Sustainability and market performance: an empirical study in the Indian small businesses context

Purpose In developing countries, sustainability practices can impact market performance as stakeholders respond differently, especially to resource-crunched small businesses. India’s mandatory business responsibility report (BRR) provides insights into their sustainability practices. This study aims to analyse the impact of sustainability practices on the market performance of small companies. Design/methodology/approach The authors extracted cross-sectional data from the websites of companies listed on India’s S&P BSE 250 SmallCap Index. They evaluated their sustainability performances on a scale of 0–3 and calculated market performance from their financial data. The authors employed linear regression model and ensured the validity. Findings The study reveals that overall Sustainability and its Social dimension have no impact on market performance, but the Governance and Environmental dimensions have negative associations, considering the signalling and system’s theory. Research limitations/implications Panel data may provide better empirical results compared to cross-sectional studies. This study relies on manual analysis of BRRs to derive dependent variable data, which can be implicitly biased. BRR is self-reporting from the companies, sometimes leading to data assurance issues. Originality/value The authors contribute to small businesses’ empirical evidence on sustainability and its dimensions. In the process, the authors evaluated BRR, an Indian mandatory disclosure requirement and provided insights to various stakeholders.