Abstract
The objective of this study was to examine how corporate sustainability can raise the level of corporate financial performance of small- and medium-sized enterprises (SMEs) in the fashion industry by considering the roles of organizational values and business model innovation in forming corporate sustainability. It is meaningful to explore the role of corporate sustainability in SMEs as well as fashion companies considering the recent growth of SMEs in the fashion industry. Practitioners (N = 218) working for SMEs located in South Korea participated in an online survey. Exploratory factor analysis resulted in three organizational values of SMEs: flexibility value, rational value, and hierarchical value. While flexibility has contributed to forming business model innovation and sustainability, having a rational value has impacted business model innovation and financial performance. A hierarchical value affected only corporate sustainability. However, business model innovation did not show any significant impact on corporate sustainability or financial performance. Finally, corporate sustainability positively influenced financial performance only for SMEs that had experience practicing at least three sustainable activities. These results have implications for how SMEs manage sustainability to enhance financial performance.
Highlights
Sustainability has become an important issue that corporations have to pursue, to take social and environmental responsibility but to successfully increase their sustainable profitability
We focus on the concept of corporate sustainability and examine how corporates build sustainable systems ranging from monitoring, reporting, to rewards, which are related to corporate social responsibility (CSR) and corporate citizenship
Several studies have explored the relationship between corporate sustainability and financial performance, there is no consistent agreement on this relationship [1] (Pedersen et al, 2018)
Summary
Sustainability has become an important issue that corporations have to pursue, to take social and environmental responsibility but to successfully increase their sustainable profitability. Previous research on sustainability has focused on consumers’ responses to certain sustainable strategic activities or products, but the focus has not been extended from practitioners’ perceptions to the overall corporate level of sustainability that can be achieved by supply chain management or business model innovation. We focus on the concept of corporate sustainability and examine how corporates build sustainable systems ranging from monitoring, reporting, to rewards, which are related to corporate social responsibility (CSR) and corporate citizenship. The purpose of the current research is to examine how corporate sustainability influences financial performance focusing on small- and medium-sized enterprises (SMEs) in the fashion industry. The complicated supply chain involves numerous SMEs. Given the scarce research on sustainability in SMEs in the fashion industry, there is an urgent need to examine the role of sustainability and the relationship to SMEs’ financial performance
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