Government Intervention
Government intervention signifies how government through policy formulation, issuance of SME specific guidelines and standards, credit facilitation, conduction of different educational and promotional programs, development of entrepreneurial skill, sustainability management strategy and tools can boost up responsible business behaviour on the part of SMEs. Government need to intervene through soft policies and also promote development of sustainability management tools to better suit the SME (Matthew & Johnson 2015).
Earlier studies have identified factors like absence of institutional environment, lack of policy support and unavailability of frameworks and guidelines as some of the major barriers to sustainability management activities for SMEs in the emerging markets ( Alexander et al, 2010) . Role of government is important here. Government through policy regime, issuance of guidelines and standards, development of sustainable management tools can boost sustainable growth in SMEs. Geographic spread of the SMEs is much wider in India which can effectively be leveraged in the process of inclusive growth. Government can play a significant role by introducing some kind of mandatory obligations of responsible business practices on the SMEs. Alexander et al (2010) focussed on government intervention and cooperation of the external facilitators to boost employee morale and relationship with customer and community. Codes of conduct transmitted from trans-national companies and an active government role is necessary for boosting sustainability practices in SMEs in India (Nimruji, 2012). Banjo & Doren (2012) suggested that government policies and programs to encourage small firms in Philippines to become sustainable should go beyond financial forms of assistance. On Government part enforcing labour code is also essential (Trans and Jeppesen 2016). Also by conducting funded awareness programmes on sustainability for SMEs and by providing opportunities for innovation government can stimulate adoption of sustainability practices among SMEs. We integrate these views to develop our first research proposition that government intervention positively influence sustainability performance.
Government intervention is a factor external to SMEs. But to measure the effectiveness of government intervention on SME business we perceive it from SME point of view and measure the construct based on the effort made by the SMEs to leverage from government intervention. To develop the construct ‘Government Intervention’ we considered factors like SMEs’ level of awareness about and adherence to different government policies on CSR, environment laws and labour practices, their awareness about available guidelines, tools & framework for managing sustainability practices in the organization. Also their participation in various social and environmental initiatives of government was also noted to assess the effectiveness of these interventions.