How Stakeholder Pressure Influence Corporate Sustainability, and Financial Performance in Manufacturing Industries of Pakistan: The Mediatory Role of Sustainable Supply Chain Management

Abstract

It is of great importance to gain a better understanding of the impact of external stakeholder groups on an organization’s supply chain management strategies and practices. The greater challenge is to know how the two constructs affect an organization’s sustainability and performance. This study aims to investigate the relationship between stakeholder pressure (SP), sustainable supply chain management (SSCM), corporate sustainability performance (CSP) & financial performance (FP). For this we proposed a theoretical framework, modifying Wolf’s (2014) model, to incorporate the mediating role of sustainable SCM. Stakeholder pressure is captured by environmental issues and social supply chain issues. Sustainable SCM was measured by waste reduction (WR), green purchasing (GP), and social supply chain standards (SSCS). Empirical validity was established by conducting a survey using a close-ended questionnaire. Data was collected from 310 employees and analyzed using confirmatory factor analysis and structured equation modeling. Findings show that environmental issues have a significant effect on CSP, FP & SSCM, sustainable supply chain management (SSCM) except green purchasing (GP) has a significant effect on CSP, FP hence green purchasing has insignificant results. Social supply chain issues have not a significant effect on CSP, FP, and waste reduction (WR). There is a mediating effect of SSCM on environmental issues that leads to CSP & FP, but not on supply chain issues. This study will add to the existing knowledge of sustainability by different firms of a developing country like Pakistan. This will also help in understanding that how stakeholder pressure affects the reputation of organizations in result firms mount their strategies and tactics, and can better understand that what measures they should take for environmental and social standards by focusing on employee safety, suppliers’ engagement, and safety programs.