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Corporate environmental responsibility and the business risk of Vietnamese SMEs: the mediating role of internal control

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Abstract

A significant amount of research has focused on examining the correlation between corporate environmental responsibility (CER) and the financial performance of businesses. However, only a limited number of studies have explored the relationship between CER and firm risk. In this study, we aim to contribute to the existing literature by utilizing a panel dataset for small and medium enterprises (SMEs) and investigating the impact of CER, including its various forms, on business risks in Vietnam. The results of our study emphasize the negative effect of CER on firm risk, highlighting the importance of internal control mechanisms. This finding remains consistent even when considering endogeneity bias and unobserved factors, employing a variety of methodologies. Additionally, our research sheds light on the potential benefits of CER in terms of improving the business environment and enhancing labor productivity, despite the absence of a direct link with financial support.

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Acknowledgements

This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under Grant Number 502.01-2020.312

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Authors and Affiliations

  1. School of Trade and International Economics, National Economics University, Hanoi, Vietnam

    Do Anh Duc

  2. National Economics University, 207 Giai Phong Street, Hai Ba Trung District, Hanoi, Vietnam

    Le Quoc Hoi & Tran Lan Huong

  3. International School, Vietnam National University, Hanoi, Vietnam

    Le Van Dao

  4. Academy of Finance, Hanoi, Vietnam

    Vu Thi Phuong Lien

  5. VNU University of Economics and Business, Hanoi, Vietnam

    Nguyen Thanh Hang

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  1. Do Anh Duc
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  2. Le Quoc Hoi
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  3. Le Van Dao
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  4. Vu Thi Phuong Lien
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  5. Nguyen Thanh Hang
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  6. Tran Lan Huong
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Correspondence to Le Quoc Hoi.

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Appendices

Appendix 1

See Table 5.

Table 5 Corporate environmental responsibility and firm revenue risk
Full size table

Appendix 2

See Table 6.

Table 6 Types of CER and firm revenue risk
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Appendix 3

See Fig. 1.

Fig. 1
figure 1

Adopting CER according to legal ownership

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Appendix 4

See Table 7.

Table 7 Descriptive statistics of main variables in the model
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Duc, D.A., Hoi, L.Q., Van Dao, L. et al. Corporate environmental responsibility and the business risk of Vietnamese SMEs: the mediating role of internal control. Risk Manag 26, 2 (2024). https://doi.org/10.1057/s41283-023-00133-1

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