Transformations  in
Business & Economics

INVESTIGATING SMES SUSTAINABILITY WITH PARTIAL LEAST SQUARES STRUCTURAL EQUATION MODELLING
Elena-Madalina Vatamanescu, Florina Pinzaru, Andreia Gabriela Andrei, Alexandra Zbuchea

ABSTRACT. The present paper addresses the sustainability configuration within small and medium-sized enterprises (SMEs), focusing on several key standpoints: their exigence for innovation and quality, interest for technological development, capitalisation of social networks and the approach of transactional orientations. Using the recent literature on this topic, the study develops a conceptual model to be tested with PLS-SEM (partial least squares structural equation modelling), using the data collected from 98 Romanian SMEs from the services sector that participated in a survey conducted in the spring of 2016. The variance-based structural equation modelling, PLS-SEM, was the method of choice for model testing, as it allows a complete statistical analysis of both formative and reflective models. The findings show that innovation and quality, the technological development and the social networks capitalisation influence business sustainability. Entrepreneurs are using social network capitalisation (SNC), innovation and quality (I&Q) and technological development (TH) to achieve sustainability. Still, the main driver of sustainable businesses is the innovation and quality approach that acts as a mediator bridging firm's orientation towards technological development and business transactions with sustainable objectives fulfilment, such as long-term profitability, customers' loyalty, environmental footprint and improvements in community welfare .

KEYWORDS:  PLS-SEM, structural model, sustainability, quality, innovation, social networks, technological development.

JEL classification:  M31, Q56.