Firm Sustainability Research Articles

Linking ESG and Tax Compliance: Stakeholders' Perspectives

This is an exploratory study to gain insight among tax and ESG practitioners on the linkage between ESG and tax compliance. Prior studies used secondary data to examine the association between ESG and tax avoidance and reported inconclusive results. This leads to speculative discussion to support the results, among which are corporate ethics and corporate hypocrisy. This motivates the study to examine the perception among parties involved to understand their views on the relationship. A total of 22 personnel representing firms, consultants, and regulator from various categories of organisations were interviewed. We found a gap between firms and tax regulators and consultant perception of the link between ESG and tax compliance. There is also an inconsistent perception among sustainability and tax personnel in firms. Interestingly, we found only the government-linked companies perceived tax compliance to be part of social components. Our study implies that there is evidence to support negative and no relationship between tax avoidance and ESG but no evidence to support corporate hypocrisy. Keywords: ESG, tax, hypocrisy.

Sustainability orientation and sustainability performance in response to hostile environments in cultural tourism destinations

PurposeThe purpose of this study is to understand how sustainability orientation influences economic, environmental and social sustainability performance and the moderating role of environmental hostility on these relationships. This study aims to deepen the consequences of the strategic commitment to sustainability of tourism firms located in the World Heritage Cities of Cusco, Lima and Arequipa in Peru.Design/methodology/approachThe empirical analysis was conducted on a sample of 238 tourism firms. The authors implemented structural equation modelling technique to contrast the hypothesis.FindingsThe results shows that sustainability orientation has a positive effect on social and environmental performance mainly, but also on both financial and non-financial economic performance. The authors also detect a significant negative moderating effect of environmental hostility, which is accentuated in the case of social and economic-financial performance.Practical implicationsThis study provides interesting practical implications in the tourism sector. Firms should develop a strategic commitment to sustainability, even in hostile environments, to improve their competitive position while reducing the negative impact of their activity on the natural and social environment. Institutions should encourage firms to commit to sustainability to achieve more sustainable and competitive urban tourism destinations.Originality/valueThis study advances the controversial debate on whether sustainability orientation of tourism firms leads to better economic performance. Moreover, from triple bottom line approach, it provides a holistic view of how sustainability orientation affects sustainability performance in all its dimensions. Finally, this paper delves into the complexities and challenges of sustainable urban tourism.

Investing Practices and Firm Sustainability: A Comprehensive Analysis of Water and Sanitation Companies (WASCO's) in Kenya

Investing Practices and Firm Sustainability: A Comprehensive Analysis of Water and Sanitation Companies (WASCO's) in Kenya

Exploring the Impact of Financing Practices on Sustainability of Water and Sanitation Firms in Kenya

Exploring the Impact of Financing Practices on Sustainability of Water and Sanitation Firms in Kenya

Does the COVID-19 epidemic impact on economic sustainability of big agricultural firms in Indonesia?

The current research seeks to determine whether the economic sustainability of large agricultural firms in Indonesia be affected by the COVID-19 epidemic. The agricultural sector’s economic sustainability assures the food supply chain, which ultimately maintains the nation’s food security. In the current research, big agricultural companies are represented by those listed on the Indonesia Stock Exchange (IDX) in two consecutive years, 2019 and 2020. Meanwhile, economic sustainability refers to companies’ business performance, which is assessed by some financial ratios, namely the Altman Z-model for forecasting financial difficulties, liquidity, profitability, and leverage. The Altman Z-model is utilized to identify whether the monetary soundness of the business is good, in a precautionary situation, or in bad shape. Surprisingly, our data analysis shows an increase in the sample company’s Z score, liquidity, and profitability from 2019 to 2020. The average Altman Z-score indicates that big agricultural companies are financially healthy. The outcomes of the paired samples t test indicate no disparity in the economic performance of Indonesia’s largest agricultural firms. This study provides evidence that large agricultural companies are resilient in fighting the COVID-19 pandemic.

