Sustainable supply chain management practices, dynamic capabilities and competitive advantage: Evidence from Bangladesh ready‐made garments industry

Abstract

AbstractThe ready‐made garments (RMG) production industry in Bangladesh has achieved a major presence in the global fashion apparel supply chain particularly due to the competitive advantage (CA) primarily attributed to its' large pool of low cost labor. However, the competitiveness of this industry is under threat from other emerging economies that are rapidly becoming lower cost production sources. As a result the Bangladesh RMG sector is under pressure to find alternate sources of CA by introducing sustainable supply chain management (SSCM) practices along with improving the dynamic capabilities (DC) of the RMG manufacturers. However, the extant literature indicates that there is a dearth of sufficient empirical evidence on whether SSCM practices in combination with improvements in management and technological capabilities of such enterprises leads to gains in CA. In order to address the aforesaid gap, this study draws on the integration of the SSCM practices view and the DC view, to propose a set of relationships that posit that environmental, social, and economic sustainability measures of SSCM practices along with management and technological capabilities will have a significant influence on CA. The hypotheses are tested by applying structural equation modeling on a sample of 345 export‐oriented RMG manufacturers in Bangladesh. The findings indicate that influence of social sustainability, along with management and technological capabilities, on CA is positive and significant. While the relationship between environmental and economic sustainability and CA were not significant.