Belief Traps Hinder Small Business Climate Action

Climate (in)action by small business owners is not driven only by policy or economic considerations but also by sociological and psychological factors, as leaders mimic the behaviors they perceive among their peers. We find that these social inferences about what others believe are often incorrect. In this registered report of 4,432 small-to-medium business owners and leaders across seven countries, we observe a persistent gap between perceived and actual beliefs. And this gap matters: small-to-medium enterprise owners exhibiting a larger gap have fewer sustainability policies in place. These results highlight how peer effects can spur climate action among business leaders.