IDEAS home Printed from https://ideas.repec.org/p/pdn/dispap/169.html

Can You Have It All? Trade-Offs, Tensions, And The Esg Tightrope In Entrepreneurial Decision-Making

Author

Listed:
  • Sumaya Islam

    (Paderborn University)

  • Tobias Buchta

    (Paderborn University)

  • Colin Wooldridge

    (Texas A&M University-Corpus Christi)

Abstract

Entrepreneurial decision-making often unfolds in an environment of uncertainty, resource constraints, and conflicting value systems, intensifying the tension between mission-oriented ideals and pragmatic economic constraints. In this paper, we analyze entrepreneurs' willingness to compromise on environmental, social, and governance (ESG) criteria and their underlying cognitive justifications. Our study with 79 entrepreneurs combines a conjoint design with validated scales for moral disengagement (MD) and founder identity. We investigate (a) the entrepreneurs' preferences for ESG attributes, (b) their general willingness to compromise on ESG criteria, and (c) the differences between social and commercial entrepreneurs. Our results show that first, entrepreneurs' willingness to compromise on ESG criteria is positively related to their level of MD, second, entrepreneurs' willingness to compromise on ESG criteria depends on their founder identity: missionaries, common among social entrepreneurs, show lower MD and lower willingness to compromise on ESG criteria, while darwinians, common among commercial entrepreneurs, show higher MD and higher willingness to compromise on ESG criteria, and third, entrepreneurs have a blind spot for the governance criterion when making ESG-related decisions. Our study contributes to the literature on entrepreneurship and business ethics by offering a context-specific theoretical model of MD in the new venture creation process and by providing evidence of differences in MD between social and commercial entrepreneurs. Thus, the findings reveal that MD and its interaction with founder identity play a key role in influencing ESG decisions, which in turn impact the legitimation and reputation of new ventures, stakeholder trust, and progress in achieving the United Nations’ Sustainable Development Goals. Besides, they have implications for investors, regulators, and entrepreneurship ecosystem builders who seek to foster sustainable new ventures amid ESG reporting mandates and accountability pressures.

Suggested Citation

  • Sumaya Islam & Tobias Buchta & Colin Wooldridge, 2026. "Can You Have It All? Trade-Offs, Tensions, And The Esg Tightrope In Entrepreneurial Decision-Making," Working Papers Dissertations 169, Paderborn University, Faculty of Business Administration and Economics.
    • Handle: RePEc:pdn:dispap:169
    as

