SMES’ reluctance to embrace corporate sustainability: The effect of stakeholder pressure on self-determination and the role of social proximity

Small and medium-sized enterprises (SMEs) are said to engage significantly less with corporate sustainability (CS) than their larger peers, because they more reluctant voluntarily in CS beyond regulatory thresholds. However, the mechanisms for changing reluctance of SMEs regard poorly understood. By drawing on self-determination stakeholder theory from a social proximity perspective, this paper argues that stakeholders play key role influencing controlled motivation SMEs, will consider claims ‘proximate’ as being salient ‘distant’ pressure, latter even potentially exercising negative effect SMEs' motivation. The hypotheses empirically tested using survey-based data sample 344 privately-held operating Germany Austria. Results structural equation model confirm employee community pressure reduces ultimately increases overall performance, whilst has precisely opposite effect, reducing performance SMEs. These findings help clarify close attachment employees, deep embeddedness local might be important catalysts improvements willingness CS, since is often perceived an unfair, demotivating, external imperative, which compromises self-determination. Lastly, theoretical managerial implications provided.