Abstract
Sustainable manufacturing is a critical phenomenon in the process of creating sustainable value. This is a way to increase innovation and resource quality. On the other hand, the partnership strategy is an important factor in efforts to improve company performance. The involvement of the partnership strategy is one of the factors that strengthen the achievement of sustainable values. Furthermore, this affects the sustainability of a manufacturing company's competitiveness, including Small and Medium Enterprises (SMEs). In this study, we focus on creating sustainable value and the role of partnership strategies in improving the business performance of SMEs engaged in the metal manufacturing industry. The Partial Least Squares (PLS) approach to Structural Equation Modeling (SEM) is used to evaluate relationships and effects based on survey data from small and medium industries. The results show that the creation of sustainable value, including products, processes, production, equipment, organization, and human values, has a significant impact (β=0.522; ρ<0.001) on increasing the competitiveness of small and medium enterprises. The effect of sustainable value creation on sustainable competitiveness is fully moderated by the partnership strategy (β=0.179; ρ=0.03), especially in the technology & equipment, and human resources. Apart from being a moderating variable, the partnership strategy has also been shown to significantly act as a partial mediating variable (β=0.135; ρ<0.05) for sustainable value creation in enhancing competitiveness. The partnership strategy's simultaneous involvement proves that the partnership strategy plays an important role in value creation to increase the competitiveness of sustainable manufacturing SMEs
Highlights
In the last decade, the issue of sustainability has emerged and has been realized and developed in various fields, including the manufacturing field
The growing numbers of sustainable manufacturing practices are mostly based on several drivers, including global climate and ecological scarcity, environmental impacts, production efficiency and productivity improvement, social welfare improvement for employees and consumers
The purpose of this study is to evaluate the relationship between Sustainable Value Creation (SVC) and competitive advantage in the manufacturing Small and Medium Enterprises (SMEs)
Summary
The issue of sustainability has emerged and has been realized and developed in various fields, including the manufacturing field. Many models and theories regarding formulation and achievement of competitive advantages are only applied to larger firms, they are not wholly appropriate for smaller firms Smaller firms such as Small and Medium Enterprises (SMEs) differ from the large-scaled firms in terms of particular operating circumstances surrounding the enterprise [8] and the non-existence of scale economies, which is applied in the larger firms [9, 10]. The ability to create value and provide products according to customer needs at low costs are the key factors in achieving competitive advantages. This research contributes to practical industries by providing SMEs’ directions in the decision-making process to increase business performance and competitive advantages through sustainable value creation. This study’s results are expected to be used as managerial directions in strategy formulation and enhancing the sustainable competitiveness of SMEs
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