Non-Financial Reporting—Standardization Options for SME Sector

Round 1

Reviewer 1 Report

The paper titled “Non-Financial Reporting – Standardization Options for SME sector” covers a very important topic. SMEs are a tremendous part of every country’s economy and they are closely interconnected with numerous stakeholders. Non-financial reporting can offer valuable information for those stakeholders. The paper is an adequate review of the current knowledge.

Nevertheless, I have few comments and suggestions for this paper:

• Proofread the article – there are some missing words (e.g. first sentence of the introduction, line 28 “is recognized”), redundant words (e.g. SME enterprises), unfinished or leftover sentences (lines 408-409).
• The methods should be more thoroughly described, it needs to be coherent and clear. 
• Results section should provide the results of the research, but the discussion part, and answers to research questions would better fit in the discussion section, in order to provide clarity and structure to the paper.
• Discussion section of the paper seems rather weak. It should have a stronger connection to the theoretical part, and provide discussion about the results and implications. 

Thank you for the opportunity to review this paper.

Best regards

Author Response

Dear Reviewer,

Thank you very much for your constructive and positive words. Detailed comments will raise the level of article.

I corrected the selected linguistic errors. I moved the answers to research questions from the "results" part to the "discussion" part.

I hope that the changes made will make the article more interesting. The discussed topic is important and can make a significant contribution to the development of knowledge on SMEs and non-financial reporting.

Best regards,

PK

Reviewer 2 Report

The Non-Financial Disclosure is a  debated issue, also with regard to SMEs that have an important role in the EU economic growth. SMEs, due to their governance characteristics and financial structure need different standards to report their committment in CSR.

This paper approaches the matter with an attempt to quantitative analysis. While appreciating this effort by the author, in my opinion, it suffers from a methodological weaknesses which induced me to reject the paper. 

The results of Sec.4 are not the results of the survey explained in the Sec.3 (quantitative analysis) but they come from a literature and state of the art review. The quantitative survey depicted in Table 4 shows only the use or not of GRI standards without go into the details e.g. what GRI information are more frequently reported by SMEs considering that the principle of comply or explain is applied. What are the 'non GRI' standard SMEs prefer to GRI? Why? The answers to these questions, in my opinion, will help to say GRI are or are not fully appropriated for SMEs...simply counting the percentage of SMEs which report non financial information the author doesn't give sufficient justifications to support the sentence at l. 492 'there is a need to create standardization normes for these entities'. Is the author really sure that SMEs don't communicate their social and environmental committment because of the absence of special standards?

Furthermore, an industry analysis about the NFD of SMEs should be interesting

Concluding, the survey doesn't afford to give an answer to the reserach questions summarized in l. 472-476. The first RQ finds an answer in the existing legislation; the second RQ finds an answer in the existing initiatives about standards and guidelines for NFD; the third RQ needs an analysis about the reasons why SMEs choose non GRI standards (what are SMEs searching for that GRI are not be able to give?). In the Sec.6 limitations and impacts are not adequately reported.

So, in my opinion this survey could be an effective starting point for a following and more detailed research about the special needs SMEs have in terms of non financial communication. I wish the author all the best for his/her future research activity

Marginal notes: what is the source of sentence in l. 66? In l. 131 the [20] is not the correct reference. Why does the author focus on Polonia in l. 132-167? This should be justified. There is not the source of the research cited in l. 237. Give support to the sentence in l. 266-267 'GRI are the best known and most widely used...'. In l. 356 there is a typo in the number of the Table. The References are not correctly edited.

Author Response

Dear Reviewer,

Thank you very much for your constructive review. Detailed comments will raise the level of the article. They also provide guidance for further research on the topic presented.

