Sustainable development of small companies: Investors' perspectives

Abstract

The aim of this paper is to explore the sustainability choices of a group of investors relating to corporate environmental initiatives and disclosures given a case‐based scenario. Obtaining such an understanding is important because, as per signaling theory, investors' preferences for sustainable development initiatives and disclosures are one of the contributory factors in determining the quality of environmental disclosures. A web‐based survey of a group of investors was conducted. The questionnaire includes a hypothetical case‐based scenario presenting environmental versus economic consequences of pollution prevention initiatives for a small mining company. The findings indicate that a majority (52%) of the respondents failed to choose a dominant proenvironmental or profinancial strategy. The findings imply that making a decision about a sustainable initiative is complex and requires consideration of a range of contextual factors. The findings support the view that given the resource limitations of a small company, compliance with existing regulation is preferred by the investors over competitive advantage and reputation for undertaking prosustainability initiatives. Hence, one implication is that the regulators should examine tightening the current sustainability regulation status for small companies regarding their environmental policies and disclosures.

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

“…In our research, we consider different ways of managing corporate philanthropy and assure it as a signal (Connelly et al, ; Groening & Kanuri, ; Haski‐Leventhal & Foot, ; Moratis, ). These signals convey the ideas of transparency, professionalism, best practices, good governance, and consistency (Siddique & Sciulli, ). Investors evaluate them to determine their trustworthiness and validity and make decisions based on them (Xu et al, ) that could affect market value.…”

“…Business sector is a factor that can be associated with the market value of the company (Jia & Zhang, ). The sector in which a company operates could have an effect on the distribution of resources, public exposure, and stakeholder expectations (Jain, Aguilera, & Jamali, ; Siddique & Sciulli, ; Yang, Wang, Hu, & Gao, ). Therefore, firms in specific sectors (e.g., with more visibility, more need to promote good public relations or more social impact) are more likely to develop social practices, whether unilaterally or in response to demand, that inform stakeholders of the firm's social commitment (Aqueveque, Rodrigo, & Duran, ; Gómez‐Bezares, Przychodzen, & Przychodzen, ; Yang et al, ).…”

Environmental sustainability and financial performance of the small‐scale tea processors in Kenya

“…A positive relationship is explained in resource‐based view theory and stakeholder theory. Natural resource‐based theory stipulates that firms that secure resources and develop capabilities ultimately gain a competitive advantage (increased productivity and efficiency) in the face of environmental challenges (Siddique & Sciulli, ). Accordingly, natural resource‐based theory asserts that the adoption of process‐focused pollution prevention, such as eco‐efficiency, to reduce wastes can reduce environmental impact and simultaneously improve firm performance through cost reduction (Huang, Wong, & Yang, ).…”

“…These positive, negative, or neutral associations findings stem from conceptual, operationalization, and methodological differences in the definitions and measurement of EP (Bouslah et al, 2009). The mixed empirical evidence further reveals the complex contextual factors considered in making decisions about environmental initiatives (Siddique & Sciulli, 2018).…”

Environmental Initiatives and Disclosures by Large companies: The Views of Investors

“…Environmental management initiatives require immediate financial investment while the environmental remediation expected from such initiative often takes time to materialise. Therefore, a managers' dilemma may revolve around the choices of individual versus competitors' action, economic versus environmental preferences and short-term versus long-term outcomes (Siddique & Sciulli 2018;Chinda 2016). Further, research studies have established that among other factors, such as institutional pressure, existing laws and regulations, cultural factors and firm size are important factors in determining environmental initiatives and disclosures (Brammer & Pavelin, 2008;Rover et al, 2015;Comyns, 2016).…”