Sustainable development - Direct and indirect effects between economic, social, and environmental dimensions in business practices

Abstract

This study investigates the direct and indirect effects between economic, social and environmental dimensions of triple bottom line (TBL), based on a questionnaire survey and cross-industrial sample in Sweden. The analyses apply partial least squares structural equation models. The study tests the direct and indirect effects between economic, social, and environmental dimensions of TBL and offers additional validity and reliability to establish the measurement and structural properties between the dimensions of TBL. The study extends earlier findings by explicitly discussing how the three TBL goals relate to each other and shows how the dynamic capability view can be a fruitful lens to investigate business sustainability. Some differences in sustainability business practices caused by differences in national cultures are identified. Sustainability reporting in a strong uncertainty avoidance (UA) country happens in accordance with regulations and laws. Conversely, for weak UA cultures, reporting and compliance with regulations are ways to build trust with stakeholders. That is, reporting is more transparent and widespread in weak UA countries. The study also provides a foundation to guide companies' actions of business sustainability. The model shows companies how to establish the order of actions undertaken across economic, social, and environmental dimensions. In addition, it clarifies that the economic dimension exerts an effect on the social and environmental dimensions. The model also grasps long-term economic performance by including competitiveness and brand value, while earlier research mainly has focused on more short-term measurements as return on assets.