Orientation and absorptive capacity towards sustainability: a missing link between sustainability and performance

Abstract

Purpose

This study investigates economic sustainability through orientation and absorptive capacity.

Design/methodology/approach

The researchers developed a conceptual framework based on vigorous literature for this investigation. This study targeted managers from Pakistan's SME sector as respondents and employed cross-sectional data. In total, the authors based this study's findings on 192 valid cases.

Findings

The structural equation modeling (SEM) results highlight that innovation orientation (IO), customer orientation (CO), supplier orientation (SO), network orientation (NO) and absorptive capacity (AC) have significant effects on economic sustainability (ES). Moreover, this study's findings show that ES significantly predicts environmental sustainability (ENS). Finally, the results also demonstrate that ES and ENS positively and substantially affect financial performance (FP).

Practical implications

This study's findings help SMEs continue sustainable business practices by avoiding adverse environmental effects and ongoing climate changes. This study's findings contribute also to the manufacture of eco-friendly environmental products to reduce the contamination of the environment. Financial institutions and policymakers would boost SME owners' capacity and the obtainability of financial resources to improve Pakistani SMEs’ sustainable economic and environmental performance.

Originality/value

This study's findings help to enrich environmental and economic sustainability and, more significantly, for developing countries.

Citation

Shah, N., Moawad, N.F., Bhatti, M.K., Abdelwahed, N.A.A. and Soomro, B.A. (2024), "Orientation and absorptive capacity towards sustainability: a missing link between sustainability and performance", International Journal of Productivity and Performance Management, Vol. 73 No. 5, pp. 1535-1562. https://doi.org/10.1108/IJPPM-01-2022-0018