Socially friendly business strategy and social sustainability performance: roles of spiritual capital and social management process

Abstract

Purpose This study aims to determine whether socially friendly business strategy impacts social sustainability performance and, if so, whether social management process and spiritual capital act as mediators and moderators of the relationship. Design/methodology/approach This study uses a comprehensive research framework consisting of the mediation and moderation relationship among four constructs, namely, socially friendly business strategy, social management process, spiritual capital and social sustainability performance. A total of 433 owners/managers of micro, small and medium-sized firms (MSMEs) in the Indonesian province of East Java took part in this study, and the data were gathered using a survey method. The resource-based view, stakeholder theory and partial least squares structural equation modelling are all used in this study to evaluate and explain the hypotheses. Findings The results show that both socially friendly business strategy and social management process positively affect social sustainability performance. Further analysis reveals that spiritual capital moderates the effect of socially friendly business strategy on social sustainability performance. Second, social management process mediates the influence of socially friendly business strategy on social sustainability performance in part. Research limitations/implications The current study has limitations. First, it restricts the scope of its sample to MSMEs in Indonesia’s East Java Province. As a result, it also restricts its generalizability, and care must be used if the findings are applied to other types of organizations and geographic areas. Second, some survey participants needed help to complete the online questionnaire. As a result, collecting the data were less successful than anticipated. This study has significant implications for the development of the stakeholder theory, particularly in elucidating the mechanisms by which socially responsible corporate strategies, social management practices and performance in terms of social sustainability are affected. Practical implications The findings provide a comprehensive guidance for owners/managers in reorienting their business strategy, managing the social management process and building their spiritual capital to achieve social sustainability performance. It provides materials for researchers and students who are interested in studying the subject matter. Social implications MSMEs have a significant role in society. The welfare of society will therefore increase if social sustainability performance is successful. The overall model of social sustainability performance improvements and its antecedents are presented in this study. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to explore the general model of improving social sustainability performance using four constructs that are rarely used in previous studies. It also uses a new data set and research setting in Indonesia as one of the emerging countries.