THE EFFECT OF EMPLOYEE FINANCING DIVERSITY AND CORPORATE SOCIAL RESPONSIBILITY ON SUSTAINABLE FIRM PERFORMANCE

This study delves into the intricate dynamics between Employee Financing Diversity (EFD), Corporate Social Responsibility (CSR), and Sustainable Firm Performance (SFR) within the contemporary corporate landscape. Employing a quantitative methodology involving a sample of 200 participants, this research uncovers pivotal insights into the reciprocal influence of these variables and their profound impact on organizational trajectories. The findings illuminate robust, positive associations between EFD and both CSR and SFR. EFD emerges as a driving force behind the augmentation of Corporate Social Responsibility initiatives, which, in turn, exert a potent influence on Sustainable Firm Performance. These outcomes underscore the imperative for organizations to not only concentrate on conventional diversity benchmarks but also to consider financial diversity when designing their workforce structures. Furthermore, the study underscores the paramount role of Corporate Social Responsibility in catalyzing advancements in Sustainable Firm Performance. It accentuates the significance of ethical business conduct, environmental stewardship, community engagement, and stakeholder accountability. Businesses that prioritize the synergistic cultivation of Employee Financing Diversity and CSR are strategically positioned to secure a competitive edge, attracting a diverse customer base, socially conscious investors, and a highly skilled workforce. The implications of this research extend to policymakers, highlighting the necessity of fostering responsible corporate behaviors and financial inclusivity. The study also beckons further investigation into the underlying mechanisms governing these intricate relationships. Acknowledging its limitations, this study encourages subsequent research endeavors to explore causal pathways and mediating factors. In conclusion, this study fortifies the proposition that socially responsible and diversified corporate practices are pivotal in shaping a more sustainable and equitable future for both businesses and society.

Entrepreneurial Finance and Sustainability of Nascent Firms

The sustainability challenges of nascent firms in developing economies were a motivation for this study. Hence, a direct effect of entrepreneurial finance on nascent firms’ sustainability was investigated. The study proposed an integrative model that accounts for innovation capability and government support, as mechanisms in explaining the entrepreneurial finance and sustainability nexus. Data collection was with questionnaire from a sample set of 235 nascent entrepreneurs. Structural equation model with the aid of SmartPLS was used for the data analysis. The study found that entrepreneurial finance, innovation capability and government support all have a direct positive effect on nascent firms’ sustainability. Innovation capability, in contrast, partially mediates the relation between entrepreneurial finance and sustainability. However, the study failed to account for a conditional effect of government support on the indirect effect of innovation capability on nascent firms’ sustainability. The study validates the resource dependence theory as a theoretical lens and highlights the fundamental issues that drive sustainability as it relates to new-born firms, most especially from an emerging economy perspective.

How big data features drive financial accounting and firm sustainability in the energy industry

PurposeThis study aims to scrutinize the relationship between the perception of big data (BD) features and the primary outcomes of financial accounting. Likewise, it explores whether financial accounting practices moderate the relationship between BD features and firm sustainability.Design/methodology/approachThe study used a questionnaire survey based on the Likert scale for two distinct groups of participants: academic scholars and industry practitioners operating in the BD era within the energy sector.FindingsThe results reveal significant positive associations between BD features and firm performance, reporting quality, earnings determinants, fair value measurements, risk management, firm value, the efficiency of the decision-making process, narrative disclosure and firm sustainability. Besides, the path analysis indicates an indirect impact of BD on firm sustainability via financial accounting practices. The results suggest that energy firms should consider incorporating BD analysis into their financial accounting processes to improve their sustainability performance and create long-term value for their stakeholders.Practical implicationsThe findings are particularly interesting to academics in accounting and business to improve the accounting curriculums to fit the technological revolution, especially in the field of BD analytics. Practitioners within energy industries must also refine their skills and knowledge to meet the challenges of BD in the foreseeable future. The results provide important implications for policy setters to revise current financial accounting standards to cope with technological innovation.Originality/valueThe study makes a valuable contribution by critically examining the impact of BD on various financial accounting practices neglected in prior research. It highlights the transformative power of BD in the domain of financial accounting and provides insights into its potential implications for energy firms.

The nexus of sustainable development, blue financing, digitalization, and financial intermediation

Financial intermediaries are essential for advancing circular and blue economies by providing critical financial support to sustainable ventures. However, sustainability efforts may lack persistence without appropriate incentives. This paper aims to investigate the impact of lending to blue and sustainable firms, as well as increased digitalization, on the performance of the banking sector. Using a comprehensive sample of banks from twenty-seven member states of the European Union over 11 years, our findings reveal a positive association between banking performance and blue lending, sustainable credit, and digitalization. Specifically, we observe that an increase in banks' financing to blue and other sustainable firms, along with higher investments in digitalization, leads to a rise in the net interest margin. Similarly, the solvency risk will be reduced when the exposure to sustainable firms is higher. Likewise, investment in digitalization will lower banking risks. These empirical results manifest significant implications for sustainable development, blue economy firms, and the banking sector at large.

Effects of Various Inputs for Increased Interest Rate of Capital: A Nonlinear Budget Constraint Consideration

This article attempts to discuss economic effects of various inputs when the interest rate of capital is increased during profit maximization analysis. In this paper Cobb-Douglas production function, 6×6 bordered Hessian matrix, and 6×6 Jacobian are operated to make the study meaningful and interesting. Every firm wants to achieve a maximum profit, but achievement of profit maximization is not an easy process. A firm must be watchdog in every step of production, inventory, distribution, and management for attaining optimum result. In the twenty first century global economy faces serious complexities due to political unrest and war among the nations, also for abnormal natural calamities due to global warming. Therefore, efficient and wise decisions are necessary for the sustainability of the industrial firms.

