The Urgency of Legal Regulation in Sustainable Business Practices
DOI:
https://doi.org/10.55606/jumbiku.v5i1.5465Keywords:
Corporate Sustainability, Emerging Economies, ESG Regulation, Greenwashing, Legal Enforcement.Abstract
This study investigates the critical role of legal regulation in promoting sustainable business practices, particularly in emerging economies facing institutional constraints. Using a qualitative, literature based approach grounded in thematic analysis, the research explores how legal frameworks influence corporate environmental, social, and governance (ESG) behavior across China, Indonesia, Brazil, and South Africa. Findings reveal that while mandatory ESG disclosures, environmental laws, and green fiscal incentives can positively shape corporate conduct, their effectiveness is highly dependent on enforcement consistency and institutional capacity. Multinational firms often lead in sustainability due to global regulatory pressures, while small and medium sized enterprises (SMEs) face structural challenges. The study also highlights the risks of greenwashing and regulatory arbitrage in jurisdictions with weak oversight. Moreover, international legal instruments such as the EU Deforestation Regulation and Paris Agreement are shown to influence domestic governance, although unevenly. The research concludes that to embed sustainability effectively, legal frameworks must not only be robust and adaptive but also supported by institutional legitimacy and stakeholder engagement. The study offers strategic policy insights for governments, regulators, and corporate leaders committed to advancing sustainable governance.
Downloads
References
Braun, V., & Clarke, V. (2021). One size fits all? What counts as quality practice in (reflexive) thematic analysis? Qualitative Research in Psychology, 18(3), 328–352. https://doi.org/10.1080/14780887.2020.1769238
Buhmann, K. (2020). Business and human rights: Understanding the UN Guiding Principles from the perspective of transnational business governance interactions. Transnational Legal Theory, 11(3–4), 328–358. https://doi.org/10.1080/20414005.2020.1827667
Cai, L., & Ye, M. (2023). Environmental regulation, green innovation and firm performance: Evidence from China's new environmental law. Journal of Cleaner Production, 398, 136302. https://doi.org/10.1016/j.jclepro.2023.136302
Dangelico, R. M., Pujari, D., & Pontrandolfo, P. (2020). Green product innovation in manufacturing firms: A sustainability oriented dynamic capability perspective. Business Strategy and the Environment, 29(6), 2129–2143. https://doi.org/10.1002/bse.2481
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.
Khan, M., Serafeim, G., & Yoon, A. (2021). Corporate sustainability: First evidence on materiality. The Accounting Review, 96(3), 169–198. https://doi.org/10.2308/TAR-2019-0508
Kolk, A., Rivera-Santos, M., & Rufin, C. (2022). Reviewing a decade of research on the “Base/Bottom of the Pyramid” (BoP) concept. Business & Society, 61(2), 293–354. https://doi.org/10.1177/0007650319845324
Liu, Y., Xiang, C., & Zhu, J. (2022). Government supervision, financial incentives and corporate green innovation. Technological Forecasting and Social Change, 174, 121248. https://doi.org/10.1016/j.techfore.2021.121248
Lu, J., & Cheng, C. (2023). Environmental regulation, firm heterogeneity and green innovation: Evidence from China's manufacturing sector. Environmental Economics and Policy Studies, 25, 1–24. https://doi.org/10.1007/s10018-023-00355-3
Porter, M. E., & van der Linde, C. (1995). Toward a new conception of the environment competitiveness relationship. Journal of Economic Perspectives, 9(4), 97–118. https://doi.org/10.1257/jep.9.4.97
Silverman, D. (2021). Qualitative research (5th ed.). London: Sage.
Wang, Z., & Sarkis, J. (2021). Corporate social responsibility governance, outcomes, and financial performance. Journal of Cleaner Production, 278, 123692. https://doi.org/10.1016/j.jclepro.2020.123692
Zhang, B., & Han, J. (2025). The role of institutional pressures and public scrutiny in driving corporate environmental responsibility. Journal of Business Ethics, 178(1), 113–132. https://doi.org/10.1007/s10551-024-05371-2
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Jurnal Manajemen, Bisnis dan Kewirausahaan
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
