Bridging stakeholder influence and environmental, social and governance (ESG) practices through knowledge: insights from halal micro, small and medium enterprises (MSMEs)

Purpose Grounded in stakeholder theory and the knowledge-based view (KBV) theory, this study aims to examine the factors influencing the adoption of environmental, social and governance (ESG) practices among Malaysian halal micro, small and medium enterprises (MSMEs). Specifically, it investigates the role of various stakeholders and the mediating effect of ESG knowledge in driving these practices. Design/methodology/approach A quantitative approach was adopted, with data collected through a semi-structured questionnaire distributed to 200 MSMEs at the Penang International Halal Expo (PIHEX) 2024. A total of 95 valid responses were retained for analysis using SmartPLS. Findings This study finds that employees, suppliers and shareholders play significant roles in driving ESG practices among halal MSMEs. Moreover, ESG knowledge is found to strengthen the influence of employees and suppliers on the adoption of ESG practices, underscoring its importance as a mediating mechanism in stakeholder–practice relationships. Research limitations/implications The study carries important implications for the halal industry, society and MSMEs. Industry organizers and agencies can embed ESG practices into halal business platforms through certification standards, training and recognition schemes. At the societal level, wider ESG adoption supports environmental stewardship and community well-being. Finally, for halal MSMEs, ESG practices enhance competitiveness, consumer trust and access to global markets. Originality/value This study empirically tests a research framework on the role of stakeholders in determining ESG practices among halal MSMEs in Malaysia.