Human and social capital and environmental management in small firms: a developing country perspective

We examine the important roles of two forms of capital—human andsocial—in the accumulation of critical resources that enable firms to adopt soundenvironmental management practices which contribute to better firm performance.Drawing on human and social capital theories and the resource-based view of the firm,we tested this proposition using data from a survey of 141 small manufacturing firmsdrawn from a survey of business enterprises in a metropolitan city in the southernregion of the Philippines. The results of our analysis using structural equationmodelling-partial least square approach show that both human capital such as age,experience and education of managers of the firm and social capital such as externalmanagerial ties and networks have significant and positive contribution to the environmentalmanagement resources of firms although the effects vary in magnitude. Theaccumulation of environmental management resources not only is positively linked tothe adoption by firms of pro-environment practices but also fully mediates the effects ofthe two types of capital on the adoption of such practices. Pro-environment practicesare positively linked to better performance outcomes. The findings underscore the needto account for the intangible and more tacit forms of capital such as managerial talent,knowledge, skills and social ties and networks in the wider debate on how smallmanufacturing firms in developing countries can address the pressing need to integrateenvironmental sustainability in business.