Driven by SDGs, Powered by Human Capital: Managing Emotional Health in SMEs

ABSTRACT

This study examines the mediating role of human capital between company emotional capital and managerial perceptions of employees' emotional health, analysing how this relationship is conditioned by the pursuit of specific sustainable development goals (SDGs 3, 4, 5, 8) and perceived institutional pressures in SMEs. A cross‐sectional survey was conducted among 96 Spanish SME managers to analyse these contingent relationships. Results indicate that external pressures predict a higher strategic integration of the SDGs, strengthening the mediating role of human capital. This mediating mechanism is contingent, as its indirect effects vary significantly depending on the specific SDG pursued. SME managers should proactively embed SDGs into HR strategies to leverage human capital and transform institutional compliance into improvements in managerial perceptions of employees' emotional health, thereby contributing to public welfare. Building on prior work that has already linked emotional capital and the SDGs, this study advances the literature by specifying how and under what conditions this link operates in SMEs. It proposes a novel dual‐mechanism model in which company human capital acts as an internal mediator between company emotional capital and managerial perceptions of employees' emotional health, whereas external pressure associated with specific SDGs (3, 4, 5 and 8) operates as an external conditioning factor shaping perceived workplace well‐being dimensions.