Correlation of lean management practices, sustainability-oriented innovation and corporate social responsibility with sustainability performance of small and medium sized enterprises

Abstract

While lean management practices (LMP) help small and medium sized enterprises (SMEs) to be efficient, sustainability-oriented innovation (SOI) facilitates adopting environmental and social practices. Although prior research looks into the effect of LMP on economic performance of SMEs, less is known about the effect of LMP on sustainability (economic, environmental, and social) performance. Studies on the effect of SOI on sustainability and economic performance are also scant. Additionally, examining the mediating effect of corporate social responsibility (CSR) practices (environmental and social practices) on both LMP and SOI achieving sustainability performance is rare. This research bridges these knowledge gaps by answering how LMP, SOI, CSR practices, sustainability and economic performance are correlated. Through a few hypothesis tests using structural equation modelling, this study reveals the impact of LMP, SOI and CSR (environmental and social) practices on sustainability and economic performance. The study uses data from 119 SMEs within manufacturing industries in the Midlands, UK. The analysis reveals that LMP and SOI facilitate achieving both sustainability and economic performance, and SOI mediates LMP to achieve sustainability performance. Additionally, although CSR practices mediate LMP to achieve sustainability performance, it only marginally mediates SOI to achieve sustainability performance.