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Responses of Small, Medium and Micro Enterprises to ESG Practices of Large Firms: A Multidimensional Perspective in the B2B Context

Year: 2025

Type: article

Abstract: ABSTRACT Prior research on Environmental, Social, and Governance (ESG) practices has primarily focused on how they affect large firms' financial performance and investor responses, leaving a limited understanding of how key stakeholders, such as small, medium, and micro enterprises (SMMEs), respond to the ESG practices of larger firms. Grounded in Signalling Theory and Stakeholder Salience Theory, this study examines how ESG ratings, disclosure types (voluntary versus mandatory), and pillar salience shape the behavioural responses of SMMEs. Using a mixed‐methods design, the research combines three between‐subjects vignette experiments with a qualitative enquiry. Data were drawn from South African SMME decision‐makers across a field sample (Study 1: n = 101), two independent national online panels (Study 2: n = 200 and Study 3: n = 175), and 17 semi‐structured interviews (Study 4). Findings indicate that higher third‐party ESG ratings significantly enhance SMMEs' positive responses to offers from larger firms. The social pillar consistently emerged as the most influential, reflecting South Africa's inequality and collective welfare priorities, while governance also mattered in compliance‐sensitive industries. By contrast, the type of disclosure (mandatory vs. voluntary) had no measurable impact on SMME responses. Theoretically, this paper links ESG practices to stakeholders' judgments of legitimacy and urgency, clarifying the conditions under which ESG cues translate into cooperative intent. In practice, the paper shows how large firms can better calibrate ESG communication and investment to attract SMME partners in B2B markets.

Source: Business Strategy & Development

DOI: 10.1002/bsd2.70251

Author: Paul Blaise Issock Issock

Institution: University of the Witwatersrand

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,240