A pro-environmental survey of Malaysian micro, small and medium enterprises: a cross-sectional study

Introduction

Despite the Malaysian government’s effort in educating businesses on the importance of environmental commitment, a study conducted by the Alliance Bank showed that Malaysian micro, small and medium enterprises (MSMEs) lacked awareness on the importance of pro-environmental behavior (Sharifah, 2022). 86% of surveyed MSMEs had never come across the concept of environmental sustainability (Yacob et al., 2022). These companies also admitted that their journey of adopting green knowledge sharing and green human resource management in the organizations had not been smooth from the start (Handrito et al., 2021). It is found that resources allocated to environmental protection were limited, and there is a lack of MSME-centric guidelines and technical know-how to adopt pro-environmental measures (Yacob et al., 2022). 22% of MSMEs have not yet integrated pro-environmental practices into their operations post the coronavirus disease 2019 (COVID-19) pandemic (Sharifah, 2022). The lack of adoption is primarily due to confusion about how environmental commitment will affect the company. Financial restrictions and a lack of environmental protection understanding are two additional major deterrents to pro-environmental behavior (Handrito et al., 2021).

MSMEs often lack information about the costs and benefits of green knowledge sharing and green human resource management practices (Sharifah, 2022). Corporate leaders have limited time and expertise to understand green entrepreneurial requirements to address environmental issues and improve environmental performance (Handrito et al., 2021). Leaders and management always face uncertainty to identify the most appropriate measure to incorporate green practices into sustainable business planning (Handrito et al., 2021).

As resource and energy savings are not related to the core business of the company, managers and owners in MSMEs lack the commitment to take pro-environmental actions (Yacob et al., 2022). Most managers and owners in MSMEs are still unaware of the importance of pro-environmental behavior due to the lack of public education and lack of pro-environmental reading materials in the country (Yacob et al., 2022). More than 61% of managers and owners in MSMEs either know very little or have never heard of climate change and environmental protection (Yacob et al., 2022).

As successful environmental practices in MSMEs contribute more than MYR 500 million to the gross domestic product (GDP) of developing countries in Malaysia (Yacob et al., 2022), a study is in urgent need to promote pro-environmental behaviors post COVID-19 pandemic.

The objective of this study is to examine the relationships among green human resource management, green knowledge sharing, green leadership, environmental commitment, green entrepreneurial orientation and pro-environmental behavior in MSMEs post COVID-19 pandemic. The research framework is depicted in Figure 1.

Figure 1. Research framework.

Literature review

Methods

Results

Table 1 depicts descriptive analysis results that summarize demographic backgrounds of the respondents who participated in this research. Half of the respondents (50.0%) have more than 10 years’ experience of working in MSMEs. Over 54% of respondents are the owner or top management of the organizations. Majority (65.8%) had at least an undergraduate education and 11.6% had a postgraduate education.

The structural equation model, mentioned in the methodology section, is tested and verified in terms of convergent validity. The convergent validity of the structural equation model is established by examining the factor loadings, average variance extracted (AVE), and composite reliability (CR) (Hair et al., 2014). All factor loadings in Table 2 are greater than the minimum acceptable level of 0.7, which confirms the reliability of the questionnaire (Hair et al., 2014). The AVE is above the acceptable limit of 0.50 (Hair et al., 2014) and the CR is higher than the recommended between 0.70, indicating sufficient convergent validity (Hair et al., 2014). High composite reliability confirms that the hypothesized model of this study accurately represents the relationships between green knowledge sharing, environmental commitment, green human resource management, green leadership, green entrepreneurial orientation and pro-environmental behavior. This result ascertains that the questionnaire instrument used in this research accurately and consistently measures pro-environmental behavior at MSMEs (Hair et al., 2014).

The discriminant validity of the model is confirmed by comparing correlations between the constructs and the bolded diagonal square root of the AVE (Hair 2017). Since all values on the diagonal in Table 3 exceed the correlations values in the corresponding rows, the discriminant validity was confirmed (Hair et al., 2014).

As shown in Table 4, environmental commitment, green human resource management and green entrepreneurial orientation positively influence pro-environmental behavior at MSMEs post COVID-19 pandemic. In contrast, green knowledge sharing and green leadership do not influence pro-environmental behavior at MSMEs. Table 4 discloses that 49.5% of the variance in pro-environmental behavior are explained by green knowledge sharing, environmental commitment, green human resource management, green leadership and green entrepreneurial orientation. Therefore, Hypothesis 1 is supported where green human resource management significantly improves pro-environmental behavior. Hypothesis 3 is also supported where environmental commitment significantly improves pro-environmental behavior. Hypothesis 5 is also supported where green entrepreneurial orientation significantly improves pro-environmental behavior.