The "results" section presents information (table 2) that could be included in the "literature review" section. It is a synthetic summary of information from individual websites. It is a new original contribution to the issue of financial reporting, therefore it was placed in the "results" section. During writing, the author, had doubts where to put table 2 and its conclusions. However, it was placed in the results section. The other three reviewers did not question its legitimacy in part, so it should probably stay there in the final version. The remaining tables 3 and 4 and chart 1 are the result of recalculations of the numerical data from the GRI Data Base, so they are most appropriate for this part.

Bibliography and footnotes were automatically generated by the Zotero system (recommended by the MDPI). The indicated comments will be verified

"... The European Commission plans to extend the obligation of non-financial reporting, currently required from large entities, also to small and medium-sized enterprises ...." The source of such information is participation in training sessions and webinars related to the topic. Source cannot be identified.

Source of citation was added in 237 l.

Certain references to Polish data result from the author's previous knowledge and experience. The literature review includes authors from different parts of the world.

The presented article is the first connecting SME and non-financial reporting prepared by the author. It is the starting point for the future analyse in subject.

I hope that the changes made will make the article more interesting. The discussed topic is important and can make a significant contribution to the development of knowledge on SMEs and non-financial reporting.

Best regards,

PK

Reviewer 3 Report

Although the paper is interesting, I do not see a clear contribution to the literature. Nevertheless, the value of the proposal could be in than highlighting the necessity of non-financial reporting for SMEs. Furthermore, after presenting the evolution of how SMEs have present non-financial reports, I think the contribution of the paper lies in providing a review of the standardization options for non-financing reporting, and in indentifying which of them are suitable for SMEs that are also in line with the mandatory issues in the Directive 2014/95/EU of the European Parliament and of the Council. Therefore, the introduction and conclusion sections must be focused on this contribution.

Section 5-Discussion does not contain discussion. In this section there are some kind of reflections, but it is not actually a discussion of results. Moreover, it is brief, it has no sense.

Other minor issues:

Page 8 – l.356: “In Table X”

Page 11 – l. 408 There seems to be a mistake in the sentence “description of the experimental results,…”

The legend in Chart 1 lacks the significance of the green color.

Page 14 – l. 494-495: “This section may be divided by subheadings. It should provide a concise and precise description of the experimental results, their interpretation, as well as the experimental  conclusions that can be drawn.”

Why do you affirm that “Non-financial reporting is a toll of sustainability” in page 15?

Author Response

Dear Reviewer,

Thank you very much for your constructive review. Detailed comments will raise the level of the article. They also provide guidance for further research.

As suggested, the "discussion" section has been developed. It now contains answers to research questions. Thanks to this, the "discussion" part should meet the expectations of the reader who often starts reading the article from this part.

The article was checked for technical errors. The defects indicated by the reviewer were corrected (Page 8 - l. 356, Page 11 - l. 408, Chart 1, Page 14 - l. 494-495).

Why it is written: “Non-financial reporting is a toll of sustainability…” Because it shows what companies think  and how create sustainable future.

The presented article is the first connecting SME and non-financial reporting prepared by the author. It is the starting point for the future analyse in subject.

I hope that the changes made will make the article more interesting. The discussed topic is important and can make a significant contribution to the development of knowledge on SMEs and non-financial reporting.

Best regards,

PK

Reviewer 4 Report

Dear author,

This letter regards the review of the manuscript entitled “Non-Financial Reporting - Standardization Options for SME Sector”. Thanks for submitting your article which resorts to a very interesting and relevant topic nowadays. The introduction and the abstract present a very complete and clear landscape of the paper.

Although it is a very complete and structured paper, below, I will suggest relevant elements that can positively contribute to your publication.

