Impact of Waste Management Practices of Indian Small and Medium-Sized Manufacturing Enterprises on Their Financial Performance
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Purpose—The study tends to investigate correlations of forward logistics (operational and environmental management comprises of “reduce”) and reverse logistics (waste management comprises of “reuse and recycle”) with the productivity and financial performance of the Indian small and medium-sized manufacturing enterprises (SMMEs). Design/methodology/approach—This research adopts the inductive approach. First, it develops a conceptual model using a structured literature review. Second, this leads to develop a few hypotheses. Third, a survey questionnaire is formulated based on the hypotheses. Fourth, the survey is undertaken in 65 SMMEs in India. Fifth, the responses are processed using structural equation modeling approach through AMOS software. Sixth, the hypotheses are proved and disproved, and finally, a model has been proposed for managing reverse logistics of Indian SMMEs. Findings/Results—The data analysis reveals that lean practices, effectiveness of business processes and environmental system are strongly connected to productivity and in turn financial performance. However, reverse logistics (waste management, i.e., reuse and recycle) is loosely correlated to productivity and negatively related to the financial performance of SMEs. Therefore, the study reveals that process optimization and energy reduction (“reduce”) enhance productivity and financial performance of the SMEs, but waste reduction (“reuse” and “recycle”) negatively impacts the financial performance. This is due to higher capital and operating cost for waste management initiatives, and negative perceptions of SMMEs’ managers on benefits of waste reduction through reuse and recycle. Therefore, in order to promote waste management in SMMEs in India the overall benefits of waste management should be made clear to concerned stakeholders. Research limitations/implications—The study has been undertaken within a specific zone (i.e., eastern part of India) using a sample of limited number of SMMEs. Practical implications—The findings of the study facilitate both the policy makers and individual SMME in the region. The policy makers and SMME owners take away the knowledge of correlations of waste management practices (reduce, reuse, and recycle) with financial performance, which motivates them to prioritize their actions of managing waste across the supply chain. Individual SME would be able to develop a sustainability performance management model following the outcomes of this study. Originality/value—Although the correlation of environmental practices and financial performance is thoroughly researched across the industries and geographical locations, whether waste management (reduce, reuse, and recycle) positively contributes to SMMEs’ financial performance is under researched. Additionally, the studies on means for practicing reduce, reuse, and recycle within SMMEs efficiently are scant. This study bridges these gaps.
KeywordsFinancial performance Structural equation modeling Forward and reverse logistics Small and medium-sized manufacturing enterprises (SMMEs)
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