Sustainable development of small companies: Investors' perspectives

Salina P. Siddique and Nick Sciulli

Business Strategy and the Environment, 2018, vol. 27, issue 8, 1258-1271

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.

Date: 2018
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