The Relationship Between Sustainability, SCM Performance, and Financial Performance of Korean SMEs

Abstract

Purpose - This study carried out an empirical study of the impact of sustainability - which has been gaining attention as challenges are arising in supply chains based on existing trade networks due to the impact of the COVID-19 pandemic - on SCM performance and financial performance of Korean SMEs. The study seeks to propose a measurement model to enhance the SCM performance and financial performance of Korean SMEs and to identify the relationship between sustainability, SCM performance and financial performance to suggest implications to SMEs, governments, and relevant organizations. Design/methodology - Our Analysis established hypotheses that economic sustainability, environmental sustainability, and other factors related to sustainability have a positive impact on SCM performance and financial performance as well as SCM performance has a positive impact on financial performance, making empirical validations by utilizing Structural Equation Modeling based on data collected through survey from Korean SMEs. Findings - According to an empirical study, although environmental sustainability and economic sustainability among factors of sustainability had a positive influence on SCM performance, social sustainability did not have a statistically significant influence. Furthermore, it was learned that only economic sustainability had a positive influence on financial performance while SCM performance has a positive influence on financial performance. Originality/value - This empirical study explored the relationship between SCM performance and financial performance of Korean SMEs with a high tendency to depend on specific supply chains when the international trade network is in confusion and/or the global supply chain has collapsed. If Korean SMEs allocate management resources to the factors deducted from this study, they would be able to build more efficient supply chains and improve financial performance to improve sustainability.