Do Sustainable Procurement Practices Improve Organizational Performance?

Md Mazharul Islam,Abalala Turki,Azharul Karim,Md Wahid Murad

doi:10.3390/su9122281

Abstract

This exploratory study investigates the impacts of sustainable procurement (SP) practices on organizational performance by using the established scales of SP practices and organizational performances, taking Saudi Arabia as a case country. Data used in the study was collected through a questionnaire survey from procurement directors and managers. Regression and multivariate-based path analysis was performed to assess the impacts of SP practices. From the preliminary results, a significant association between combined SP practices and organizations’ financial performance was found. A mediational analysis was conducted to discover the direct and indirect effects of SP practices on financial performance. There was no evidence of a significant direct impact of the summary measures of SP practices on financial performance, while the indirect impact of SP practices via organizational nonfinancial performance on financial performance was found to be statistically significant. This study contributes to SP practice literature by developing a conceptual model for the outcomes of SP practices and establishing statistically significant relationships between SP practices, organizational financial performance, and mediating factors.

Highlights

In response to the Sustainable Development World Summit [1], sustainable procurement (SP) has become an important agenda for governments seeking to demonstrate sustainable development [2]
Studies demonstrate that sustainable procurement practices can transform markets, save money, enhance financial viability, increase the competitiveness of eco-industries, protect natural resources, and foster job creation, which will in turn contribute to sustainable development
This study examines the relationships between SP practices and organizational performance in Saudi Arabia, which has a dominant culture of socialization strongly anchored in religion and steeped in tradition

Summary

Introduction

In response to the Sustainable Development World Summit [1], sustainable procurement (SP) has become an important agenda for governments seeking to demonstrate sustainable development [2]. Environmental and social issues are increasingly becoming important in managing any business due to the increasing awareness of society and political leaders. These trends have contributed to SP practices, which are considered an important aspect of corporate management that can empower organizations to advance their stated goals. Academics and practitioners have been investigating how organizations and their suppliers affect the environment, society, and the economy [7,8]. Despite this increasing interest, evidence of the organizational performance in implementing SP practices is still lacking

Results

Discussion

Conclusion