Supply chain sustainability performance measurement of small and medium sized enterprises using structural equation modeling

Abstract

Sustainability of small and medium sized enterprises (SMEs) is significant as SMEs contribute to GDP substantially in every economy. This research develops an innovative sustainable supply chain performance measurement model for SMEs. Prior researches predominantly use balanced score card (BSC) approach that presume causal relationship of criteria and Data Envelopment Analysis (DEA), which derive efficiency of units from a few input and output criteria. While DEA is effective for policymakers, BSC is more suitable for individual SME. The proposed method that uses structural equation modeling (SEM) approach to derive the relationship of criteria and criteria weights formulates regression-type models for a specific region as well as for specific SME. The SEM-based supply chain sustainability performance measurement model is beneficial to policymakers as they can determine means for improvement at a regional level. The proposed method could also facilitate managers/owners of individual SMEs with measures for improving their supply chain sustainability performance. The method has been applied to three varied geographical locations in the UK, France and India in order to demonstrate its effectiveness.