Sustainability Marketing, Social Responsibility, Ethics, and SME Performance: The Moderating Role of Government Regulations

The research examines sustainability marketing, corporate social responsibility (CSR), and ethical behaviour as potential determinants of small and medium-sized firm (SME) success, while moderating for government regulatory. However, most of the work on these challenges has been done with big enterprises, with little understanding of their impact on SMEs, especially in emerging countries. This research is based on Stakeholder Theory and employs quantitative analysis to assess survey data from 110 SMEs using partial least squares structural equation modelling (PLS-SEM). The research indicated that ethical behaviour, CSR, and sustainability marketing had substantial and beneficial impacts on business performance. Interestingly, contrary to expectations, the influence of governmental rules did not reach statistical significance, suggesting that SMEs’ choice to follow responsible practices is more likely motivated by internal or market forces than by regulatory frameworks. This means that ethical and sustainable operations are strategically advantageous for SMEs, even in countries with lax rules, and emphasises the critical need for well-targeted policy measures to improve their efficacy. The study’s drawbacks include a cross-sectional design and a focus on a single location, which may restrict generalisability. Future research should look at longitudinal trends, sector-specific disparities, and other moderators like access to money or digital technologies. This research contributes by evaluating Stakeholder Theory in the SME context via a theoretical exposition and giving some practical insights for company owners and policymakers on how to promote the sustainable development of SMEs in developing nations.