Global value chains, trade facilitation, and the use of environmental management practices in SMEs

Purpose: This study investigates the relationship between small and medium enterprises (SMEs) participation in global value chains (GVCs) and the use of environmental management practices. The study examines the role of national governments in shaping this relationship, specifically exploring the role of trade facilitation. The emphasis lies on understanding the extent to which GVCs and governmental policy interaction relate to improved environmental management practices among SMEs. Design/methodology/approach: The study builds on several publicly available data sources, including the World Bank’s Archival Enterprise Surveys and the OECD Trade Facilitation Indicator. The sample includes 1,462 SMEs in 18 countries. To test our hypotheses, we use regression analysis employing bootstrapping techniques for rigorous testing of direct and indirect associations. Findings: Results indicate that SMEs tend to use environmental management practices when entering GVCs, but not after exiting. Moreover, the study suggests that a non-linear feature of trade facilitation plays an important role in mitigating the relationship between SMEs exit from GVCs and SMEs abandonment of environmental management practices. Originality: The relationship between SMEs entering and exiting GVCs and environmental management practices is not well understood. It is still unclear whether the external pressures and governmental policies to stimulate trade contribute to improving the sustainability behaviour of SMEs. This study adds to the operations management literature by relating government policies with the use of environmental management practices, providing insights on the relationship between deglobalisation and SMEs sustainability activities.