A SYSTEMATIC REVIEW OF GRC TRANSFORMATION IN SMEs: FROM COMPLIANCE BURDEN TO SUSTAINABILITY CAPABILITY

Michelle Dewi Novandi, Nazwa Nurul Nafiza, Naila Sahla, Novita Novita

Abstract


Small and medium-sized enterprises (SMEs) are increasingly faced with demands for sustainability, regulatory accountability, and increased environmental, social, and governance (ESG) credibility. However, compliance obligations are often perceived as burdensome administrative activities. This systematic literature review aims to examine how governance, risk management, and compliance (GRC) mechanisms can shift compliance pressures into strategic capabilities to support SME sustainability. Following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) process, this study synthesizes 29 key references and groups them into four main themes: regulatory compliance and environmental knowledge, ESG governance and performance, risk management and operational resilience, and capability-based digital GRC. The study findings demonstrate that compliance can provide strategic value when integrated into governance systems, supported by risk management, strengthened through environmental knowledge, and facilitated by digital systems. GRC contributes to increased accountability, legitimacy, data quality, ESG reporting, and operational resilience of SMEs. However, GRC implementation still faces several challenges, such as limited resources, high ESG reporting burdens, and a digital capability gap. This study emphasizes that GRC can be understood as an integrated capability that plays a crucial role in driving the sustainability transformation of SMEs, while also serving as a foundation for the development of ESG standards, policy formulation, and future research agendas.

Keywords: Sustainability Capabilities; Risk Management; ESG Reporting; Risk Governance and Compliance; Small and Medium Enterprises


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DOI: https://doi.org/10.31326/.v6i2.2930

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