The Impact of Lean Management Practices and Sustainably‐Oriented Innovation on Sustainability Performance of Small and Medium‐Sized Enterprises: Empirical Evidence from the UK

Abstract

While lean management practices (LMP) help small and medium‐sized enterprises (SMEs) to be efficient, sustainability‐oriented innovation (SOI) facilitates adopting environmental and social practices. Although prior research looks into the effect of LMP on the economic performance (EP) of SMEs, less is known about the effect of LMP on sustainability (economic, environmental and social) performance. Studies on the effect of SOI on sustainability and economic performance are also scant. Additionally, examining the mediating effect of corporate social responsibility (CSR) practices (environmental and social practices) on both LMP and SOI achieving sustainability performance (SP) is rare. This research bridges these knowledge gaps by answering the question of how LMP, SOI, CSR practices, sustainability and economic performance are correlated. Through hypothesis testing using structural equation modelling, this study reveals the impact of LMP, SOI, CSR (environmental and social) practices on sustainability and economic performance. The study uses data from 119 SMEs within manufacturing industries in the Midlands, UK. The analysis reveals that LMP and SOI facilitate achieving both sustainability and economic performance, and SOI mediates LMP to achieve sustainability performance. Additionally, although CSR practices mediate LMP to achieve sustainability performance, they only borderline mediate SOI to achieve sustainability performance.

Circular economy to enhance sustainability of small and medium‐sized enterprises

“…Very few researches reveal direct relationship between social well‐being and economic performance and environmental performance (Tseng et al, ). However, environment‐friendly SMEs are likely to have satisfied employees with higher economic performance (Dey et al, ; Dey, Malesios, De, Chowdhury, & Abdelaziz, ). Although lean practices and energy efficiency measures help achieve both economic and environmental performance , eco‐design , use of renewable energy , and social well‐being are capital intensive (Dey et al, ).…”

From Lean to Sustainable Manufacturing – An Overview

“…From the standpoint of the sustainable management paradigm challenges, various levels of the Lean implementation may have an impact (both positive and negative) on one or more TBL pillars (Helmold, 2020;Dey et al, 2020). The beneficial effect of the LM practices implementation on the improvement of MS results concerns, among others:…”

Responsible Innovation in SMEs: A Systematic Literature Review for a Conceptual Model

“…The nodes identified within this cluster include a different and discrete profile of SMEs when addressing corporate responsibility, sustainability-oriented innovation, and business performance. The authors used various methods to analyse different operational dimensions in the supply chain [68,69] from management practices and environmental sustainability [22,46,48] to sustainability-oriented innovation practices [1,70] that explain the commitment to sustainability in SMEs. An overview of the literature associated with sustainable development in SMEs has attracted major attention see [71], which identified key performance factors (such as reducing employee turnover, increasing employee productivity, and improving manufacturing processes) that are capable of creating business efficiency.…”

“…As an essential part of responsible innovation strategies, the stakeholders identified in the literature are: Customers, employees, environment, suppliers, community, owners/shareholders, R&D, government, competitors, funding agencies/investors, and alliances [15,18,20,21,32,38,41,43,44,48,49,[51][52][53]59,62,63,68,69,80,81,85,86,[91][92][93]96,99,103,104,[106][107][108].…”