Sustainable Environmental Management Practices in Ghanaian SMEs: The Roles of Environmental Awareness, Corporate Governance and Regulatory Pressure

Abstract

Small and medium-sized enterprises (SMEs) dominate Ghana’s private sector, yet their combined environmental footprint is poorly managed and seldom measured. This study examines how environmental awareness, corporate governance and regulatory pressure shape the adoption of sustainable environmental management practices (SEMP) among Ghanaian SMEs, and whether regulatory pressure conditions the effects of the two internal drivers. Grounded in the natural resource-based view and institutional theory, the study uses survey data from 450 owner-managers and senior executives of SMEs in the Greater Accra, Ashanti, Western and Northern regions, analysed with partial least squares structural equation modelling (PLS-SEM). Corporate governance (β = 0.327, p < .001) and regulatory pressure (β = 0.384, p < .001) have strong positive effects on SEMP, whereas the effect of environmental awareness is positive but weak and significant only at the 10% level (β = 0.142, p = .065). Regulatory pressure strengthens the link between awareness and SEMP (β = 0.168, p = .004) but weakens the link between governance and SEMP (β = −0.124, p = .027). The model explains 48.7% of the variance in SEMP. The results indicate that awareness turns into practice mainly where enforcement is credible, and that regulation and internal governance behave as substitutes rather than complements when governance structures have not been designed with environmental responsibilities in mind. The importance-performance map identifies corporate governance as the area with the greatest room for improvement. The study offers an integrated account of internal and institutional drivers of SME environmental practice in a weakly enforced regulatory setting and draws out implications for regulators, SME boards and the emerging sustainability accounting agenda in Ghana.