Sustainable business practices and SMEs' performance: evidence from a Sub-Saharan African context

Abstract

Sustainability business practices are widely acknowledged as critical for addressing urgent global challenges such as environmental degradation, climate change, and socio economic inequalities. However, SMEs are often found to exhibit lower corporate sustainability performance compared to large firms due to their reluctance or inability to engage in sustainability measures such as cleaner production and socially responsible practices. Drawing on natural resource based view theory and stakeholder theory, this research investigates sustainable business practices and performance of SMEs in Anambra State. Specifically, the study examine how environmental, social and economic sustainability practices and stakeholder engagement influence the non-financial performance of SMEs in Anambra. A survey design approach was used to collect data from 357 SMEs in Anambra state. Five hypotheses were stated and tested using multiple regression analysis. The Findings revealed that Environmental, social and economics sustainability practices were found to have a significant positive effect on the non-financial performance of SMEs. Stakeholder engagement also had a significant positive effect on non-financial performance. The joint effect of environmental, social, and economic sustainability practices with stakeholder engagement was statistically significant. The study recommends that SMEs business owners should strategically integrate environmental practices into this existing framework, recognizing them not as a cost but as a driver of efficiency and leveraging stakeholder engagement to foster genuine motivation for sustainability. While policymakers should create targeted incentives that address the specific lag in environmental sustainability..