    Download full text from publisher

    File URL: http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/dispap/DP169.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jens Schüler & Brian S. Anderson & Charles Y. Murnieks & Matthias Baum & Alexander Küsshauer, 2024. "Test-Retest Reliability in Metric Conjoint Experiments: A New Workflow to Evaluate Confidence in Model Results," Entrepreneurship Theory and Practice, , vol. 48(2), pages 742-757, March.
    2. Vithala R. Rao, 2008. "Developments in Conjoint Analysis," International Series in Operations Research & Management Science, in: Berend Wierenga (ed.), Handbook of Marketing Decision Models, chapter 0, pages 23-53, Springer.
    3. Sophie Bacq & Chantal Hartog & Brigitte Hoogendoorn, 2013. "A Quantitative Comparison of Social and Commercial Entrepreneurship: Toward a More Nuanced Understanding of Social Entrepreneurship Organizations in Context," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 4(1), pages 40-68, March.
    4. Robert G. Eccles & George Serafeim & Michael P. Krzus, 2011. "Market Interest in Nonfinancial Information," Journal of Applied Corporate Finance, Morgan Stanley, vol. 23(4), pages 113-127, December.
    5. Robert G. Eccles & Michael P. Krzus & George Serafeim, 2011. "Market Interest in Nonfinancial Information," Harvard Business School Working Papers 12-018, Harvard Business School.
    6. Green, Paul E & Srinivasan, V, 1978. "Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 5(2), pages 103-123, Se.
    7. David B. Audretsch & Erik E. Lehmann, 2022. "The knowledge spillover theory of entrepreneurship," Chapters, in: Cristiano Antonelli (ed.), Elgar Encyclopedia on the Economics of Knowledge and Innovation, chapter 39, pages 317-324, Edward Elgar Publishing.
    8. Leonardo Becchetti & Emanuele Bobbio & Federico Prizia & Lorenzo Semplici, 2022. "Going Deeper into the S of ESG: A Relational Approach to the Definition of Social Responsibility," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
    9. Tobias Hahn & Jonatan Pinkse & Lutz Preuss & Frank Figge, 2015. "Tensions in Corporate Sustainability: Towards an Integrative Framework," Journal of Business Ethics, Springer, vol. 127(2), pages 297-316, March.
    10. Babita Bhatt, 2022. "Ethical Complexity of Social Change: Negotiated Actions of a Social Enterprise," Journal of Business Ethics, Springer, vol. 177(4), pages 743-762, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    2. Wong, Jin Boon & Zhang, Qin, 2022. "Stock market reactions to adverse ESG disclosure via media channels," The British Accounting Review, Elsevier, vol. 54(1).
    3. Hua Wang & Haodong Chang & Kun‐Shan Wu, 2025. "U‐shaped relationships between corporate carbon performance and cost of debt: Evidence of China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(1), pages 465-480, January.
    4. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2020. "An Efficiency Perspective on Carbon Emissions and Financial Performance," Ecological Economics, Elsevier, vol. 175(C).
    5. Dang, Rey & Houanti, L'Hocine & Sahut, Jean-Michel & Simioni, Michel, 2021. "Do women on corporate boards influence corporate social performance? A control function approach," Finance Research Letters, Elsevier, vol. 39(C).
    6. Ioannis Ioannou & George Serafeim, 2015. "The impact of corporate social responsibility on investment recommendations: Analysts' perceptions and shifting institutional logics," Strategic Management Journal, Wiley Blackwell, vol. 36(7), pages 1053-1081, July.
    7. Kira R. Fabrizio & Eun-Hee Kim, 2019. "Reluctant Disclosure and Transparency: Evidence from Environmental Disclosures," Organization Science, INFORMS, vol. 30(6), pages 1207-1231, November.
    8. Subhransu S. Mohanty & Odette Mohanty & Mike Ivanof, 2021. "Alpha enhancement in global equity markets with ESG overlay on factor-based investment strategies," Risk Management, Palgrave Macmillan, vol. 23(3), pages 213-242, September.
    9. R. Benkraiem & M. Qureshi & A. Saeed & C. Zopounidis, 2024. "Corporate Social Responsibility, Carbon Footprints and Stock Market Valuation," Post-Print hal-04679536, HAL.
    10. Adelaide Martins & Delfina Gomes & Manuel Castelo Branco, 2020. "Managing Corporate Social and Environmental Disclosure: An Accountability vs. Impression Management Framework," Sustainability, MDPI, vol. 13(1), pages 1-15, December.
    11. Hirunyawipada, Tanawat & Xiong, Guiyang, 2018. "Corporate environmental commitment and financial performance: Moderating effects of marketing and operations capabilities," Journal of Business Research, Elsevier, vol. 86(C), pages 22-31.
    12. El Ghoul, Sadok & Fu, Zhengwei & Guedhami, Omrane & Kim, Yongwon, 2024. "Do insiders profit from public environmental information? Evidence from insider trading," Global Finance Journal, Elsevier, vol. 60(C).
    13. Amalesh Sharma & Sourav Bikash Borah & Tanjum Haque & Anirban Adhikary, 2025. "Engaging customers and suppliers for environmental sustainability: Investigating the drivers and the effects on firm performance," Journal of the Academy of Marketing Science, Springer, vol. 53(2), pages 341-366, March.
    14. Maggie Hao & Dana A. Forgione & Liang Guo & Hongxian Zhang, 2017. "Improvement in clinical trial disclosures and analysts’ forecast accuracy: evidence from the pharmaceutical industry," Review of Quantitative Finance and Accounting, Springer, vol. 49(3), pages 785-810, October.
    15. Maria Federica Izzo & Alberto Dello Strologo & Fabrizio Granà, 2020. "Learning from the Best: New Challenges and Trends in IR Reporters’ Disclosure and the Role of SDGs," Sustainability, MDPI, vol. 12(14), pages 1-22, July.
    16. Mathias Payer & Martin Schüder & Tanja Gemünden & Henning Zülch, 2025. "Aligning ESG ratings with cultural values: a framework for the German-speaking region," Sustainability Nexus Forum, Springer, vol. 33(1), pages 1-19, December.
    17. Litfin, Thorsten & Meeh-Bunse, Gunther & Luer, Katja & Teckert, Özlem, 2016. "Perception of Sustainability Reporting – an Attempt by Means of Eye-Tracking," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2016), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 8-9 September 2016, pages 344-351, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    18. Bo Wang & Zehui Wang & Jun Wen & Xiaotian Tina Zhang, 2021. "Executive Gender and Firm Environmental Management: Evidence from CFO Transitions," Sustainability, MDPI, vol. 13(7), pages 1-14, March.
    19. Palea, Vera & Drogo, Federico, 2020. "Carbon Emissions and the Cost of Debt Financing: What Role for Policy Commitment, Firm Disclosure and Corporate Governance?," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202002, University of Turin.
    20. Mehdi Nekhili & Amal Boukadhaba & Haithem Nagati, 2021. "The ESG–financial performance relationship: Does the type of employee board representation matter?," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(2), pages 134-161, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pdn:dispap:169. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: WP-WiWi-Info (email available below). General contact details of provider: https://edirc.repec.org/data/fwpadde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.