Social Dilemmas in Small Enterprises' Intention to Switch to Green Supply With a Premium Price

ABSTRACT This study introduces a power conflict perspective rooted in social exchange theory to investigate the key drivers behind small and medium‐sized enterprises' (SMEs') intention to switch to green supply with a premium price, an increasingly significant issue in strategic management and global sustainability. By synthesizing institutional theory with insights from industrial organization research, this research proposes that SMEs' decisions to switch to green supply are not solely dictated by regulatory compliance. Instead, they are shaped by the tension between normative stakeholder power advocating for environmental practices and supplier power arising from market competition, creating a social dilemma. While suppliers are a distinct group of stakeholders, their power in market competition introduces conflicting pressures that shape SME decision‐making. Surveys of 441 SMEs confirm that greater normative stakeholder power leads to higher switching intention. However, supplier power diminishes the effect of normative stakeholder power. This study establishes the role of power conflicts in shaping SMEs' environmental sustainability decisions and introduces a novel examination of how industry structure influences environmentally conscious purchasing decisions.