The Impact of Artificial Intelligence and Sustainability Management on Fostering ESG Practices and Competitive Perspectives Among SMEs

Abstract

The adoption of environmental, social, and governance (ESG) practices is spreading rapidly among all types of companies. Although many scholars are interested in the topic, there is not yet a shared framework exploring the factors that encourage companies—in particular, small and medium-sized enterprises (SMEs)—to adopt ESG criteria and the possible expected benefits. This is probably due to the extreme heterogeneity that characterizes such companies. The contribution of this study derives from the investigation of two factors considered decisive for SMEs' ability to adopt ESG practices and improve their perception of competitiveness: artificial intelligence and sustainability management. For this purpose, the well-known method of partial least squares structural equation modeling was applied to a homogeneous population of SMEs located in Italy. The results show that the two investigated factors increase the likelihood of adopting ESG criteria and directly affect competitive perspectives. In turn, the environment and governance pillars, but not the “S” pillar, affect the competitive perspectives.