The Best of Both Worlds: How Financial Growth Can Engender Improved Sustainability for Businesses

Abstract

In recent decades, the increasingly competitive marketplace that has resulted from factors such as globalization and technological innovation has made it ever harder for businesses to deliver economic sustainability. At the same time, the pressure on businesses to achieve and maintain environmental sustainability has also grown significantly. This study examines the factors that influence economic sustainability, the relationship of economic sustainability to environmental sustainability, and the extent to which these two factors ultimately affect financial growth. In order to achieve this, this study analyses the results of 342 questionnaires completed by managers of manufacturing companies within Saudi Arabia’s small and medium enterprises (SMEs) sector. This analysis, using structural equation modeling, showed that innovation inclination, customer centricity, supplier relationships, network maturity, and strategic agility all have significant effects on economic sustainability. This study also shows that economic sustainability has a significant impact on environmental sustainability and that economic sustainability and environmental sustainability positively impact financial growth. This study adds to the current literature by demonstrating an explicit association of innovation inclination, customer centricity, supplier relationships, network maturity, and strategic agility with economic sustainability, as well as a positive relationship between economic sustainability and environmental sustainability. The findings also contribute to the literature by showing the direct impact of both economic sustainability and environmental sustainability on financial growth. In practical terms, this study will help Saudi SMEs develop business strategies that drive both environmental and business performance and provide useful insights for Saudi policymakers and financial institutions looking to support the Saudi Vision 2030 aims by encouraging funding and support mechanisms that drive better business and environmental performance.