Sustainability Orientation, Supply Chain Integration, and SMEs Performance: A Causal Analysis

The pressure of globalization has raised social concerns related to the protection of the environment, forced companies to use sustainability as a strategic weapon to fulfill the legal obligations and achieve overall competitiveness. It is reported that small and medium enterprises (SMEs) are globally responsible for approximately 70% of the industrial pollution, justifying urgent attention to the operations of these businesses. This paper aims at analyzing the impact of sustainability orientation and supply chain integration implemented by SMEs on their sustainable procurement and design. Moreover, this study examines how SMEs’ sustainable procurement and design affect their environmental and cost performances. We develop a comprehensive model to test the relationships among sustainability orientation, supply chain integration, sustainable procurement, sustainable design, environmental performance and cost performance at SMEs level. We investigate the relationships of the mentioned factors by a dataset that is collected from 358 Indian manufacturing SMEs. The results indicate that in the SMEs’ context: (i) sustainability orientation positively influences both sustainable procurement and sustainable design, (ii) external integration positively affects sustainable procurement, (iii) internal integration positively affects sustainable design, (iv) sustainable procurement positively influences the environmental performance, and has not impact on cost performance, and (v) sustainable design positively influences both environmental performance and cost performance. This study provides a broad view of the relation between driving factors that may direct SMEs toward a better sustainability performance and offers practical managerial insights to these important business entities.