Portraying a Big Picture of Deeply Sustainable Firms: An Integrative Review of the Literature

Portraying a Big Picture of Deeply Sustainable Firms: An Integrative Review of the Literature

The integration impact of Agile and ERM on firm Sustainability

The integration impact of Agile and ERM on firm Sustainability

Effect of Corporate Sustainability on Firms’ Performance in Nigeria (2011 – 2020)

This study examined the effect of corporate sustainability on firms’ performance in Nigeria covering the period ten years ranging from 2011 to 2020. It was necessitated by the cost implication of Corporate Sustainability on Firms’ performance in Nigeria. Specifically, the objectives of the study are to examine the effect of economic, environmental and social sustainability on the profit for the year of the selected firms in Nigeria. This study adopts ex-post facto research design as the researcher made use of past data in the form of secondary data to investigate the effect of corporate sustainability on performance of firms. Four (4) major high sustainability firms were purposively selected based on the complete availability of data for the period under review and their greatest effect on environment in Nigeria namely; Julius Berger Nigeria Plc., Conoil Plc., Nigeria Breweries Plc. and Dangote Cement Plc. The study used secondary data extracted from the annual reports of the selected firms. Panel data regression method was used to estimate the parameters of the model. The major findings of the study were that economic, environmental and social sustainability have probability values of 0.184406, -0.124495 and 0.064896 respectively which implies that they have non significant impact on profit for the year of selected firms in Nigeria. It is therefore the recommendation of this study that firms should be intentional and strategic in incorporating sustainability measures in their business activities.

Business strategy and sustainability of Chinese SMEs: determining the moderating role of environmental uncertainty

This paper investigates the relationship between business strategy and sustainability of Chinese SMEs and how the environmental uncertainty may affect this relationship. It analyses the impact of active and passive business strategies on firms’ sustainability and tests the potential moderating role of economic policy uncertainty in this relationship. The empirical analysis is performed by employing fixed-effect and GMM estimations on data collected from 937 Chinese A-share non-financial companies listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2021. The results show that the high-risk active business strategy of innovation and new market development is associated with greater business sustainability, and this relationship is stronger for SMEs than for non-SMEs in China. Moreover, higher economic policy uncertainty strengthens the positive relationship between active business strategy and firm sustainability, implying that in periods of higher environmental uncertainty firms which pursue active business strategy achieve greater business sustainability. These findings are useful for devising business strategy and can assist in formulating policy initiatives seeking to ensure sustainable development of SMEs in China.

Moving Beyond the four walls: The evolving impact of supplier sustainability on firm value

Stakeholders are increasingly holding firms accountable for the sustainability performance of their suppliers, calling for increased levels of transparency and higher standards of social and environmental sustainability. This research focuses on the effect of supplier sustainability on focal firm value, and whether it differs from the effect of focal firm sustainability. The authors use an event study methodology to investigate 3986 positive and negative environmental and social sustainability event announcements from 1994 to 2013. The results suggest that supplier sustainability performance was not related to focal firm value at the beginning of this time period. However, after the turn of the millennium, the authors find a significant relationship between supplier social sustainability and focal firm value. Notably, focal firm value is not as heavily affected by supplier environmental performance. This long-term multi-faceted comparison provides empirical evidence informing firms on how they can best allocate their monetary and strategic resources to specific categories of supply chain sustainability in a way that maximizes focal firm value.

Do fintech adoption and financial literacy improve corporate sustainability performance? The mediating role of access to finance

Corporate sustainability performance (CSP) has recently garnered considerable traction worldwide. Adopting industry 4.0 technologies such as financial technology (Fintech) and leveraging critical organizational resources are of great importance to the sustainability and performance of firms. This study draws upon the ecological modernization theory (EMT) and resource-based view (RBV) to assess the effects of a firm's Fintech Adoption (FA) and Financial Literacy (FL) on different dimensions of its sustainability performance. We also examine the mediating role of Access to Finance (AF) in the associations among these understudied variables. Empirical data was collected from 262 firms in the Bangladeshi apparel industry, and the CB-SEM approach was employed to assess the proposed hypotheses. The findings revealed that FA and FL are significant drivers of firms' sustainability performance. Additionally, access to finance was found to have a robust mediating impact on both the fintech adoption-sustainability performance relationship and the financial literacy-sustainability performance relationship. Moreover, the findings indicated that access to finance positively spurs a firm's sustainability performance. These results are robust to several sensitivity checks. Our findings extend the EMT and RBV theories' scope by establishing FA, FL, and AF as valuable resources for firms to drive their sustainability performance. Given the dearth of primary-data-based research, our empirical study addresses the gaps in the fintech, FL, and sustainability literature and yields crucial implications for theory and practice. Our research provides managers of RMG enterprises and policymakers with a constructive model for implementing fintech and managers' FL to enhance firms' access to credit and sustainability performance.

