The Relationship between Sustainable Development and Organizational Performance of SMEs in Guangdong Province, China

This study investigates the impact of sustainable development on the organizational performance of small and medium-sized enterprises (SMEs) in Guangdong Province, China, focusing on three dimensions: economic, social, and environmental sustainability. A quantitative research approach was adopted, utilizing Structural Equation Modeling (SEM) with data collected from 371 SMEs in Guangdong Province. The analysis was conducted using SmartPLS 4.0 to test the proposed hypotheses. The results indicate that all three dimensions of sustainable development positively influence organizational performance. Economic sustainability enhances financial performance and competitiveness, social sustainability improves employee engagement and stakeholder relationships, and environmental sustainability reduces operational costs and enhances market reputation. The cross-sectional nature of the study limits the ability to infer causality. Future research should consider longitudinal studies and explore the impact of sustainable development across different regions and industries. SME managers should integrate sustainable practices into their business strategies to improve organizational performance. Policymakers are encouraged to create supportive environments and incentives for SMEs to adopt sustainability practices. This study contributes to the literature by providing empirical evidence on the positive impact of sustainable development on SME performance in the context of a rapidly developing region. It also extends the application of Dynamic Capability Theory to sustainability practices within SMEs.