Examining the Role of Stakeholder-Oriented Corporate Governance in Achieving Sustainable Development: Evidence from the SME CSR in the Context of China

Abstract

Corporate governance (CG) has been experiencing a shift from the antecedent shareholder-oriented system toward the recent more popular stakeholder-oriented system. To better serve the aim of sustainable development, more and more companies have initiated stakeholder-oriented practices. Increasing social responsibility behaviours demonstrate the prioritisation of stakeholders’ interests. Nevertheless, most extant research on stakeholder-oriented CG focuses on MNEs and large listed companies. Limited attention has been paid to the small and medium-sized enterprises (SMEs) sector. This study aims to fill this gap by providing empirical evidence of Chinese SME corporate social responsibility (CSR). We develop and test two hypotheses by using samples of 172 Chinese listed SMEs. Our result is distinct from most of the extant SME CG literature, given that the stakeholder-oriented CSR types have a negative impact on short-term operational profitability and expansion over a fixed period. Additionally, the government subsidy, as one of the most significant national institutions, partially moderates the relationship between stakeholder-oriented CSR and firm performance. The outcomes of this research make both theoretical and managerial contributions to SMEs’ CG systems. In the context of Chinese SME CSR, managerial stakeholder theory is a more pragmatic means to guide firms toward sustainable development than ethical stakeholder theory.

Stakeholder-Centered Corporate Governance and Corporate Sustainable Development: Evidence from CSR Practices in the Top Companies by Market Capitalization at Shanghai Stock Exchange of China

“…The results are in line with those of the other studies in the same area of interest, which indicate that focusing on the important aspect that is better CSR practices and having more consideration for stakeholders, an increase is witnessed in the overall firm performance [55,56]. On the other hand, these results contradict previous studies that suggested enterprises' stakeholderscentered CSR activities have a negative impact on their short-term operational profitability and growth potential [86,[110][111][112], which is also supported by the stewardship theory of the study.…”

Towards achieving the sustainable development goal 9: Analyzing the role of green innovation culture on market performance of Chinese SMEs

“…In contrast, the guidelines for the industrial sector for SMEs include no more than 2,000 employees and an annual turnover of a maximum of RMB 300 million. Their total assets must not exceed 400 million RMB ( Zhang et al, 2022 ).…”

Environmental Sustainability Commitment and Access to Finance by Small and Medium Enterprises: The Role of Financial Performance and Corporate Governance

“…Sustainable development is achieved by performing well in terms of the economic, social, and environmental pillars [42]. As such, all nations are mandated to achieve sustainable development goals to ensure that human needs are balanced with the regeneration rate of the environment [42,43]. It becomes vital to define sustainability to understand sustainable development at the firm level.…”

“…Firms should not view the sustainability call as a threat to business viability, but rather as a scope within which to unlock new opportunities [31]. In this case, the best environmental sustainability strategy should leverage clear green policies and green practices shared by all organisational members and other stakeholders [33,36,43]. This ensures that everyone understands the strategy, making it easier to implement and achieve the expected results [52].…”