Adopting Pro-environmental Labelling Certification by Exporting SME's: Drivers and Effects on Competitive Advantage and Export Performance

Abstract

The adoption of pro-environmental labeling certification by Small and Medium-sized Enter-prises (SMEs) engaged in international trade has arisen as a crucial subject of research in today's globalized economic climate. However, little is known about the drivers behind SMEs' pursuit of such certifications and the resulting effects on their competitive advantage and export performance. Therefore, the primary goal of this thesis is to explore the drivers and outcomes of adopting pro-environmental labelling certification by exporting SMEs.

The conceptual model of this thesis is developed by reviewing the prior key literature on SMEs, importance of adopting pro-environmental labelling certification by exporting SMEs, and drivers and performance outcomes of adopting pro-environmental labelling certification by exporting SMEs. The study followed an abductive strategy and qualitative interview data was collected from four case companies active in export.

The findings suggest that the transition toward environmental responsibility is no longer vol-untary but a strategic necessity for SMEs. Adopting PELC is driven by a combination of inter-nal forces, such as top management commitment and long-term economic goals, and external forces, most notably foreign customer demand and strict host-country legislation. Specifically, the results show that certification often acts as a "basic condition" for international partnerships and a "green passport" for entering developed markets. While adoption enhances export performance through significant reputational gains and product differentiation, achieving a cost leadership advantage remains difficult for smaller firms due to high initial compliance costs. These findings help managers understand the critical role of PELC in maintaining market alignment and overcoming the liability of foreignness in the global marketplace.