The importance of performance measurement and management in sustainable supply chain governance among SMEs

Abstract

Purpose: This study presents evidence of the role of performance measurement and management (PMM) in sustainable supply chain governance. This study tests a model hypothesizing whether it is the PMM itself or the mediating effect of supply chain governance that is essential for both business and sustainability performance. Design/methodology/approach: This study builds on a survey of 274 SMEs in Finland. Findings: The findings indicate that PMM does not directly contribute to SMEs’ business or sustainability performance. Supply chain governance mediates the relationship between PMM and business performance. Business performance also enhances sustainability. Practical implications: These findings can guide managers in managing company relationships with customers and suppliers. The mediating role of supply chain governance highlights the potential of PMM to enhance performance. Without supply chain governance, the PMM, while efficient in traditional business practices, may lose its effectiveness because of the pressure to advance sustainability values within firm operations. Originality/value: The role of PMM in enhancing supply chain sustainability is frequently overlooked in the existing research, necessitating an empirical evaluation of PMM’s impact on supply chain sustainability. This study addresses this gap by focusing on the SME context, where the pressure to adopt sustainable practices is increasing, yet SMEs employ PMM less frequently than larger firms.