DOI QR코드

DOI QR Code

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

  • Han, Neung-Ho (Institute of Foreign Trade, Sungkyunkwan University) ;
  • Choi, Doo-Won (Department of International Trade, Busan University of Foreign Studies)
  • Received : 2022.02.16
  • Accepted : 2022.04.01
  • Published : 2022.04.30

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.

Keywords

References

  1. Anderson, J. C. and Gerbing, D. W. (1988), "Structural equation modeling in practice: A review and recommended two-step approach", Psychological Bulletin, 103(3), 411-423. https://doi.org/10.1037//0033-2909.103.3.411
  2. Bagchi, P. K., Chun Ha, B., Skjoett-Larsen, T. and Boege Soerensen, L. (2005), "Supply chain integration: a European survey", The International Journal of Logistics Management, 16(2), 275-294. https://doi.org/10.1108/09574090510634557
  3. Bagozzi, R. P. and Yi, Y. (1988), "On the Evaluation of Structural Equation Models", Journal of the Academy of Marketing Science, 16(1), 74-94. https://doi.org/10.1007/BF02723327
  4. Bai, C. and Sarkis, J. (2010), "Integrating sustainability into supplier selection with grey system and rough set methodologies", International Journal of Production Economics, 124(1), 252-264. https://doi.org/10.1016/j.ijpe.2009.11.023
  5. Beamon, B. M. (1999), "Measuring Supply Chain Performance", International Journal of Operations and Production Management, 19(3), 275-292. https://doi.org/10.1108/01443579910249714
  6. Bentler, P. M. and Bonett, D. G. (1980), "Significance tests and goodness of fit in the analysis of covariance structures", Psychological Bulletin, 88(3), 588-606. https://doi.org/10.1037/0033-2909.88.3.588
  7. Bhagwat, R. and Sharma, M. K. (2007), "Performance Measurement of Supply Chain Management: A Balanced Scorecard Approach", Computers and Industrial Engineering, 53(1), 43-62. https://doi.org/10.1016/j.cie.2007.04.001
  8. Byrne, B. M. (1989), A Primer of LISREL: Basic Applications and Programming for Confirmatory Factor Analytic Models, New York: Springer-Verlag Publishing.
  9. Carter, C. R. (2004), "Purchasing and social responsibility: A replication and extension", The Journal of Supply Chain Management, 40(3), 4-16. https://doi.org/10.1111/j.1745-493X.2004.tb00170.x
  10. Carter, C. R. and Rogers, D. S. (2008), "A framework of sustainable supply chain management: Moving toward new theory", International Journal of Physical Distribution & Logistics Management, 38(5), 360-387. https://doi.org/10.1108/09600030810882816
  11. Chhabara, R. (2010), Ethical Sourcing: The Responsible Chain Gang, London: Ethical Corporation.
  12. Choi, Jee-Hyun and Kim, Jun-Hee (2021), "Serial mediation effects of organizational culture and non-financial performance on the relationship between e-learning effectiveness and financial performance in companies in South Korea", The Journal of Lifelong Education and HRD, 17(3), 59-84. https://doi.org/10.35637/KLEHRD.2021.17.3.003
  13. Chung, Yong-Kyun, Cho, Se-Hyung and Kim, Seung-Chul (2007), "The Impact of Inter-Firm Collaboration on the Performance of Supply Chain Management: The Case of Buyer-Supplier Relationship in Korean Automotive Industry", Journal of the Korean Society of Supply Chain Management, 7(1), 139-151.
  14. Conant, J. S., Mokwa, M. P. and Varadarajan, P. R. (1990), "Strategic types, distinctive marketing competencies and organizational performance: A multiple measures-based study", Strategic Management Journal, 11(2), 365-383. https://doi.org/10.1002/smj.4250110504
  15. Craighead, C. W., D. J. Ketchen Jr. and J. L. Darby (2020), "Pandemics and supply chain management research: Toward a theoretical toolbox", Decision Science, 51(4), 838-866. https://doi.org/10.1111/deci.12468
  16. Dommerholt, E. (2016), "The Corporate Sustainability Performance - Financial Performance Link Revisited", Journal of Business and Economics, 7(5), 815-827.