Discussion

Previous literature does not cover the environmental commitment, environmental commitment and green entrepreneurial orientation at workplace (Alzaidi & Iyanna, 2022). Previous researchers focused only on the effect of green human resource management in enhancing environmental performance (Alzaidi & Iyanna, 2022; Lin et al., 2022; Qin & Hsu, 2022) without taking into consideration the influence of environmental commitment and commitment in promoting pro-environmental behavior. Secondly, previous literature (Shafiei & Maleksaeidi, 2020) did not examine the influence of green knowledge sharing, green entrepreneurial orientation on pro-environmental behavior in MSMEs. To bridge these research gaps, this study is one of the few studies conducted post-COVID-19 pandemic, which aims to examine the relationships among green human resource management, green knowledge sharing, environmental commitment, green leadership, green entrepreneurial orientation and pro-environmental behavior at MSMEs post COVID-19 pandemic. This study provides new knowledge and insights to the literature on pro-environmental behavior at MSMEs in developing countries such as Malaysia.

The first important finding of this study is green knowledge sharing improves the appeal and trustworthiness of an MSME towards conserving and preserving the environment post-COVID-19 pandemic (Peng et al., 2022). Green knowledge sharing is linked to higher organizational identity and job satisfaction among managers and owners (Kronrod et al., 2023). When managers and owners are given more opportunities to share environmental protection information, it will enhance their environmental awareness, which will subsequently create greater joint organizational effort to create an environmentally-friendly culture to enhance productivity and job satisfaction (Shafiei & Maleksaeidi, 2020).

Pro-environmental behavior is critical for MSMEs in Malaysia to ensure business sustainability through environmentally friendly practices and operations. This study reveals that MSMEs show high willingness to perform pro-environmental behavior to assist businesses in being environmentally friendly. The pro-environmental behaviors that managers and owners currently implement in MSMEs post the COVID-19 pandemic includes voluntarily saving resources by turning off unnecessary electrical equipment, using double-sided papers for printing, and getting rid of unnecessary waste to protect the environment (Kronrod et al., 2023). When the organizations resumed operations post the COVID-19 pandemic, managers and owners at MSMEs have started to promote pro-environmental behavior to improve environmental efficiency (Kronrod et al., 2023). The hypothesis testing result in Table 4 above confirms that the success in promoting pro-environmental behavior at MSMEs is determined by three crucial factors, which are green entrepreneurial orientation (Standardized Beta = 0.370, significant at 0.05 level), environmental commitment (Standardized Beta = 0.222, significant at 0.05 level), and green human resource management (Standardized Beta = 0.151, significant at 0.05 level). As there are very limited studies in Malaysia and Asia that examines factors affecting pro-environmental behavior at MSMEs post the COVID-19 pandemic, this study marks a significant contribution to the research area.

As shown in the result is Table 4, green entrepreneurial orientation is the most important factor that significantly affects pro-environmental behavior. This finding is important as managers and owners of MSMEs in Malaysia increasingly feel the need to be more proactive, risk-taking and innovative, launching green innovative products to save the environment post the COVID-19 pandemic. It is crucial to conduct pro-environmental activities to consciously address environmental problems (Nisar et al., 2021). Managers and owners perceive running an entrepreneurial venture that is designed to be environmentally friendly in its business process and products are critically essential to stay competitive in a hypercompetitive business environment post the COVID-19 pandemic (Shah et al., 2021). It is not easy for an entrepreneur to obtain support from stakeholders to pursue their ambitions of producing and commercializing environmentally friendly products in Malaysia (Nisar et al., 2021). Green entrepreneurs in Malaysia have been facing challenges post the COVID-19 pandemic in proving to stakeholders that green process and products are not just a cost but rather an opportunity to increase revenues while protecting the environment (Shah et al., 2021). Thus, the Malaysian government must assist MSMEs to create a supportive green research and development infrastructure. The government should introduce incentives and funding to strengthen green entrepreneurial orientation in MSMEs Malaysia (Shah et al., 2021). As most entrepreneur’s in MSMEs were found unfamiliar with Intellectual Property Rights when producing and selling environmental friendly innovation (Shah et al., 2021), a well-functioning Intellectual Property Rights system should be set up nationally to foster investment and commercialization of environmentally-friendly innovation.

