Corporate Sustainability in Small and Medium Enterprises (SMEs) of Brazil

Introduction

Managers understand corporate sustainability is still complex and their practices are still directly associated with environmental preservation in Brazil. Sustainability in Brazilian companies is directly associated with their organizational culture through which some environmental and social actions are implemented in an incipient way in SMEs (Gouvêa, Chousa, Senna, de Jesus & Mota, 2021).

The balance of the importance given by managers economic, environmental and social practices is one of the first challenges in SMEs, because their activities are mainly concentrated in the economic dimension, with environmental and social actions performed only when there is legal requirement in most cases (Araújo & Câmara, 2022).

Different approaches to corporate sustainability in small and medium-sized enterprises are still scarce, which motivated the development of the research presented in this chapter. The research brought the approach of how different managers can influence the way economic, social, and environmental practices are performed in SMEs, with the objective of shedding light on the relationship between management profile, efficiency in results and corporate sustainability in companies of this size.

The importance of this chapter is to reveal how different management profiles contribute to the sustainable functioning of SMEs, since in some companies’ managers can use the discourse of sustainability to legitimize themselves with the government, suppliers and customers presenting their companies as environmentally more responsible (Dixon-Fowler, Ellstrand & Johnson, 2017; Lake, Kolling & Santos, 2021).

In Brazil, the definition of SMEs varies according to different criteria established by different agencies. The first is the National Health Surveillance Agency (ANVISA), which, through Provisional Measure Nº. 2,190-34/2001, considered the annual gross turnover of small and medium-sized enterprises as the first classification criterion (Brasil, 2001). ANVISA followed the same criteria established by the national legislation that was already in force at the time.

In 1999, Law Nº. 9,841 entitled National Statute of Microenterprise and Small Enterprise was in force. In 2006, the Statute was updated through Law Nº. 123/2006, which began to define small companies as those that achieved annual gross revenue sums of more than R$ 360,000.00; and equal to or less than R$ 4,800,000.00 (Brazil, 2006); and medium-sized companies became those with gross revenues above R$ 6,000,000.00; and equal to or less than R$ 20,000,000.00.

The number of employees is another criterion for classifying SMEs in Brazil. This criterion was defined by the Brazilian Institute of Geography and Statistics (IBGE) to classify companies as small, when they have 10 to 49 employees; and as medium-sized, when they have 50 to 249 (IBGE, 2018).

In addition to the number of employees, the mandatory disclosure of financial reports represents another criterion. The International Financial Reporting Standards (IFRS) defined small and medium-sized enterprises as those that have no obligation to report publicly via general statement of statements, provided that they do not have assets traded on stock exchanges (CPC, 2009).