The implementation of sustainability reporting in a small and medium enterprise and the emergence of integrated thinking

Abstract

Purpose This study aims to examine the process through which sustainability is integrated into the organizational practices of accounting. Design/methodology/approach Action research, drawing on the lens of neo-institutional theory, is used to explore the integration process of sustainability in an Italian company. Findings The results show how different factors and organizational dynamics contribute to the initiation of both sustainability reporting and the progressive diffusion of sustainability practices in this organization, within the small- and medium-sized enterprise (SME) category. In addition, signs of integrated thinking were identified while charting the process of sustainability reporting and its institutionalization within the company. Research limitations/implications The study shows that the idea of integrated thinking was rooted in organizational culture prior to the International Integrated Reporting Council (IIRC) framework and the momentum it gave to integrated reporting. In this sense, this research provides evidence to confirm the existence of an alternate narrative in relation to the one offered by the IIRC framework. Practical implications The present study contributes to understanding how SMEs can integrate sustainability into their accounting systems. Managers working in these organizations may learn from this experience. Originality/value On the one hand, this study further the knowledge of sustainability integration processes within an organizational practice, especially in the case of SMEs. On the other hand, the study is, perhaps, the first to identify signs of integrated thinking on the journey through the sustainability institutionalization process.

Understanding integrated thinking: evidence from the field, the development of a framework and avenues for future research

“…While previous research has mainly focused on integrated reporting and its adoption within organizations (De Villiers et al , 2020; Adams, 2015; Serafeim, 2015; Barth et al , 2017; De Villiers and Sharma, 2020; Busco et al , 2018; Gibassier et al , 2018), the literature on integrated thinking is gradually expanding (Adams, 2017; Busco et al , 2017; Massingham et al , 2019; Busco et al , 2020b). A keyword search of “integrated thinking” and “reporting” in titles, keywords and abstracts in the Scopus Database reveals a growing trend.…”

“…In the attempt to clarify the concept of integrated thinking, a number of empirical studies have used proxies (mainly Thomson Reuters Asset4 scores) to measure the extent of its embeddedness within organizations. While Serafeim (2015) adopted the corporate governance score (CGVS) data item from the Asset4 database as a proxy for integrated reporting, De Villiers et al (2017) analyzed the CGVS Asset4 components and observe that “all four drivers and two of the eight outcomes refer to integration” and the remaining six refer to the “reporting outcomes” (p. 948). Therefore, De Villiers et al (2017) conclude that CGVS components measure integrated thinking in a firm (performance) rather than the quality of integrated reports (disclosure) (Venter et al , 2016; Maniora, 2017).…”

“…While previous studies have mainly focused on integrated reporting and its adoption within organizations (among recent contributions, De Villiers et al , 2020; Adams, 2015; Churet and Eccles, 2014; Serafeim, 2015; Barth et al , 2017; Flower, 2015; De Villiers and Sharma, 2020; De Villiers et al , 2014; Eccles and Krzus, 2014; Busco et al , 2018), the literature on integrated thinking is in its infancy. This emerging literature investigates how organizations integrate information, functional units and the different capitals used or affected to create value in the short, medium and long-term (De Villiers et al , 2017; Dumay et al , 2017).…”

The facets of the sustainability paradox

“…Therefore, the process of sustainability integration within organizations involves various actors and requires further exploration (Contrafatto, 2011(Contrafatto, , 2014O'Dwyer and Unerman, 2016;Rossi and Luque-Vílchez, 2020;Busco et al, 2018). Studying the internal dynamics of sustainability by focusing on organizational actors is a relevant research avenue to better understand why the sustainability paradox exists and how it unfolds.…”

Obstacles and strategies for the sustainability of Indonesian small and medium enterprises during Covid-19 Pandemic: A study case at Reban Lestari Farm Kolaka Sulawesi Tenggara

“…According to [9], collaborative modes of operation, government policies, and facilitation, supporting organizational culture can positively affect SMEs' sustainability performance and improve their financial performance. Furthermore, according to [10], various factors and organizational dynamics contribute to the initiation of sustainability reporting and the progressive spread of sustainability practices within organizations in small and medium enterprises (SMEs). Thus, it could be said that there are several mutually supportive aspects to achieve business sustainability both in terms of internal and external business, namely a regulation, government facilities, to business management capabilities, namely finance and organizational culture.…”