  17. Eccles, R., Iannou, I. and Serafeim, G. (2014), "The impact of corporate sustainability of organizational processes and performance", Management Science, 60(11), 2835-2857. https://doi.org/10.1287/mnsc.2014.1984
  18. Elkington, J. (1998), Cannibals with Forks: the Triple Bottom Line of the 21St Century, Stoney Creek, CT: New Society Publishers.
  19. Fornell, C. D. and Lacker, D. F. (1981), "Evaluating Structural Equation models with Unobservable Variables and Measurement Error", Journal of Marketing Research, 18, 39-50. https://doi.org/10.2307/3151312
  20. Fusco, G. L., Cerreta, M. and P. De Toro (2014), "Integrated Assessment for Sustainable Choices", Italian Journal of Regional Science, 13, 111-142.
  21. Gunasekaran, A. C., P. Tirtiroglu and E. Tirtiroglu (2001), "Performance Measures and Metrics in a Supply Chain Environment", International Journal of Operations and Production Management, 21(1/2), 71-87. https://doi.org/10.1108/01443570110358468
  22. Hair, J., Anderson, R., Tatham, R. and Black, W. (1998), Multivariate Data Analysis (5th ed.), New Jersey, NJ: Prentice Hall.
  23. Han, Hyun-Jeong and Yoon Se-Mok (2011), "A Study on the Influence of Corporate Culture on Financial Performance: Focusing on Hotel Corporate Culture and Perceived Performance", Korean Journal of Hospitality & Tourism, 20(1), 267-284.
  24. Han, Neung-Ho (2021), "A Study on Supply Chain Risk Management and Resilience of SME", The International Commerce & Law Review, 90, 293-314.
  25. Hassini, E., C. Surti and C. Searcy (2012), "A literature review and a case study of sustainable supply chains with a focus on metrics", International Journal of Production Economics, 140(1), 69-82. https://doi.org/10.1016/j.ijpe.2012.01.042
  26. Hetzel, R. D. (1996), A primer on factor analysis with comments on patterns of practice and reporting, In B. Thompson (Ed.), Advances in social science methodology (Vol. 4, pp. 175-206), Greenwich, CT: JAI Press.
  27. Hu, L.-T. and Bentler, P. M. (1995), Evaluating model fit, In R. H. Hoyle (Ed.), Structural equation modeling: Concepts, issues, and applications (pp. 76-99), Newbury Park, CA: Sage Publications, Inc.
  28. Jacobs, F. R. and R. B. Chase (2014), Operations and supply chain management, New York, NY: McGraw-Hill/Irwin.
  29. Kaplan, R. S. and D. P. Norton (1992), "The Balanced Scorecard - Measures that drive performance", Harvard Business Review, 70(1), 71-79.
  30. Kaplan, R. S. and D. P. Norton (1996), The Balanced Scorecard - Translating Strategy into Action, Boston, MA: Harvard Business School Press.
  31. Kim, So-Chun and Lim, Wang-Kyu (2014), "The effects of the Partnership in Supply Chain Management with Appling Social Business on the outcome of the SCM", Journal of The Korea Society of Computer and Information, 19(1), 95-110. https://doi.org/10.9708/JKSCI.2014.19.1.095
  32. KOSBI (2005), Establishment of supply chain standardization model and operation plan for SMEs, Seoul: KOSBI.
  33. Kurucz, E., Colbert, B. and Wheeler, D. (2008), The Business Case for Corporate Social Responsibility, In Crane, A., McWilliams, A., Matten, D., Moon, J. and Siegel, D.(Eds.), The Oxford Handbook of Corporate Social Responsibility (pp. 83-112), Oxford: Oxford University Press.
  34. Lee, Su-Yol and Lee, Joon-kyum (2015), "Sustainable Supply Chain Management and Performance in the Global Supply Network: An Empirical Validation of Vietnamese Suppliers", Korean Journal of Business Administration, 28(2), 453-468.
  35. Lee, Won-Hee and Lee, Su-Yol (2014), "The effects of sustainable supply chain management on relational social capital and supplier sustainability performance: An integrative model of the fair, green, and responsible supply chain", Korean management review, 43(2), 275-302.
