Performance Implications of SMEs’ Sustainability Orientation: The Role of Non-profit Organizations

This paper explores the sustainability orientation of SMEs and its impact on performance level and performance variability. We also evaluate the role of non-profit organizations (NPOs) as important ecosystem stakeholders that shape the efficacy and efficiency of these relationships. Though we find that sustainability orientation is beneficial for improving firm performance and reducing performance variability, we show that the concentration of NPOs in a region negatively affects both relationships. We argue that SMEs diminish their endorsement of and involvement in sustainability initiatives in regions where NPOs are more capable of achieving social objectives. In such environments, SMEs may be reluctant to engage in sustainability because it is less unique and may invite unwanted attention and external monitoring from ecosystem partners. We build our arguments primarily on the resource-based view and stakeholder theory, by bringing conceptual premises of social movement theory. We extend prior literature on sustainability by testing our hypotheses on data sourced from an emerging economy, as 333 Russian companies from 59 regions participated in this research.