Sustainability and economic performance of startups in the AgTech sector: empirical evidence from Argentina

In this paper, we build a sustainability score to measure the performance of Argentine companies in the Ag-Tech sector in its social and environmental dimensions, by using data from the companies themselves that we collected through own surveys in 2022 and 2023. Then, we use regression models to estimate the effect of the social and environmental performance of companies on two economic performance indicators (revenues and insertion in foreign markets) that adequately signal the scaling potential of startups. Our main results suggest that, beyond the potential of the firms, there is still a long way to go to expand the scope of their social and environmental sustainability. While companies believe they contribute to the achievement of the SDGs and produce carbon-smart results, they could improve web-based communication, which highlights a lack of public commitment to sustainability and inconsistencies with respect to what they declare in our survey. In addition, most of the firms do not have sustainability certificates, nor do they measure the social and environmental impact of the technology they offer. Econometric estimates suggest that social and environmental performance tends to correlate negatively with companies' revenues, although this effect is likely to be reversed for high levels of sustainability, suggesting that consumers “asymmetrically value" different degrees of sustainability. However, we find that better social and environmental performance increases the likelihood of go beyond the boundaries of the local market by accessing foreign markets.