Sustainable Corporate Governance and ESG Adoption in Italian SMEs: Organisational Learning and the Liminal Stage of ESG Maturity

Sustainability transitions increasingly require organisational governance and learning mechanisms capable of translating institutional pressures into concrete organisational change. In this context, ESG (Environmental, Social and Governance) frameworks, together with the evolving European regulatory landscape (including the Corporate Sustainability Reporting Directive and Italian Legislative Decree 125/2024), may function not only as reporting obligations but also as potential catalysts for organisational transformation in small and medium-sized enterprises (SMEs). Empirical evidence on how SMEs interpret and operationalise these pressures, however, remains limited, particularly in the Italian context. This exploratory study investigates ESG perceptions and integration among Italian SMEs, focusing on the drivers, barriers, and governance arrangements shaping sustainability-related practices. Data were collected through a structured questionnaire administered to 82 SMEs operating in the manufacturing, agri-food, and service sectors across Northern Italy (Lombardy, Emilia-Romagna, and Veneto). Quantitative descriptive analyses were complemented by qualitative interpretation of open-ended responses to capture organisational sense-making and learning dynamics. The findings indicate increasing yet uneven levels of ESG awareness. While most firms recognise sustainability as strategically relevant, only a limited number have embedded ESG within formal governance structures, organisational routines, and performance measurement systems. Reputation and relational legitimacy emerge as the most salient drivers of ESG engagement, whereas capability constraints-particularly limited expertise-together with perceived implementation costs and regulatory uncertainty represent the principal barriers. Firms characterised by more formalised governance arrangements display higher levels of ESG integration and stronger expectations regarding sustainability-related benefits. Overall, the results indicate that many SMEs currently operate within a liminal stage of ESG maturity, in which cognitive alignment with sustainability and legitimacy-seeking motivations precede the organisational routinisation of ESG practices. Consequently, ESG engagement remains fragmented and, in some cases, potentially reversible. The study contributes to sustainability transitions research by providing micro-level diagnostic evidence on ESG integration in SMEs and by conceptualising ESG adoption as a process of organisational learning under institutional complexity. The findings highlight the need for capability-building initiatives, proportionate regulatory support, and intermediary infrastructures capable of translating regulatory requirements into actionable organisational practices for resource-constrained firms.