Sustainable Business Practices in Georgian SMEs: Assessment, Needs, and Strategic Perspectives

This paper explores the integration of sustainable business practices within small and medium-sized enterprises (SMEs) as a catalyst for regional economic development in Georgia. Against the backdrop of global environmental and socio-economic pressures, the study situates sustainability as a critical strategic consideration for SMEs operating across diverse Georgian regions. Utilizing a mixed-methods approach, the research combines quantitative survey data from 240 SMEs across Guria, Kakheti, and Tbilisi with qualitative insights to assess the current state of environmental awareness, sustainability integration, and institutional support.The findings reveal considerable heterogeneity in SMEs’ awareness of their environmental impacts, with material use (e.g., paper, plastics) being more readily acknowledged than more systemic concerns such as energy use, carbon emissions, and land degradation. Notably, a significant proportion of SMEs underestimate their environmental footprint, suggesting a pervasive gap in sustainability literacy. Moreover, the study uncovers a widespread lack of awareness regarding government initiatives supporting sustainable practices—only 5% of respondents could name a relevant program—indicating a serious communication and policy implementation deficit.Institutional weaknesses are further highlighted by SMEs’ perceived lack of regulatory enforcement, minimal financial incentives, and the absence of structured technical support. Despite this, the research identifies a clear demand for financial incentives and individualized consulting, suggesting that targeted policy interventions could catalyze more sustainable operational behavior. Drawing on successful international models from Austria, Germany, and Japan, the study proposes policy recommendations including the establishment of innovation hubs, community engagement mechanisms, and robust public-private partnerships.The theoretical framework underpinning this study draws from the Triple Bottom Line, Circular Economy, and Multi-Level Perspective (MLP) approaches, while also incorporating institutional theories on change and embeddedness. These frameworks help explain the interplay between economic behavior, institutional capacity, and socio-cultural dynamics in shaping sustainability transitions.This research contributes to the broader discourse on sustainable development by providing an empirically grounded, context-specific analysis of how sustainability can be effectively localized within transitional economies. It underscores the necessity of adaptive, regionally differentiated policy frameworks to support SMEs in becoming agents of sustainable growth. Ultimately, the study argues that the convergence of business innovation, institutional support, and localized strategies is essential to align Georgia’s economic development trajectory with environmental and social imperatives.