Sustainability Practices and Firm Performance in Indian Manufacturing SMEs: Environmental and Economic Perspectives

This study develops and tests an integrated conceptual framework grounded in the Natural Resource-based View and Institutional Theory to examine the impact of sustainability practices on environmental and economic performance. This study uses a quantitative research design, collecting data from 310 manufacturing small and medium enterprises (SMEs) in India through a structured survey instrument. The proposed relationships are analyzed using partial least squares structural equation modelling via SmartPLS 4. The results suggest a positive relationship between green product design, lean manufacturing, energy efficiency and sustainable supply chain management and environmental outcomes. The findings also indicate that green product design and lean manufacturing have a positive relationship with economic sustainability, while the relationships between energy efficiency and sustainable supply chain management and economic sustainability are not supported. The results suggest that the sustainability practices could have different impacts on the environment and economy and that sustainability outcomes might be a result of the characteristics of the practices and their application in SMEs. The results provide information regarding sustainability in SMEs’ manufacturing operations and implications for managers and policymakers who want to consider sustainability along with long-term economic goals.