The quality of SMEs stakeholder communication during strategic crises: The case of Italian unlisted SMEs

The aim of this paper is to assess small and medium-sized enterprises' (SMEs') readiness to initiate a mature dialogue with stakeholders in the exceptional context of a strategic crisis, when information on business model sustainability has become universally material for all stakeholders. A quantitative study is carried out by developing a business model content analysis and applying it to a data sample of 109 manufacturing SMEs in Italy with annual revenues ranging from €10 to €50 million. After analyzing the literature on SMEs stakeholder communication and arguing the conflicting influences of stakeholder and legitimacy motivations in the context of a strategic crisis, three hypotheses are tested by collecting data from annual reports. Despite increased stakeholder expectations, the level of communication was limited to a minimum amount of information, demonstrating no relationship with the firms' relative size and proving a prominent influence of legitimacy motivations, with a specific relevance of legal pressures. Under the stress of the crisis, all SMEs, particularly those that were strategically and financially vulnerable, provided extremely limited information, demonstrating the tendency to conceal strategic risks and the difficulties in engaging in mature dialogue with stakeholders. To the best of our knowledge, this is the first quantitative study focusing on unlisted SMEs' sustainability communication. The paper contributes to the policymaker debate on the possibility of extending the current legal obligation on sustainability reporting and transparency to smaller businesses.