Sound Financial Practices and Entrepreneurs' Socio-Environmental Commitment: Revealing the Role of Financial Barriers

Abstract

Small enterprises (SEs) constitute a major component of economic systems, and their socio-environmental commitment is critical for promoting societal well-being. This paper examines the direct effect of sound financial practices on socio-environmental commitment and evaluates the mediating role of financial constraints—specifically debt and equity—within Spanish SEs. Addressing gaps in sustainability research regarding the social dimension and financing mechanisms, data from 1120 SEs were analysed using the Hayes PROCESS Macro. Findings indicate that sound financial practices enhance socio-environmental commitment both directly and indirectly through equity availability, whereas debt does not act as a significant mediator. These results position equity as a strategic resource for long-term sustainability and underscore the importance of financial behaviour in fostering socio-environmental engagement. Practical implications include the design of financial training programmes and flexible financing policies to strengthen sustainability initiatives among SEs.