Environmental Sustainability Practices in SMEs: Insights from Integrated PLS-SEM and fsQCA approaches

Abstract

Manufacturing businesses are creating serious and tangible ecological disruption through their unsustainable practices. Academicians and practitioners are, consequently, increasingly interested in exploring the dynamic interaction between environmental knowledge management and environmental sustainability practices. This study delves into the complex effect of three dimensions of environmental knowledge (systems knowledge, action knowledge, and effectiveness knowledge) on environmental sustainability practices among manufacturing small and medium enterprises (SMEs) in Bangladesh, particularly via the mediation of employee environmental behavior and the moderation of resource commitment. Adopting a cross-sectional, correlational design, 313 survey responses were collected from manufacturing SMEs using a structured questionnaire. Data analysis was conducted following a comprehensive methodology that combined Partial Least Squares Structural Equation Modeling (PLS-SEM) and fuzzy-set Qualitative Comparative Analysis (fsQCA). The results evidenced that system, action, and effectiveness knowledge dimensions improve environmental sustainability practices in SMEs by boosting employees’ environmental behavior. However, resource commitment was found to moderate only the relationship between action knowledge and environmental sustainability practices. This study contributes to the existing literature on environmental sustainability with an expanded analytical process. The empirical evidence provides scholars a nuanced understanding of the specific environmental knowledge types that foster SMEs’ adoption of environmental sustainability practices within the context of a developing country—Bangladesh. For stakeholders, this study offers valuable insights in prioritizing relevant knowledge dissimilation to ensure business sustainability.