Improving Firm Sustainability Through Dynamic Capability: The Mediation Role of Ambidexterity

Purpose: This study aims to analyze the effect of dynamic capability dimensions on sustainability and ambidexterity. Furthermore, this study also analyzes the mediating role of ambidexterity to influence sensing, seizing and reconfiguring capabilities in building firm sustainability. Theoretical framework: There are inconsistencies in previous research related to the effect of dynamic capability. Some recent literatures emphasize the important role of dynamic capability in increasing company sustainability including Li et al. (2019), Dangelico et al. (2017), Chowdhury & Quaddus, (2021). However, in some cases, capability does not have a strong influence on sustainability (Hong et al: 2018, Borahima et al. 2021). This study seeks to analyze further and find a better model. Design/methodology/approach: This study is a quantitative study with a research population that includes employees, managers, and start-up owners in Yogyakarta. From the population, 250 respondents were taken as research samples. The analysis was carried out using the structural equation model method using AMOS software. Findings: The results found that sensing capability had no effect on sustainability and ambidexterity. In other side, seizing and reconfiguring capability influence sustainability and ambidexterity. Furthermore, this study found that ambidexterity was not able to mediate sensing capability on sustainability. Meanwhile, ambidexterity has been proven to mediate each effect of seizing and reconfiguring capability on sustainability. Research, Practical & Social implications: This research emphasizes on managers and entrepreneurs that dynamic capability and ambidexterity have an important role in growing sustainability. Future studies may consider to elaborate further on the role of dynamic capability and ambidexterity both from the aspect of moderating influence and the wider research object aspect. Originality/value: The results indicate that dynamic capability’s factors especially seizing and reconfiguring capability, also ambidexterity have an important role in company’s sustainability.

Exploring sustainability disclosures in family firms: a bibliometric analysis

Families own two-thirds of the world’s private businesses. It is an organizational model that has succeeded in various sizes, both small and large publicly listed companies. This study aims to explore the developments in sustainability reporting for family firms. The current study employs bibliometric analysis to examine family firms’ sustainability literature’s conceptual structure and influential aspects. Our study recruited 131 research documents from 2004 to 2021 based on our inclusion criteria. The findings from the conceptual analysis, the co-occurrence network of keywords analysis yields three clusters: CSR disclosures and corporate governance in family firms of emerging economics (red cluster), while red and green clusters focus on environmental performance, earnings management, and corporate governance in family firms. Our study has also highlighted the influential aspects of sustainability in family firms’ literature. Our findings have significant implications for researchers and policymakers. Our findings could be helpful to both family businesses and sustainability researchers. The study contributes to the business literature by illuminating the new research directions in sustainability reporting by family firms using bibliometric techniques.

Intergenerational dynamics of digital transformation in family firms

The integration of digital technologies and processes presents a multifaceted and complex challenge for family firms, as they must navigate new technologies while maintaining their unique familial attribute. Moreover, the issue of intergenerational inheritance adds an additional layer of complexity, as succession must be effectively executed to ensure the continued success and survival of the family firm in the digital age. Together, these challenges pose a significant threat to the sustainability and competitiveness of family firms. To gain a deeper understanding of how these challenges can be effectively addressed, the study utilizes data from the 2016 Chinese Private Enterprises Survey to identify the factors influencing family firms' digital transformation and the role of entrepreneurs' characteristics in this process. From the perspective of intergenerational inheritance, the study finds that both the willingness of entrepreneurs to hand over power and the willingness of their children to take over firm power have a moderating effect on the relationships between entrepreneurs' characteristics and firms’ digital transformations. This study also verifies the heterogeneous effects from the type of business digitalization, location of the firm, and educational level of the children.

Sustaining firm sustainability endeavors: The role of international diversification on firm CSR capability

CSR's role in the international business context has been widely noted. Yet, how firms' cross-border strategies influence firm CSR capability is largely absent in the literature. Our study examines how firm international diversification, as reflected by breadth and depth, affects CSR capability. These relationships are further built into a contingency-based model incorporating the market dynamism and competition intensity. We collect a large dataset with 6069 firm-year observations range from year 2000–2015, and we employ multiple robust methods including Newey-West robust regression and Driscoll-Kraay robust regression to estimate the model. The results demonstrate the significant driving role of international diversification on CSR capability, although diminishing return effects exist in the contingencies. Also, this relationship becomes stronger in more dynamic and more competitive environments. Our research provides unique contributions to the stakeholder theories, strategic CSR theories, dynamic capability view, and international business literature.