Institutionalizing <scp>ESG</scp> in <scp>SMEs</scp> : Insights From Transformational Leadership and Institutional Theory

ABSTRACT This study investigates how small and medium‐sized enterprises (SMEs) can proactively institutionalize environmental, social, and governance (ESG) practices despite limited resources and weak regulatory pressures. Drawing on transformational leadership and institutional theory, we conducted a qualitative case study of Yuren Industrial Technology, a Taiwanese manufacturing firm. Data from in‐depth interviews and document analysis were coded thematically around four institutionalization stages: void recognition, strategic framing, top management accountability, and data‐driven institutionalization. The findings show that visionary leadership reframed institutional gaps as strategic opportunities, mobilized employees through role modeling and individualized support, and embedded ESG into daily operations via data visibility and accountability mechanisms. This study highlights how data‐driven ESG actions can evolve into substantive governance in emerging‐market SMEs, providing theoretical insights and practical guidance for leaders and policymakers to advance sustainability.