Examining the Structural Pathways Linking Sustainable Resource Management, Sustainability Embeddedness and Sustainable Performance in Malaysian Hotel SMEs

This study investigates the mechanisms linking Sustainable Resource Management (SRM) to sustainable performance in small and medium-sized hotel enterprises (SMEs) in Malaysia, a context characterized by significant resource constraints and high ecological sensitivity. Grounded in and extending Dynamic Capability theory, we posit sustainability embeddedness as a critical mediator that translates strategic resource orchestration into performance outcomes. Data were collected from 371 SMEs and analyzed using Covariance-Based Structural Equation Modelling (CB-SEM). The results confirm that SRM significantly enhances sustainability embeddedness, which in turn strongly drives sustainable performance. Furthermore, sustainability embeddedness partially mediates the SRM-performance relationship. This partial mediation suggests a dual pathway: direct performance benefits from resource efficiency and indirect strategic benefits through cultural routinization. The study provides valuable insights for scholars seeking to understand the micro-foundations of sustainability in SMEs and for managers aiming to navigate the journey from discrete practice adoption to holistic sustainable value creation.