Institutional work in SMEs is surprisingly clearly visible in the VSME discussion. In recent months, I have followed the discussion surrounding the voluntary VSME sustainability reporting standard. Reactions have largely been positive. The standard is described as necessary, useful, and a development in the right direction.
More rarely do we stop to ask: what is actually happening when we, as experts, say this?
In organizational research, the concept of institutional work refers to the actions carried out by actors such as companies, experts, and public authorities through which they create, maintain, or change societal rules and practices. Institutions do not remain in force by themselves, but because people repeat, explain, and legitimize them in their everyday activities.
When a sustainability professional says that VSME is necessary and useful, they are not merely describing regulation. They participate in building its legitimacy. They engage in institutional work, often unintentionally. This is therefore not an accusation, but an observation.
How does legitimacy emerge and how do we maintain it?
EU sustainability regulation has emerged primarily from the needs of financial markets, large companies’ value chains, and comparable data. It is a logical part of a broader system in which capital, risks, and sustainability are interconnected. But when the focus shifts to the everyday life of SMEs, the setting changes.
In a small company, sustainability is often the entrepreneur’s value base, everyday practices, and networks. It does not primarily begin, nor should it begin, from a reporting structure. VSME represents a metric-driven and structural way of thinking that has emerged for a different operating environment.
When experts defend this structure, they participate in maintaining the institution. From the perspective of institutional theory, this is normal. Institutions remain stable precisely because actors reproduce them. EU regulation is not maintained only by the Commission or EFRAG. It is also maintained by thousands of consultants, trainers, and sustainability experts whose work accumulates into general acceptance.
In their work, sustainability experts often also engage in temporal institutional work unintentionally, for example by constructing a sense of urgency. When we justify the importance of the standard by saying that “now is the time to act in order to stay on board,” we create an image of regulation as an inevitable force of nature. Constructing urgency is an effective way to achieve legitimacy, but it may simultaneously silence critical discussion about whether the rhythm and purposes of reporting logic fit the everyday life of an SME and whether they advance the company’s business objectives.
Another issue is how a rapidly changing regulatory environment may cast not only the entire regulatory system but also the forces maintaining it in a peculiar light. A good example of this is the Omnibus amendment proposals, which have taught us all that what initially appears urgent and necessary may soon become politically negotiable.
The Omnibus amendment proposals have taught us all that what initially appears urgent and necessary may soon become politically negotiable.
Institutional work does not mean only driving change. It can also be stabilizing and maintaining the existing order. When we normalize a reporting framework as part of an SME’s everyday life without examining its proportionality and practical benefits, we may reinforce a structure that does not originate from the SME’s own needs nor serve them. This does not mean that VSME is always bad, but that its legitimacy should not be automatic.
Sustainability professionals have a significant role here. We can act merely as transmitters of regulation, or we can act as interpreters who adapt the logic and purposes of regulation to the reality and needs of the SME. We can raise questions about the proportionality, practicality, and real business benefits of regulation.
Institutional work can also be critical and constructive.
If we genuinely want to support SMEs in the green transition, we must dare to examine regulation both from within and from outside. A scientific perspective helps us see that rules of the game are not neutral. They arise from specific interests and are reinforced when we repeat them.
Many sustainability professionals have a strong belief that EU regulation develops companies in the right direction. There is something here similar to the theoretical thinking of institutional work: when people repeat, explain, and defend regulation, they do not merely interpret it, but build its legitimacy as part of social reality.
Beunen & Patterson (2019) argue that institutional work includes both efforts to change the rules of the game and efforts to maintain and strengthen the existing order. They emphasize that this is not only intentional action, but also a discursive, multi-actor, and temporally cumulative process – precisely the kinds of processes in which speaking in favor of regulation often takes place.
At the same time, research shows that action is not one-directional. Arenas et al. (2020) describe how responsible entrepreneurs balance between existing rules of the game and changing them. They adapt to institutions sufficiently to gain general acceptance, while at the same time seeking to shape their operating environment to better fit their objectives by influencing the content of the system from within. Adaptation and influence are not opposites, but often occur in parallel.
A critical and constructive perspective also helps to understand the role of SMEs and sustainability experts. When a company adopts, for example, the VSME reporting framework, it can simultaneously strengthen the position of regulation and interpret it from its own starting points. When an expert helps apply the standard, they do not merely transfer regulatory requirements forward, but also prioritize and apply them in practice. This can turn compliance into deliberate strategic positioning.
The above also explains why experts’ comments are not merely technical explanations. They are part of a broader activity in which the regulatory system maintains itself also through our interpretations and narratives. I therefore encourage all sustainability experts to help SMEs engage in their own institutional work, that is, to define for themselves what sustainability means for their company and its core business, instead of merely adapting to externally imposed requirements and metrics.
References
Arenas, D., Strumińska-Kutra, M., & Landoni, P. (2020). Walking the tightrope and stirring things up: Exploring the institutional work of sustainable entrepreneurs. Business Strategy and the Environment.
Beunen, R. & Patterson, J. (2019). Analysing institutional change in environmental governance: Exploring the concept of institutional work. Journal of Environmental Planning and Management.
Granqvist, N., & Gustafsson, R. (2016). Temporal institutional work. Academy of Management Journal.
Henttonen, K., (2025). Institutional work of born-circular ventures. Journal of Circular Economy.
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