Table 4 discovers that environmental commitment is the second most important factor that positively influences pro-environmental behavior. Result in Table 4 implies that strong willingness to preserve the environment encourages MSMEs to be actively involved in pro-environmental efforts. Table 4 results imply that MSMEs exhibit more environmental commitment to act pro-environmentally when all members in the organizations are taking social responsibility and commitment to complete business tasks environmentally friendly. Therefore, education and training are important for internalization of environmental values among all members in the organizations.

Another important finding of Table 4 is green human resource management is the third most important factor affecting pro-environmental behavior. Green human resource management increases employee awareness of pro-environmental responsibilities and encourages them to participate in pro-environmental welfare. MSMEs that practice green human resource management treat employees as important stakeholders for pro-environmental activity implementation (Faraz et al., 2021). Employee-focused practices are a significant component of pro-environmental behavior as pro-environmental objectives are realized through managers and owners (Liu et al., 2020). Human resource management is the third most important factor affecting pro-environmental behavior (Table 4) implies that respondents of this study recognize the importance of using recruitment, selection, training, empowerment, and reward management to create the green workforce at MSMEs to focus on fulfilling the pro-environmental goals of the organization. Green human resource practices are important in MSMEs (Table 4) because these practices play a role in enhancing the abilities of employees in protecting the environment. MSMEs in Malaysia should concentrate on attracting employees who are committed to resolving the issues related to the environment to enhance the reputation and well-being of the organization post COVID-19 pandemic.

On the other hand, hypothesis testing result in Table 4 of this study discovers that pro-environmental behavior at MSMEs is not determined by green leadership and green knowledge sharing Managers and owners at MSMEs perceive green leadership and green knowledge sharing as not important in affecting pro-environmental behavior in the organizations.

This study contributes to the knowledge by confirming that green leadership is not an important factor affecting pro-environmental behavior post COVID-19 pandemic. This implies that MSMEs owners and managers do not have satisfactory abilities to stimulate and influence their subordinates to perform pro-environmental behavior. When the results of this study discover that green leadership is not an important factor (Table 4), it implies that owners and managers at MSMEs show less empathy and care for their subordinates’ pro-environmental wellbeing. This finding is consistent with the argument that a lack of empathy and care among owners may hinder the implementation of pro-environmental behavior (Li et al., 2019; Shah et al., 2021). When MSMEs in Malaysia fail to implement ecological leadership, they will lose the opportunity to maximize their potential human resources in the form of knowledge, skills, and experiences to solve problems and achieve company goals.

Another unique finding of this study is that knowledge sharing about environmental challenges is not important in MSMEs. Managers and owners in MSMEs are not interested in spreading information and knowledge about environmental challenges. This is a worrying trend as knowledge sharing is important in enhancing learning opportunities to engage in pro-environmental behavior (Lange & Dewitte, 2019). If managers and owners at MSMEs are made aware of the benefits associated with environmental practices through green knowledge sharing at campaigns and promotional advertising, they will be much more inclined to engage in environmentally friendly practices.

In order to improve green knowledge sharing in MSMEs Malaysia. employees should be given more opportunity and authority to make decisions regarding environmental concerns. Empowering employees motivates them to contribute to problem-solving and participating in environmental programs with minimal supervision. Employee empowerment involves decentralization from green leadership which gives autonomy to employees in bringing creative and best ideas for enhancing pro-environmental performance. Formal and informal communication channels should be established at MSMEs to encourage sharing knowledge on environmental concerns towards improving future pro-environmental behaviors. Problem-solving groups should be developed at MSMEs to address environmental issues where team members can share ideas and actively play a role in pro-environmental actions.

Conclusions

This study addresses the research gaps in Malaysia and Asia, by examine pro-environmental behavior at MSMEs post COVID-19 pandemic. This study provides new knowledge and insights to the literature on pro-environmental behavior at MSMEs in developing countries such as Malaysia. Environmental commitment, green human resource management and green entrepreneurial orientation positively influence pro-environmental behavior at MSMEs post COVID-19 pandemic. In contrast, green knowledge sharing and green leadership do not influence pro-environmental behavior at MSMEs.