Impact of Sustainable Practices on the Performance of Manufacturing SMEs in India
DOI:
https://doi.org/10.17010/amcije/2025/v8i1/175193Keywords:
economic performance (EP), exploratory factor analysis, innovation performance (IP), PLS-SEM, and sustainable manufacturing business.JEL Classification Codes: L26, O31, Q01
Publication Chronology: Paper Submission Date : April 23, 2025 ; Paper sent back for Revision : May 10, 2025 ; Paper Acceptance Date : May 25, 2025
Abstract
Purpose : Sustainable manufacturing practices (SMP) represent a comprehensive framework that align environmental, economic, social, and cultural sustainability. In the Indian context—marked by rapid industrialization and growing environmental concerns—a new wave of ecopreneurs has emerged, utilizing business opportunities to promote sustainability. While prior literature emphasized that sustainable practices contribute to environmental preservation, their role in enhancing economic performance (EP), particularly when mediated by innovation, remains underexplored. This study aimed to empirically assess the impact of SMP on EP and to evaluate the moderating role of innovation performance (IP) among Indian small and medium enterprises (SMEs).
Methodology : Primary data were collected through a structured questionnaire administered to 350 SME manufacturers across India, using a simple random sampling technique. The relationships between sustainable practices, IP, and EP were analyzed using partial least squares structural equation modeling (PLS-SEM).
Findings : The results confirmed that sustainable practices positively impacted EP. Moreover, IP enhanced this relationship, demonstrating its moderating influence. The findings highlighted the synergistic effect of sustainability and innovation in achieving economic success within the Indian SME sector.
Practical Implications : This research provided a strategic framework for SME manufacturers to integrate sustainability and innovation into their operations. It addressed the gap in understanding how these dimensions jointly drive economic growth. However, it acknowledged the exclusion of risk-taking behavior—a crucial entrepreneurial trait, especially among Indian women entrepreneurs—as a limitation and suggested its inclusion in future studies.
Originality : The study provided empirical evidence bridging sustainability and innovation, offering a novel perspective for Indian manufacturing SMEs.
Downloads
Published
How to Cite
Issue
Section
References
1) Afriyie, S., Duo, J., & Musah, A.-A. (2018). The nexus between innovation types and marketing performance of SMEs in an emerging economy: The mediating role of knowledge sharing. Journal of Economics, Management and Trade, 21(10), 1–22. https://doi.org/10.9734/jemt/2018/44223
2) Agarwal, R., Pundir, S., & Pokhriyal, A. K. (2022). The role of the Indian entrepreneurship ecosystem in the era of climate change. AMC Indian Journal of Entrepreneurship, 5(2), 56–65. https://doi.org/10.17010/amcije/2022/v5i2/171470
3) Almeida, F., & Wasim, J. (2023). Eco-innovation and sustainable business performance: Perspectives of SMEs in Portugal and the UK. Society and Business Review, 18(1), 28–50. https://doi.org/10.1108/sbr-12-2021-0233
4) Anusha, V. (2021). Innovative ideas in entrepreneurship: Key issues, challenges, and future scope. AMC Indian Journal of Entrepreneurship, 4(2–3), 49–59. https://doi.org/10.17010/amcije/2021/v4i2-3/164697
5) Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173
6) Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of Cleaner Production, 65, 42–56. https://doi.org/10.1016/j.jclepro.2013.11.039
7) Bustinza, O. F., Gomes, E., Vendrell-Herrero, F., & Baines, T. (2019). Product-service innovation and performance: The role of collaborative partnerships and R&D intensity. R&D Management, 49(1), 33–45. https://doi.org/10.1111/radm.12269
8) Cetindamar, D., & Ulusoy, G. (2008). Innovation performance and partnerships in manufacturing firms in Turkey. Journal of Manufacturing Technology Management, 19(3), 332–345. https://doi.org/10.1108/17410380810853768
9) Chardine-Baumann, E., & Botta-Genoulaz, V. (2014). A framework for sustainable performance assessment of supply chain management practices. Computers & Industrial Engineering, 76, 138–147. https://doi.org/10.1016/j.cie.2014.07.029
10) Cheng, C. C., Yang, C.-L., & Sheu, C. (2014). The link between eco-innovation and business performance: A Taiwanese industry context. Journal of Cleaner Production, 64, 81–90. https://doi.org/10.1016/j.jclepro.2013.09.050
11) Choudhary, E. (2018). Women entrepreneurs: Making green business a reality. Jharkhand Journal of Development and Management Studies, 16(4), 7887–7902.
