Why Resource-constrained SMEs Embrace Corporate Sustainability: Evidence from a Sri Lankan Apparel Firm

Abstract

This study explores why resource-constrained small and medium-sized enterprises (SMEs) in developing countries and weak institutional contexts embrace corporate sustainability (CS), focusing on a Sri Lankan apparel firm that institutionalized CS, despite systemic challenges. Drawing on institutional, resilience, and identity framing theories, the study adopts an exploratory single-case design to examine how internal leadership decisions interact with external pressures and are interpreted and embedded through leadership framing. The findings question the common belief that CS in the Global South is driven by external forces, symbolic actions, or structural limits. Instead, sustainability is shown as a moral and risk-management-oriented survival strategy, shaped by a strong underdog identity and close-knit operations. An emergent conceptual framework highlights how SMEs translate buyer demands and local constraints into embedded practices, through purpose-driven adaptation. It offers fresh insights into how SMEs in low-capacity and weak institutional environments lead sustainability efforts and suggests the need for context-aware policy support.