Sustainable Manufacturing Practices, Competitive Capabilities, and Sustainable Performance: Moderating Role of Environmental Regulations

Abstract

Research highlights the increasing engagement of SMEs in adopting sustainable practices to enhance their sustainable performance. This paper extends the current literature on sustainable manufacturing practices (SMPs) and SMEs’ sustainable performance by examining the mediating effect of competitive capabilities and the moderating impact of environmental regulation. Structured questionnaires were used to collect data from 288 manufacturing SMEs in China. Research findings using structural equation modeling with partial least squares (PLS-SEM) revealed that adopting SMPs enables SMEs to gain competitive capabilities and to positively influence their sustainable performance. In addition, gaining competitive capabilities have a positive mediating impact on the relationship between SMPs and SMEs’ sustainable performance. Further, the interaction between SMPs and environmental regulation strengthens SMEs’ sustainable performance. At the end of this paper, a set of concluding remarks and implications is drawn.