Sustainable Manufacturing Practices among SMEs in Malaysia
Corresponding email: norsiahami@uum.edu.my
Published at : 30 Dec 2018
Volume : IJtech
Vol 9, No 8 (2018)
DOI : https://doi.org/10.14716/ijtech.v9i8.2751
Hami, N., Yamin, F.M., Shafie, S.M., Muhamad, M.R., Ebrahim, Z., 2018. Sustainable Manufacturing Practices among SMEs in Malaysia. International Journal of Technology. Volume 9(8), pp. 1658-1667
| Norsiah Hami | School of Technology Management and Logistics, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia |
| Fadhilah Mat Yamin | School of Technology Management and Logistics, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia |
| Shafini Mohd Shafie | School of Technology Management and Logistics, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia |
| Mohd Razali Muhamad | Faculty of Manufacturing Engineering, Universiti Teknikal Malaysia Melaka, 76100 Durian Tunggal, Melaka, Malaysia |
| Zuhriah Ebrahim | Faculty of Manufacturing Engineering, Universiti Teknikal Malaysia Melaka, 76100 Durian Tunggal, Melaka, Malaysia |
Small and medium enterprises (SMEs) play a significant role in the economic development of Malaysia, accounting for approximately 97.3% of businesses in the country. While there is a plethora of studies which examine the commitments of large and multinational firms towards business sustainability, little is known about the efforts of SMEs to translate their strategic orientation towards environmental and social sustainability into action. It is important to examine the extent of SMEs’ response to the imperatives of becoming sustainable businesses through the implementation of sustainable manufacturing practice (SMP) in their business operations. The purpose of this paper is to determine the extent of the implementation of SMP among SMEs in Malaysia. Analysing survey data from 127 SMEs, the results show that the extent of the implementation of SMP among them is low to moderate. This implies that although environmental initiatives are becoming important nowadays, there is still a lack of implementation of SMP in the operational and business activities of SMEs in Malaysia. As well as offering some insights into SMP, particularly in the context of SMEs, this study provides a useful reference for salient stakeholders, such as the government and industrial practitioners, for making decisions and taking further action related to the strategies of nurturing, implementing and enforcing environmental protection and social well-being.
Manufacturing industry; SMEs; Survey; Sustainability; Sustainable manufacturing practice
Small and medium enterprises (SMEs), which account for a large proportion of businesses, play a significant role in the economic development of developing countries (Koe et al., 2015). In Malaysia, they contributed 32.5% of gross domestic product (GDP), 19% of exports, and 57% of employment (Department of Statistics Malaysia, 2011). SME GDP has grown annually, growing by 6.1% in 2015, despite a slight decrease compared to the 7.9% growth recorded in 2014 (SME Corporation Malaysia, 2016). Unfortunately, while contributing to positive economic values, SMEs have also caused negative effects from their operational and business activities, such as environmental damage (Koe et al., 2015). As argued by Berawi (2016), the challenge for any country is to continue its economic growth and to provide welfare, while ensuring environmental sustainability. In line with the national agenda to become a developed nation, it is crucial for Malaysian SMEs to improve their economic performance at the same time as protecting the natural environment and enhancing social well-being.
Sustainable manufacturing practice (SMP) is one of the essential approaches to handling environmental degradation and other sustainability issues. A central principle underlying SMP is its relationship with the sustainability performance of a firm. Recent studies on sustainability management have acknowledged the contributions of SMP to sustainability performance in terms of its abilities to generate greater economic, environmental and social sustainability in firms.
Recognising its importance as a platform for surviving in intense global competition, many manufacturers have increasingly begun to promote and implement sustainable initiatives and practices. Despite the abundance of studies investigating the commitment and initiatives of large and multinational firms towards sustainability in business, little is known about the efforts of SMEs to put their sustainability goals into practice. It is important to determine how well they respond to the imperatives of becoming sustainable businesses, as many firms remain confused about whether and how they should internalize natural environmental and social considerations into their core business operations.
Recently, Khatri and Metri (2016) claimed that SMEs are slow to implement sustainable practice. Developing a sustainable SME business is a great challenge due to the lack of certain important aspects such as innovation and technology, human capital development, market access, access to financing, legal and regulatory frameworks, infrastructure and security (Hashim, 2013). Laurinkeviciute and Stasiskiene (2011) found that SMEs in Lithuania often did not implement any practical measures to reduce their environmental impact. However, examining the environmental practice adoption among SMEs in the manufacturing industry in Auckland, Cassells and Lewis (2011) found that majority of the responding firms did consider the environmental impact of their business activities. Hence, it can be concluded that the responsibility of SMEs to be environmentally friendly and socially responsible is still questionable.
In Malaysia, several studies have been conducted on the implementation of sustainable manufacturing practice in SMEs. Most of these have tended to focus on specific contexts, such as green practice (e.g. Wooi & Zailani, 2010; Yahya et al., 2014) or social responsibility practice (e.g. Nejati & Amran, 2013; Yusoff & Adamu, 2016). Therefore, by considering sustainable manufacturing practice in a wider context, including both environmental and socially responsible practices, this paper aims to examine the extent of the implementation of SMP among SMEs in the Malaysian manufacturing sector.
The following section explains the concepts of sustainability, sustainable manufacturing, stakeholder theory and SMP, and is followed in Section 3 by an explanation of the research method employed. The results of the study are presented and further discussed in Section 4. The paper concludes with the implications, and recommendations for expanding the scope of the study in future research.
Empirical evidence from previous studies emphasizes that better economic performance of manufacturing firms, together with environmental and social sustainability, can be achieved by implementing SMP. This study has examined the extent of the implementation of SMP among SMEs in the Malaysian manufacturing sector. In general, the results of the analysis reveal that they have adopted a proactive approach to SMP in their operational and business activities, but at a low to moderate extent of implementation. Considering the uniqueness of SMEs, especially micro and small manufacturers, the lack of resources, organizational management and financial stability may explain the reasons for the insufficient implementation of pollution prevention approaches, such as cleaner production and eco-efficiency, as well as socially responsible practices related to employees, customers and suppliers. Customer-oriented sustainable practice is the most common type of sustainable practice implemented by the responding firms, followed by customer relations, cleaner production, eco-efficiency and supplier relations.
The study provides data and information regarding the current status of SMP implemented by SMEs in Malaysia and will a useful reference for salient stakeholders such as the government and industrial practitioners when making decisions and taking further action related to the strategies of nurturing, implementing and enforcing environmental protection and social well-being. Since this study is descriptive in nature and is focused on sustainable practices, it is suggested that future research should study the relationship or the impact of these practices on the sustainability performance of firms.
The authors wish to thank the Ministry of
Higher Education Malaysia for funding this study under the Fundamental Research
Grant Scheme (FRGS), S/O code 13261, and the Research and Innovation Management
Centre, Universiti Utara Malaysia, Kedah for the administration of the study.
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