Proactive environmental and social strategies in a small‐ to medium‐sized company: A case study of a Japanese SME

Abstract There has been on‐going attention paid to small‐ and medium‐sized enterprises (SMEs) regarding how the sector manages their environmental and social impacts. This study examines the application of environmental and social sustainability practices in a Japanese SME because research on sustainability practices of such SMEs has been limited although SMEs in Japan contribute 70% of total employment and 20% of the gross national product. This study employed a qualitative case study approach based on responses from the CEO/owner of the case company and 123 employees. Using managerial discretion theory, this study found that the case company CEO/owner's decision‐making process, motivation, philosophy and determination to adapt sustainability practices played a major role in influencing employees' support for the company sustainability initiatives and contributed to positive staff turnover. This study found that if sustainability initiatives and practices are embedded into SMEs' business activities from the outset, their negative environmental and social impacts can be greatly reduced.