Belief Traps Hinder Small Business Climate Action

Climate (in)action by small business owners is not driven only by policy or economic considera- tions but also by sociological and psychological factors, as leaders mimic the behaviors they per- ceive 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 poli- cies in place. These results highlight how peer effects can spur climate action among business leaders.