12) Cochran, W. G. (1977). Sampling techniques (3rd ed.). John Wiley & Sons. https://openlibrary.org/books/OL4534980M/Sampling_techniques
13) Durmaz, Y., & Yaşar, H. V. (2016). Green marketinging and benefits to business. Business and Management Studies, 2(2), 64–71. https://doi.org/10.11114/bms.v2i2.1624
14) Goyal, S., Esposito, M., & Kapoor, A. (2018). Circular economy business models in developing economies: Lessons from India on reduce, recycle, and reuse paradigms. Thunderbird International Business Review, 60(5), 729–740. https://doi.org/10.1002/tie.21883
15) Hair Jr., J. F., Sarstedt, M., Hopkins, L., & Kupplewieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128
16) Hami, N., Muhammad, M. R., & Ebrahim, Z. (2015). An empirical study on the impact of sustainable manufacturing practices and innovation performance on environmental sustainability. Jurnal Teknologi, 77(4). https://doi.org/10.11113/jt.v77.6043
17) Iacobucci, D., & Duhachek, A. (2003). Advancing alpha: Measuring reliability with confidence. Journal of Consumer Psychology, 13(4), 478–487. https://doi.org/10.1207/S15327663JCP1304_14
18) Jabbour, C. J., Seuring, S., de Sousa Jabbour, A. B., Jugend, D., De Camargo Fiorini, P., Latan, H., & Izeppi, W. C. (2020). Stakeholders, innovative business models for the circular economy, and sustainable performance of firms in an emerging economy facing institutional voids. Journal of Environmental Management, 264, Article ID 110416. https://doi.org/10.1016/j.jenvman.2020.110416
19) Juan, Z. (2011). R&D for environmental innovation and supportive policy: The implications for new energy automobile industry in China. Energy Procedia, 5, 1003–1007. https://doi.org/10.1016/j.egypro.2011.03.177
20) Lüdeke‐Freund, F. (2020). Sustainable entrepreneurship, innovation, and business models: Integrative framework and propositions for future research. Business Strategy and the Environment, 29(2), 665–681. https://doi.org/10.1002/bse.2396
21) Luthra, S., Garg, D., & Haleem, A. (2015). An analysis of interactions among critical success factors to implement green supply chain management towards sustainability: An Indian perspective. Resources Policy, 46(Part 1), 37–50. https://doi.org/10.1016/j.resourpol.2014.12.006
22) Ministry of Micro, Small and Medium Enterprises, Government of India. (2022). Annual report 2021–22. https://msme.gov.in/sites/default/files/MSMEENGLISHANNUALREPORT2021-22.pdf
23) Mishra, V. (2018). Establishing a nexus between sharing economy and entrepreneurial sustainability: A conceptual perusal. AMC Indian Journal of Entrepreneurship, 1(1), 44–57. https://doi.org/10.17010/amcije/2018/v1i1/120329
24) Ramkumar, G. (2018). Challenges faced by micro, small, and medium enterprises in Chennai City: Starting or growing a business. AMC Indian Journal of Entrepreneurship, 1(4), 53–56. https://doi.org/10.17010/amcije/2018/v1i4/141222
25) Roach, D. C., Ryman, J. A., & Makani, J. (2016). Effectuation, innovation, and performance in SMEs: An empirical study. European Journal of Innovation Management, 19(2), 214–238. https://doi.org/10.1108/ejim-12-2014-0119
26) Sami, S., & Roychowdhury, S. (2023a). Impact of entrepreneurial innovation on firm performance: An empirical investigation with emphasis on women entrepreneurs. IUP Journal of Entrepreneurship Development, 20(4), 5–25. https://www.proquest.com/openview/83cfa63f29dcd799d7ce599245e20779/1?pq-origsite=gscholar&cbl=54457
27) Sami, S., & Roychowdhury, S. (2023b). Sustainable entrepreneurship: A systematic review of literature on new trends and influencing factors across the globe. In Resilient and Sustainable Businesses: An Indian Perspective (pp. 51–66). LAP Lambert Academic Publishing. https://www.researchgate.net/publication/375230974
28) The World Bank. (2022). India better positioned to navigate global headwinds than other major emerging economies: New World Bank report. World Bank Group. https://www.worldbank.org/en/news/press-release/2022/12/05/india-better-positioned-to-navigate-global-headwinds-than-other-major-emerging-economies-new-world-bank-report#:~:text=The%20report%20titled%20%E2%80%9CNavigating%20the,to%20most%20other%20emerging%20markets.
29) Wasim, M., Ahmed, S., Kalsoom, T., Khan, M. S., & Rafi-Ul-Shan, P. M. (2024). Market orientation and SME performance: The moderating role of IoT and the mediating role of creativity. Journal of Small Business Management, 62(2), 938–965. https://doi.org/10.1080/00472778.2022.2100897
30) Yadav, G., Kumar, A., Luthra, S., Garza-Reyes, J. A., Kumar, V., & Batista, L. (2020). A framework to achieve sustainability in manufacturing organizations of developing economies using industry 4.0 technologies' enablers. Computers in Industry, 122, Article ID 103280. https://doi.org/10.1016/j.compind.2020.103280
31) Yang, C.-L., Lin, S.-P., Chan, Y.-H., & Sheu, C. (2010). Mediated effect of environmental management on manufacturing competitiveness: An empirical study. International Journal of Production Economics, 123(1), 210–220. https://doi.org/10.1016/j.ijpe.2009.08.017
32) Zhu, Q., Zou, F., & Chang, P. (2019). The role of innovation for performance improvement through corporate social responsibility practices among small and medium-sized suppliers in China. Corporate Social Responsibility and Environmental Management, 26(2), 341–350. https://doi.org/10.1002/csr.1686
