Is sustainability a competitive advantage for small businesses? An empirical analysis on the possible mediators of social and financial performance relationship

The contribution of a single firm to the overall sustainability context is largely dependent on its perceptions about the advantages related to its sustainability strategies and consequent Corporate Social Responsibility (CSR) practices. The relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) has been largely debated.Our research is aimed at defining a model of relationship in which CSR practices are supposed to impact on financial performance via some strategic drivers or antecedents of firm success. We used Structural Equation Modelling (SEM) on data collected by survey on 348 Italian manufacturing SMEs; we included four constructs dedicated to CSR, a construct dedicated to perceived financial performance and four constructs measuring the possible mediators in the CSP-CFP relationship. We found that CSR practices positively impact on corporate reputation, customer satisfaction and organisational commitment, which, in turn, positively impact on competitive advantage (total mediation effect); competitive advantage was also found to positively contribute to financial performance; so differently from previous research, we found that competitive advantage is a second-stage mediator of the relationship.The contribution of our study also lies in having tested the CSP-CFP relationship in an under-explored context, that of manufacturing SMEs in a European country (Italy).