Corporate sustainability performance of the Readymade Garments industry in Bangladesh:impact of organisational pressures and sustainability management control system

Abstract

The Readymade Garment (RMG) industry of Bangladesh has been severely criticized for its negative environmental impact, frequent industrial accidents, inhuman working conditions and low wages. In response to these escalating criticisms, RMG companies in Bangladesh are sincerely trying to improve their Corporate Sustainability Performance (CSP) to pacify the concerns raised by various stakeholder groups. This study first developed and then tested a conceptual framework in order to understand relationships among the Organisational Pressures (i.e. external and internal), the Sustainability Management Control System (SMCS) and CSP, based on a large-scale questionnaire survey in Bangladesh. In total 255 responses were analysed using Structural Equation Modelling (SEM) to identify the major internal and external pressure behind CSP. In this study, International Retailers (IRs) and cost competitiveness emerged as the main triggers to improve CSP in Bangladesh. This is the first study which has investigated the mediating role of SMCS between organisational pressure and CSP. The results confirm the positive mediating effects of SMCS between external pressure and CSP. Drawing upon contingency theory, this study highlights the importance of having a dedicated SCMC as a strategic tool to improve CSP. This study has also utilised the Analytic Network Process (ANP) approach to develop a Multiple Criteria Decision Making (MCDM) model to assess the performance of the RMG companies, based on their sustainability criteria. This study also demonstrates the application of a benchmarking model based on RMG companies‘ CSP.