their role both within the ‘green growth’ agenda and, of particular interest to CUSP, the vision for ‘post-growth’ or steady state economics.

In the UK, SMEs employing less than 250 people employ 60% of the business workforce and account for just under half of all business turnover. In the global south, this proportion is even higher. Richard began his talk by pointing out that SMEs combine a considerable aggregate environmental impact – for example, in terms of their energy use and carbon emissions – with limited engagement with greening issues. However, smaller businesses are well placed to make positive contributions to addressing environmental challenges such as climate change. For example, they tend to be better trusted and more rooted in local communities than their corporate counterparts, with some recent research finding that they have the potential to reach out to parts of the population that existing climate change communicators fail to reach.

As Richard noted, the green growth agenda does pay some attention to SMEs, though its primary focus is on the role of start-ups and rapid growth firms as vehicles for green innovation – with what some regard as an excess of ‘techno-optimism’. Small businesses also feature in an alternative – or perhaps complementary – view, which has come from a recognition of planetary boundaries, steady state economics and the de-growth movement. For example, building on the legacy of Fritz Schumacher, the ‘Small is Beautiful’ agenda has explored radical alternatives of human scale technologies and community based models since the 1970s. However, this vision has also tended to prioritise particular types of SME, with current variants placing particular emphasis on social enterprises and cooperatives, for example.

So what challenges do these alternative visions pose for researchers of sustainable prosperity? Firstly we need to ensure SMEs are not marginalised in the debate. Secondly innovation researchers need to explore the incremental – and often ‘below the radar’- greening initiatives as well as those that are more radical or large scale. Thirdly we should focus more attention on sectors that can have a positive effect on sustainable prosperity. Finally, it is important that we examine more closely the nature of growth at organisational and inter-organisational levels, and the implications of a steady state economy on employment, livelihoods, equality and wellbeing.

What will this mean for the number of businesses, or for the way of life of those who own or are employed by SMEs? Which sectors of the SME population will be declining and which expanding in a steady state economy? These are issues to be addressed in the research on alternative enterprise and investment being started by CUSP. We need to explore a wide range of business forms that are alternatives to large scale corporates. These can include those enterprises that combine commercial objectives with wider social and environmental ambitions. Understanding these issues will help us answer the question of whether small is still ‘beautiful’.

Fergus Lyon is Professor of Enterprise and Organisations at the Centre for Enterprise and Economic Development Research, Middlesex University in London and Deputy Director of CUSP. He is leading the research theme on political and organisational dimensions of sustainable prosperity.

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