Testing Effect of Social Sustainability Implementation on Company Resilience and the Economic Impact of COVID-19

Abstract

This study aims to examine the effect of implementing social sustainability on companyperformance. This study took a sample of 250 employee respondents at all levels from160 companies in the motorcycle supply chain that were able to survive the pandemic.Using management commitment variables and financial support as exogenous variables,company performance as an endogenous variable, and social sustainability as mediatorvariables. The data was processed using SEM-PLS with a degree of variability of 5%to evaluate the direct and indirect relationship to company performance. The researchfindings show that all variables, namely management commitment, financial support,and social sustainability, are positively and significantly correlated with companyperformance. Different results are shown when measuring its indirect effect oncompany performance. Management commitment through the implementation of socialsustainability consistently shows a positive and significant correlation, while financialsupport shows a positive correlation although it is not significant to the company’sperformance. This result is influenced by the direct relationship of financial supportto social sustainability, which, although positively correlated, is not significant. Thisstudy also succeeded in identifying the implementation of social sustainability thatwas meaningful for the manufacturing sector being studied. This finding is a strongindication of a positive reciprocal relationship between the implementation of socialsustainability—employee loyalty—and company resilience. Hopefully, this kindof research can be expanded with different variables, indicators, and conditions tocomplement and enrich knowledge of sustainability.