Sustainable Management Practices and Organisational Performance: Evidence from Emerging Economies
DOI:
https://doi.org/10.7492/cnmghj86Abstract
The paper conducts research on the role of sustainable management practices (SMPs) on corporate performance under developed economies, as this area of research has a knowledge gap due to a paucity of empirical studies in institutionally-challenged settings. This was done by using the quantitative/ cross-sectional research design where primary data were gathered by using medium and large-sized organisations in manufacturing and service industries. Environmental, social, and governance (ESG) dimensions were used to operationalise sustainable management practices, whereas performance in the organisation was measured using financial and non-financial indicators. The proposed relationships were tested by using several regression and structural equation modeling methods. The findings indicate that the relationship between sustainable management practices and organizational performance is high and statistically significant. The strongest impact on the non-financial performance was witnessed in social sustainability practices ( 0.44, p < 0.001), then environmental practices ( 0.38, p < 0.001). A positive effect of social ( 0.35, p < 0.001) and environmental practices ( 0.31, p < 0.001) on financial performance and a moderate yet significant impact of social ( 0.21, p < 0.01) and environmental practices ( 0.29, p < 0.001) on financial performance, as well as overall performance, were also observed. The variance in financial performance and non-financial performance was indicated to be explained by the overall model by 46 and 59 percent respectively. These results show that in the emerging economies, sustainable management practices can serve as strategic value-creating processes, but not cost-generating processes. The article adds to the sustainability and management literature and provides useful information to managers and policymakers aiming to complement the sustainability programs with better organizational performance.
