Corporate investment as the key to building a sustainable company: building a theoretical model and multimethod empirical analysis

GOAL The project takes a comprehensive approach to building a sustainable society by taking a bottom-up approach and asserting that a business shift toward sustainability is critical in all three dimensions (economic, social, environmental). The project: 1) Builds a theoretical framework for a “sustainable company” and establishes a set of determinants for corporate transformation towards sustainable companies in all dimensions (economic, social, environmental); 2) Evaluates the current situation in Slovenian companies (and EU); 3) Evaluates the investments towards a sustainable company in Slovenian firms and in the EU; 4) Evaluates the gap between existing and required investments to achieve a sustainable company; 5) Provides managerial and policy implications. DATA SOURCES The project is based on a multi-method approach, which is already evident in the data sources used. Due to the complexity of sustainable investments in companies, in addition to secondary public data sources (for macroeconomic and industry data, SORS, Eurostat, European Investment Bank, OECD, IMF), rich databases of protected micro-data (firm-level and employee registers) as well as other official datasets (survey data at SORS, annual accounts at SORS, data on subsidies to companies), and primary data sources (own survey data collection and in-depth interviews) will be used. METHODOLOGY Due to the diversity of the data, various methodological approaches will be used, ranging from bibliometric analysis and classical literature review to econometric analysis, structural models, and qualitative analysis. RESULTS The research results of the project will be: (1) A comprehensive theoretical concept/ model of a sustainable company as a prerequisite for a successful transition to a sustainable economy/society, specifying the desired situation for each of the components of sustainability (focus points presented in Table 1). (2) Identification of the gap between the actual and the desired situation in Slovenian companies in detail and in EU companies. (3) Specification of a comprehensive model of the determinants of business investment dynamics (investment in the economic, social, and environmental dimension of corporate development, i.e. increasing tangible and intangible investment to increase productivity, improving health and age-mix practices, inclusion of disadvantaged groups, energy efficiency, waste management, etc.). (4) An empirical analysis of investment dynamics in all “sustainable company components” in Slovenia at the aggregate and industry level and in comparison with the EU. (5) Empirical analysis of the importance of corporate investment determinants (regulatory and macroeconomic environment, industry variables and determinants of investment activity at the company level - for tangible and intangible investments). (6) Analysis of the impact of Covid-19 on the “sustainable” investment activity of companies to examine the impact of short-term cycles on the relationship between the “short-term survival” goals and long-term sustainable goals. (7) Policy suggestions and managerial implications. CONTRIBUTIONS (1) A first comprehensive theoretical model of a sustainable company, which is a precondition to achieve sustainable development. (2) The first comprehensive theoretical model of investment needs and investment determinants for each of the sustainability aspects at three levels (macroeconomic, industry determinants and enterprise-level determinants). (3) The first systematic empirical analysis of sustainable investment activity in companies for Slovenia and comparatively with the EU with the help of combined databases of registered microdata and survey and qualitative data. (4) Analysis of the importance of individual investment determinants for sustainability investments in Slovenia and comparative analysis with the EU. We will particularly focus also on barriers. (5) Recommendations for economic policy measures. (6) Recommendations for managers.