Linking Operational Sustainability to Economic Development: Evidence from Sustainable Manufacturing in the Pharmaceutical Industry

Purpose: This paper explores how sustainable manufacturing practices (SMPs) can lead to economic growth in the pharmaceutical sector, both directly and indirectly with respect to the firm level performance measures, cost reduction, revenue increase, productive output, increased investment and market growth. Design/Methodology/Approach: The structured questionnaires completed by the senior managers, production supervisors, and operations officers were used to gather primary data with 152 pharmaceutical manufacturing firms in Nigeria. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to test the relationship between SMPs and the performance of a firm and economic growth, including the inclusion of mediation paths to estimate indirect effects. Construct reliability, convergent and discriminant validity were determined and bootstrapping and robustness checks were made to make sure that estimates were stable. Findings: The findings also show that SMPs have a moderate direct impact on the economic growth but a greater impact on the economic growth through the mediating factor of productivity, growth of investment and expansion of the market. Improvement of revenue and reduction of costs were found to be the greatest contributors to the adoption of SMP as they indicated that sustainability and financial performance are congruent. Implications/Originality/Value: The research points out that operational sustainability is a strategic direction that can be exploited to grow economically. The policies and managers are urged to devise interventions and incentive schemes to combine financial performance with sustainability objectives, which promote sustainable growth and competitiveness of industry in the pharmaceutical industry.