I briefly highlight some remarks:

• Avoid constantly repeating the Global Reporting Initiative (GRI) acronym and others such as SDGs, OECD, etc.
• Line 113 & 124: You repeat the CSR acronym in the same paragraph.
• Line 261: I suggest dropping research question No. 3 and turning it into a discussion, could be a new subsection, but as a result of your outcomes and conclusions. When you ask the question: “Is there a need to develop new non-financial reporting standards dedicated 261 to the specificity of SMEs?” you may say that from the beginning, you know the answer, but this answer should come as a research process result.
• Line 376: Instead of listing ideas, I suggest making categories or a table to introduce your idea.
• Line 403: To make Table 2 shorter, please drop long names and stay with the acronyms.
• Line 425: Same suggestion. Instead of listing conclusions,t his section should present categories of conclusions.
• Line 464: Why do you call this a “disturbing” phenomenon?
• Line 472: Instead of repeating the research questions, write a paragraph summarizing how you answer each question briefly.
• Introduce research lines and future research questions in a precise fashion at the end of the conclusions.

Thanks again for submitting this interesting paper and exciting topic.

I hope these comments are helpful for your research.

Best regards,

Reviewer

Author Response

Dear Reviewer,

Thank you very much for your positive and constructive review. Detailed comments will raise the level of the article. They also provide guidance for further research.

• The number of acronym has been checked. They are replaced with pronouns or expanded to full name where possible.
• The third research question was formulated in a different way, so as not to suggest an answer. It was: “Is there a need to develop new non-financial reporting standards dedicated to the specificity of SMEs?”. It is: “What are the needs of small and medium-sized enterprises in the area of ​​standardization of non-financial reporting?”.
• Line 403 – Table 2 is relatively large (it takes 2 pages) in a version that meets the MDPI editing requirements. In the original version (placed horizontally), it fit on one page. Replacing names with acronyms does not change much.
• Line 464: “disturbing phenomenon” was changed for “it is disturbing”.
• At the end of the conclusions was added: “The presented topic should be monitored in the future. Changes in legal regulations in this area and their impact on the behavior of enterprises should be checked. Especially if non-financial reporting becomes obligatory also for small and medium-sized enterprises. Whether the legal obligation will result in the creation of a standard dedicated to SMEs?”

I hope that the changes made will make the article more interesting. The discussed topic is important and can make a significant contribution to the development of knowledge on SMEs and non-financial reporting.

Best regards,

PK

Round 2

Reviewer 2 Report

I appreciated the effort by the Author to improve the overall quality of the paper, so I decided to accept it. In my opinion, some issues remain unexplored and suitable for future research activity (e.g. why some SMEs did't use GRI standards: the answer can be a guide for the development of special guidelines for SMEs)

Author Response

Dear Reviewer,

Thank you very much for your constructive and positive words.

Non-financial reporting is a topic that will develop. I hope to continue my research in this area

Best regards

PK

Reviewer 3 Report

Dear authors,

The discussion section has been improved.

Nevertheless, I also think that some of the results presented in this section must be also outlined in conclusions, as I remarked in my previous report, to put in value the research made.

The paper could be improved also by consulting other references that are also in line of doing efforts in developing tools for SMEs non-financial reporting. For example:

Jiménez, E., de la Cuesta-González, M., & Boronat-Navarro, M. (2021). How Small and Medium-Sized Enterprises Can Uptake the Sustainable Development Goals through a Cluster Management Organization: A Case Study. Sustainability, 13(11), 5939.

Moneva, J.M.; Hernández-Pajares, J. Corporate social responsibility performance and sustainability reporting in SMEs: An analysis of owner-managers’ perceptions. Inderscience 2018, 10, 405–420.

I hope you can improve the paper.

Author Response

Dear Reviewer,

Thank you very much for your constructive review.

Especially, I would like to thank you for specific examples of publications related to the subject. Both are very interesting. They are valuable studies that have been included in the literature review.

Part “conclusions” was supplemented with a few sentences summarizing the research:

 “…So far, there is no obligation for small and medium-sized entities to report non-financial information, but it may change in a near future. The interest of small and medium-sized enterprises in non-financial reporting is growing. Based on the research conducted, it can be concluded that it is necessary to develop non-financial reporting standards for SMEs. The presented topic should be monitored in the future…”

Best regards

PK

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.