  36. Lee, S. and Cheong, I. (2012), Sustainable supply chain management in the Korean automotive industry, In Madu, C. N. and Kuei. C. (Eds.), Handbook of Sustainability Management, Hackensack, NJ: World Scientific Publishing.
  37. Lee, Young-Min (2011), "The Impact of Internal Business Process in SCM on the Performance: Focused on The Korean Manufacturing Industries", Journal of Commodity Science and Technology, 29(2), 127-135.
  38. Maloni, M. J. and Benton, W. C. (1997), "Supply Chain partnerships opportunities for operations research", European Journal of Operational Research, 101(3), 419-429. https://doi.org/10.1016/S0377-2217(97)00118-5
  39. Margolis, J. D., Elfenbein, H. A. and Walsh, J. P. (2008), "Do well by doing good? don't count on it", Harvard Business Review, 86(1), 19.
  40. Marshall, R. S., B. Darrell and M. Plumlee (2009), "The Impact of Voluntary Environmental Disclosure Quality on Firm Value", Academy of Management Proceedings, 1, 1-6. https://doi.org/10.5465/ambpp.2009.44264648
  41. Oh, Geun-Hye and Kang, Sung-Mo, "A Study on the Effects of Sustainability Management on Financial Performance and Firm Value", The Accounting Research, 40, 81-108.
  42. Otto, A. and Kotzab, H. (2003) "Does supply chain management really pay? Six perspectives to measure the performance of managing a supply chain", European Journal of Operational Research, 144(2), 306-320. https://doi.org/10.1016/S0377-2217(02)00396-X
  43. Park, Chan-Kwon, Lee, Yoon-Ho and Kim, Chae-Bogk (2019), "Relationship between Transaction Fairness, Reputation, Commitment and Sustainability", Korean Journal of Logistics, 27(3), 53-72. https://doi.org/10.15735/kls.2019.27.3.004
  44. Phillips, J. J. and Phillips, P. P. (2016), Handbook of training evaluation and measurement methods (4th ed.), London: Routledge.
  45. Rohr, M. K., John, D. T., Fung H. H. and Lang, F. R. (2017), "A three-component model of future time perspective across adulthood", Psychol Aging, 32(7), 597-607. https://doi.org/10.1037/pag0000191
  46. Romano, P. (2002), "Impact of supply chain sensitivity to quality certification on quality management practices and performances", Total Quality Management, 13(7), 981-1000. https://doi.org/10.1080/0954412022000017067
  47. Shoham, A. (1998), "Export Performance: A Conceptualization and Empirical Assessment", Journal of International Marketing, 6(3), 59-81. https://doi.org/10.1177/1069031X9800600308
  48. Song, Sin-Geun (2016), "The Relationship among R&D Expenditure on Sustainability, Sustainability, and Financial Performance", Journal of Industrial Economics and Business, 29(1), 97-116.
  49. Steiger, J. H. (2007), "Understanding the limitations of global fit assessment in structural equation modeling", Personality and Individual Differences, 42(5), 893-898. https://doi.org/10.1016/j.paid.2006.09.017
  50. Stewart, G. (1995), "Supply Chain Performance Benchmarking Study Reveals Keys to Supply Chain Excellence", Logistics Information Management, 8(2), 38-44. https://doi.org/10.1108/09576059510085000
  51. Strough, J., Bruine de Bruin, W., Parker, A. M., Lemaster, P., Pichayayothin, N. and Delaney, R. (2016), "Hourglass half full or half empty? Future time perspective and preoccupation with negative events across the life span", Psychology and Aging, 31, 558-573. https://doi.org/10.1037/pag0000097
  52. Styles, C. (1998), "Export performance measures in Australia and the United Kingdom", Journal of International Marketing, 6(3), 12-36. https://doi.org/10.1177/1069031X9800600306
  53. Supply Chain Council (2005), Supply-Chain Operations Reference Model: SCOR Metrics Level 1, Available from https://www.tecnoali.com/files/emensa/D11/Report%20Ilim.pdf
  54. WCED (1987), Our common future, World Commission on Environment and Development, Available from https://sustainabledevelopment.un.org/content/documents/5987our-commonfuture.pdf
  55. Woo, Jong-Pil (2012), Concepts and Understanding of Structural Equation Model: Amos 4.0~20.0, Seoul: Hanarae Academy.