Explaining sustainability performance and maturity in SMEs – Learnings from a 100-participant sustainability innovation project

Small and medium enterprises (SMEs) are the backbone of many economies and shape the sustainability of both production and consumption. SMEs differ drastically in their sustainability performance and maturity. The objective of this paper is to assess what aspects of SMEs' activities, including their links to stakeholders in their supply chains, explain a company's sustainability performance. Using a literature-based theoretical framework for assessing SME sustainability performance and maturity, the study conducts a survey with participants in a 100-company sustainability innovation project conducted in the Greater Copenhagen region. The sample of companies reaches across several industries including construction, hotel/conference, information technology, and manufacturing. The study analyses survey data using paired sample t-tests and regression analyses. The results show that the following factors help explain the sustainability performance and maturity of SMEs in the sample: the degree of customer involvement in product and process development; engaging, communicating and partnering with customers; customer segmentation, technology and innovation as constituent parts in the business strategy; and the amount of time dedicated specifically to commercial and marketing efforts and process development. The study shows that devoting time and resources to engage with customers in product and process development will lead to increased sustainability performance and maturity. These results contrast with the traditional norm that companies develop as a reaction to changing customer requirements. The novelty of this study lies in bringing to light the aspects within the management of SMEs contribute to explaining their sustainability performance, and thus can be used to guide improvements. Unveiling this allows SMEs to deploy sustainability-focused action.