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An integrated framework for elucidating the energy-saving decision-making process of Small- and medium-sized Enterprises in Taiwan

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Abstract

Small- and medium-sized enterprises (SMEs) collectively account for >13% of total global energy demand but have not receive sufficient scholarly attention because of the lack of an integrated framework to investigate the decision-making process of energy-efficiency measures (EEMs) and its crucial influencing drivers. To improve the energy-saving capabilities of SMEs, we developed a framework to integrate notable contextual factors and a core decision-making model from decision essence and characteristics and conducted an empirical study in Taiwan. The integrated framework postulated that energy-saving credo affects the formation of an energy-saving routine, and the routines, in turn, determine the adoption of energy-saving behaviors. Energy-saving knowledge, participation level in energy-saving initiatives, energy-saving barriers, and energy-saving incentives are moderating factors for energy-saving behaviors. In our empirical study, 2001 valid questionnaires were collected from domestic SMEs, the response rate was 80.04%, and a majority of the hypotheses derived from the framework were validated using statistical analysis.

Our research provides at least three implications. First, the research proposed the credo–routine–behavior model, a core decision-making processes of SMEs, supported by empirical data. This empirically supported model implies that altering the credo of a company can change its behavior. Second, energy-saving knowledge, incentives, barriers, and initiatives are the contextual factors, and merely manipulating these factors cannot induce expected energy-saving behaviors in SMEs. Third, because SMEs may participate in many energy-saving programs simultaneously, governments should develop a package of energy-saving policies for SMEs that corresponds to their credos and knowledge, not only to their barriers.

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Notes

  1. Energy conservation involves a change in behavior to save energy and energy efficiency is energy saving without sacrificing the comfort of anyone. Although the means of energy conservation and energy efficiency are different, but their purpose is the same. Therefore we use energy saving to collectively refer to both energy efficiency and energy conservation.

  2. We use the concept of ‘credo’ due to following two considerations. First, we just want to emphasize that some, but not all values and beliefs of SME founders will influence their company decisions and shape decision principles. Sawabe and Ushio (2009) indicated that these values ​​and beliefs related to decision-making principles can be defined as management credos. Second, although the company’s mission and vision are also influenced by the founder values and beliefs, they provide the development direction rather than the decision principles (Desmidt 2011). As Inyang (2013) proposed, a mission statement defines what a company intends to accomplish in the future and a vision presents a picture of what a company could be in the future. For regular business decisions, companies need decision rules to carry forward the company’s values and beliefs to ensure that all managers can make decisions that meet the company’s expectations (Pasewark and Riley 2010). Energy-saving investments are part of business decisions and need to follow relevant company values and beliefs. Sawabe and Ushio (2009) defined these relevant values and beliefs as management credos.

  3. In our research, we regarded government financial assistance programs related to energy conservation or energy efficiency as energy-saving incentives that the government provided.

  4. The Taiwan government passed the Energy Management Act in 2010. The act requires every heavy energy–consumption company (i.e., companies whose contracted electricity capacity is more than 800 KW) to hire at least one energy manager to manage energy conservation. Other companies (i.e., those whose contracted electricity capacity is less than 800 KW, like SMEs) are encouraged to hire an energy manager or to contract with an ESCO to manage their energy consumption.

  5. Two-step clustering was proposed by Chiu, Fang, Chen, Wang, and Jeris (2001). The procedure consists of two steps. Step one is preclustering samples, and its purpose is to estimate the optimal number of clusters. Step two is clustering samples by using the optimal number estimated in step one. In our study, we used the Ward method to estimate the optimal number of clusters, which resulted in four clusters in step one. We subsequently clustered all samples using the K-means method into four groups in step two.

  6. This concept is similar to the ratio of energy-saving procedures to all procedures, calculated by each business function. Because most energy managers find it difficult to calculate the ratio, we used the level of routine integrity as the proxy variable.

  7. The eight common pieces of equipment were lighting devices, motors, pumps, ventilation and air conditioning equipment, gas-free dewatering devices, waste heat recovery systems, cogeneration equipment, and renewable energy equipment.

  8. The eight programs were minimum energy performance standards (MEPS), waste-heat recovery demonstration and application, high-efficiency motor demonstration and promotion, credit guarantees and low-cost financial measures, energy audits, energy-saving diagnostic service, power saving 1% action, and voluntary energy-saving plan.

  9. The seventeen predicament items were “Top management team does not know how to get energy-saving information”, “Company executives do not understand energy-saving knowledge”, “Lack of energy-saving professionals within the company”, “The cost of educating employees about how to save energy is too high”, “Employees only care about daily production activities and do not care about energy saving activities”, “The company cannot grasp the energy-saving behavior of employees”, “The company does not know how to properly purchase energy-saving equipment or products”, “The company is worried about the impact on process and product quality”, “There is no extra space to install energy-saving equipment”, “The process of obtaining device licenses and factory setup licenses is time-consuming”, “Unable to confirm the benefits of energy saving”, “Senior management of the company usually prioritizes short-term benefits”, “The return on investment of energy-saving projects is too low”, “The bank’s loan program for energy-saving projects will require higher conditions or will not be willing to undertake”, “The company’s other investment projects are more attractive than energy-saving projects, so it is impossible to invest in energy-saving projects”, “The interaction between the various departments of the company is very poor, and the cost of identifying energy-savings potential is too high or time-consuming”, and “Each department does not need to pay for energy, so there is no incentive to increase energy efficiency”.

  10. The four incentive programs are subsidies to purchase energy-saving washing machines, air conditioners and televisions, subsidies to install waste-heat recovery systems, subsidies to purchase high-efficiency motors, and credit guarantees and low-cost financial for high-efficiency equipment.

  11. The Taiwan Bureau of Energy proposed a three-year incentive program in 2018 and is currently seeking budget and legal supports from the Ministry of Economic Affairs and the Executive Yuan.

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Acknowledgments

This work was supported by the Bureau of Energy, Ministry of Economic Affairs, Taiwan (R.O.C.). The authors thank all anonymous reviewers for their helpful suggestions. The remaining errors are our responsibility.

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  1. Energy Research Division, Industry, Science and Technology International Strategy Center, Industrial Technology Research Institute, Room 102, building 10, No. 195, Sec. 4, Chung Hsing Rd., Chutung Town, Hsinchu County, 31040, Taiwan, R.O.C.

    Der-Fang Hung

  2. Chung Yuan Christian University, 200 Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan

    Chih-Ning Chu

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Hung, DF., Chu, CN. An integrated framework for elucidating the energy-saving decision-making process of Small- and medium-sized Enterprises in Taiwan. Energy Efficiency 13, 711–734 (2020). https://doi.org/10.1007/s12053-020-09853-9

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