Corporate environmental responsibility and the business risk of Vietnamese SMEs: the mediating role of internal control

A significant amount of research has focused on examining the correlation between corporate environmental responsibility (CER) and the financial performance of businesses. However, only a limited number of studies have explored the relationship between CER and firm risk. In this study, we aim to contribute to the existing literature by utilizing a panel dataset for small and medium enterprises (SMEs) and investigating the impact of CER, including its various forms, on business risks in Vietnam. The results of our study emphasize the negative effect of CER on firm risk, highlighting the importance of internal control mechanisms. This finding remains consistent even when considering endogeneity bias and unobserved factors, employing a variety of methodologies. Additionally, our research sheds light on the potential benefits of CER in terms of improving the business environment and enhancing labor productivity, despite the absence of a direct link with financial support.