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.