Impact of Social and Environmental Practices on SME Business Performance

Influence of social and environmental practices in driving business growth in case of big companies is evident. However for small and medium enterprises these aspects of business operations are grossly neglected. SMEs contribute immensely to the economic progress of a country. But a large percentage of the SMEs fail within few years of incorporation. In our paper we have tried to develop a model taking a sample of 200 SMEs from Indian leather and chemical sectors and find out how factors like collaborative approach of operation at industry level and government intervention at policy level impact their sustainability performance and how in turn their improved social and environmental performance help them to drive sustainable business growth. Empirical results of our study reveal that both government intervention and collaborative operation positively influence the firm’s sustainability performance and in turn company’s business performance is positively impacted by enhanced sustainability performance. Company size was found to have a moderating effect on this relationship