Assessing the sustainability performance of SMEs across countries and sectors

This paper develops a composite SME sustainability index, providing policymakers with a tool to simplify assessments, rankings, and benchmarking of SME performance. The proposed two-stage methodology first uses the benefit-of-the-doubt method to aggregate multiple sustainability indicators into a single weighted performance index, enabling comparisons among companies and identifying potential improvements in each sustainability dimension. Second, the resulting SME sustainability scores are regressed against explanatory variables to identify potential barriers and drivers. The applicability and effectiveness of the developed models are demonstrated through a large-scale case study involving 6635 SMEs from 37 countries. The results reveal that both the sector and the country of operation are associated with SME sustainability performance, highlighting the need for targeted interventions. Furthermore, this study identifies technological and economic factors, rather than regulatory or cultural ones, as the primary barriers to SME sustainability. • This study introduces a composite index methodology for evaluating SME sustainability across countries and sectors. • A Benefit-of-the-doubt model benchmarks SME sustainability performance, aiding policymakers in assessing policy effectiveness. • A fractional regression model is then used to identify the key barriers that SMEs face in promoting sustainability. • A large-scale case study of 6,635 SMEs from 39 countries demonstrates model effectiveness.