Discussion
The empirical results of our study reveal that government intervention
positively influences the sustainability performance of an SME which in
turn positively influences business performance of the organization.
This implies that government role is instrumental in making the SMEs
more responsible towards the social and environmental impacts of their
operations. This result is in line with the earlier studies in the
context of other geographical areas. Regulatory and legislative
interventions by the government and increased number of awareness
programs, related articles and journals have boosted up some socially
responsibility practices in SMEs in Romania (Violeta and Ileana, 2011).
Also the market pressures and laws are major key drivers for CSR in SMEs
(Elena et al, 2011). Mohammed et al (2016) suggested that Government
action and introduction of green taxes, high energy price are some of
the factors promoting environmental practices in SMEs in UK.
Our results also show that collaborative approach of operation impacts
sustainability performance in SMEs in a positive way. Enhancement of
sustainability performance through collaborations has been well
supported in earlier studies. A cluster approach or a network model can
address the limitations faced by the SMEs while trying to implement CSR
individually (Heidi and Shankar, 2011). Sustainability practices can be
strengthened by forming a forum where in different NGO can facilitate
sharing CSR best practices and can jointly address different
sustainability related issues and challenges (Janet and Nina, 2010). A
network perspective has much to offer in facilitating the transition
towards a network level culture of sustainable business practices (Jamsa
et al, 2011). Operating together, in the form of clusters, or with the
support of NGOs in introducing CSR can address the resource constraint
and implementation challenges faced by the SMEs (Magdalena and Popowska,
2015).
The result of our analysis with data from 225 Indian MSME also supports
that enhanced sustainability performance help the SME organizations
improve their business performance. This means that SMEs also through
communication of their sustainable and responsible business practices
can create a positive image in the society which in turn help them to
achieve customer loyalty, employee satisfaction which ultimately lead to
improved business performance. This finding has also been supported by
earlier researcher for SMEs in different parts of the world. Heather and
Gapp (2014), in Australian SME context has mentioned that greater social
and environmental engagement have directly attributed to the SMEs’
improved business performance. In Netherlands, SMEs with sustainability
integrated in their innovation processes show improved economical
performance (Hilke, 2010). Luis and Ricardo (2014) empirically
established the existence of a valid positive relationship between
companies’ social performance and key business results for SMEs in
Portugal.
Moreover our results on moderating effect of company size on the
relationship between the sustainable performance and business
performance shows that sustainability performance in driving business
growth is more effective in case of medium size companies than smaller
firms. Smaller companies have an added advantage of structural
flexibility over bigger firms and are more driven by the individual
value system of their owner managers. This suggests that a strong value
system and an ethical consideration on the part of the SME owner will
help in driving sustainable business practices in the organization.
Moreover small firms need to bring in more internal discipline and
better stream line their operations at individual firm level before
leveraging from collaborative operation at industry level and government
facilitations at policy level.