Management knowledge and sustainability reporting in SMEs: The role of perceived benefit and stakeholder pressure

Abstract

The paper achieves three specific objectives. First, it examines the effect of sustainability knowledge on sustainability reporting. Second, the mediating role of perceived benefit in the nexus between sustainability knowledge and sustainability reporting is assessed. Finally, it examines the moderating role of stakeholder pressure in the relationship between perceived benefit and sustainability reporting. The study adopted the cross sectional research design and survey approach. The data was collected using a structured questionnaire. The population was the Small and Medium Enterprises in Ghana and the target respondents were key decision-makers of firms. 258 respondents formed the sample size. Structural Equation Modeling (SEM) was used to analyze the data. The study found statistically insignificant positive effect of sustainability knowledge on sustainability reporting. Moreover, perceived benefit was found to fully mediate the nexus between sustainability knowledge and sustainability reporting. Finally, stakeholder pressure was found to positively moderate the relationship between perceived benefit and sustainability reporting. In light of the study's findings, SMEs management should disclose environmental, social, and economic information in financial statements and similar reports. Moreover, managers of firms should enhance stakeholder relationship management by considering stakeholders' environmental, social, and economic concerns in strategy formulation. Governments' should motivate SMEs to make environmental, social and economic disclosures which are beyond their primary objective.