Navigating Regulatory Demands Through Consultancies: A Qualitative Study of Danish Mid-Sized Companies' Engagement With External Consultants in Response to the CSRD

Abstract

The introduction of the EU’s CSRD marks a significant expansion in regulatory demands on midsized firms, many of which have not previously been required to report on sustainability-related matters to this extent. This thesis investigates how mid-sized companies engage with consultancies to respond to external regulatory demands. Through a qualitative, abductive research design guided by Resource Dependency Theory and Legitimacy Theory, the study explores how Danish mid-sized firms navigate the organizational and strategic challenges associated with CSRD compliance. Eight semi-structured interviews were conducted with senior employees from one Danish mid-sized firm and a range of external sustainability consultants and industry experts. The findings indicate that midsized firms face coordination and capacity-related challenges that make consultancy engagement a common response. These engagements are not merely transactional but develop as relational collaborations involving shared sensemaking and continuity. Firms rely on consultants to interpret regulatory complexity and support the development of internal compliance capabilities, while also using the relationship to maintain credibility with customers, financial institutions, and regulators. The study addresses a gap in the literature on how mid-sized firms engage with consultancies to respond to external regulatory demands and offers a more nuanced understanding of how they adapt to complex regulations in collaboration with external consultants. It contributes to Resource Dependency Theory by showing how firms pursue balanced dependencies rather than full autonomy, while Legitimacy Theory extends this view by highlighting the symbolic and processual dimensions of these engagements. Through this integration, the thesis demonstrates how consultancy relationships are used not only to access critical resources but also in relational way to manage legitimacy.