Green Ambidexterity and SDG Disclosure: Examining the Role of Green Exploration and Green Exploitation in Enhancing Social Reputation

In the modern business world, a company's success is no longer measured solely by its profits. Increasingly, the public, investors, and governments expect organizations to prove they are helping the planet and society. This expectation has led to the rise of the Sustainable Development Goals, a global framework created by the United Nations to guide nations and companies toward a better future. To show they are taking these goals seriously, companies publish reports detailing their environmental and social efforts. However, simply writing a report is not enough; the content must be genuine and substantial. This raises a critical question for business leaders: what internal capabilities actually drive a company to produce high-quality, transparent reports about its sustainability? The answer lies in how a company manages its existing resources while simultaneously searching for new solutions.

Researchers from Indonesia and Malaysia set out to understand this dynamic by studying hundreds of non-financial companies listed on the Indonesia Stock Exchange between 2020 and 2024. They focused on a concept called "green ambidexterity," which describes a company's ability to do two things at once: improve what it already has and invent something new. The first part, known as green exploitation, involves refining current processes to make them more efficient, less wasteful, and cleaner. The second part, green exploration, is about taking risks to discover entirely new technologies, products, or methods that solve environmental problems. The researchers wanted to know if companies that excel at both of these approaches are more likely to share detailed information about their progress toward the Sustainable Development Goals, and if doing so actually improves how the public views them.

To find the answers, the team analyzed nearly one thousand company-year observations, carefully filtering out financial institutions to focus on industrial and service sectors. They used a method called content analysis to read through thousands of pages of sustainability reports. Instead of guessing, they counted specific words that indicated a company was either refining its current operations or exploring new ideas. For example, words like "efficiency," "implement," and "production" signaled the first approach, while words like "innovate," "experiment," and "discover" signaled the second. They then compared these counts against a detailed scorecard of seventy-seven specific sustainability indicators to see how much information each company disclosed. Finally, they looked at whether companies that disclosed more information received more awards and recognition from external organizations, which served as a measure of their social reputation.

The study revealed a clear and positive chain of events. Companies that actively worked on improving their existing environmental practices were significantly more likely to publish comprehensive reports on their sustainability goals. Similarly, companies that were busy experimenting with new green technologies and taking risks on novel solutions also produced more detailed disclosures. The data showed that these two strategies are not mutually exclusive; in fact, the most transparent companies tended to be strong in both areas. They did not have to choose between fixing their current operations and inventing new ones; doing both seemed to fuel a culture of openness where the company felt confident enough to share its full story with the public.

Furthermore, the research found that this transparency pays off in the court of public opinion. Companies that provided more extensive and detailed information about their contributions to the Sustainable Development Goals earned a stronger social reputation. This reputation was not just a feeling; it was reflected in the tangible recognition these firms received, such as awards for environmental stewardship, community development, and safety innovation. The study suggests that when a company is genuinely engaged in both refining its current green practices and exploring new ones, it generates enough credible material to share. This sharing, in turn, builds trust with stakeholders, leading to a better image and greater respect from the community.

The researchers also discovered that the financial health of a company plays a role in how effectively these green strategies translate into transparency. The positive link between green activities and detailed reporting was strongest in companies with lower levels of debt. This suggests that low debt results in financial flexibility, enabling companies to dedicate more resources to sustainability and innovation. In contrast, for firms with high levels of debt, the focus often shifts to managing obligations rather than achieving SDG disclosure success. Additionally, the study noted that the contribution of green ambidexterity to SDG performance is much more effective in firms with a lower current ratio. This indicates that the proper use of green knowledge and innovations plays a more critical role in supporting sustainable development goals in firms with lower liquidity. Conversely, for firms with high current ratios, the positive influence of green exploitation and exploration on disclosure becomes less evident.

Ultimately, this work highlights that transparency is not just a matter of following rules or writing a report; it is a reflection of a company's internal capabilities. The study concludes that for a company to be seen as a leader in sustainability, it must master the balance of making its current operations better while simultaneously searching for the next big breakthrough. By doing so, these organizations do more than just improve the environment; they build a reservoir of trust that enhances their standing in society. In the competitive landscape of emerging markets like Indonesia, this combination of operational excellence and innovative thinking appears to be the most reliable path to a respected and reputable future.