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The Relationship between Sustainable Development Practices and Financial Performance: A Case Study of Textile Firms in Vietnam

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  • Thi Thu Hien Phan

    (Department of Accounting, University of Economic—Technology for Industries, Hanoi 100000, Vietnam)

  • Hiep Xuan Tran

    (Institute of Socio-Economic Research, Duy Tan University, Da Nang 550000, Vietnam
    Faculty of Humanities & Social Sciences, Duy Tan University, Da Nang 550000, Vietnam)

  • Trung Thanh Le

    (NEU Graduate School, National Economics University, Hanoi 100000, Vietnam)

  • Ninh Nguyen

    (Department of Economics, Finance and Marketing, La Trobe University, Bundoora, Victoria 3086, Australia
    Business Sustainability Research Group, Thuongmai University, Hanoi 100000, Vietnam)

  • Simon Pervan

    (School of Economics, Finance and Marketing, RMIT University, Melbourne, Victoria 3086, Australia)

  • Manh Dung Tran

    (Journal of Economics & Development, National Economics University, Hanoi 100000, Vietnam)

Abstract

Sustainable development practices have become very important for firms to go beyond short-term profitability, towards economic, environmental and social sustainability. This research aims to examine the relationship between a firm’s sustainable development practices and its financial performance. Modelled as a multidimensional construct, sustainable development practices are represented by environmental practices, social practices in the workplace and social practices in the community, while financial performance is determined by profitability and growth. Using a mixed method survey, data were obtained from 389 textile firms in Vietnam, where there is a dire need to promote sustainable and environmental practices. Data analysis using partial least squares structural equation modeling demonstrates that sustainable development practices positively affect financial performance directly and indirectly via customer loyalty, employee satisfaction and corporate reputation. The findings also reveal the moderating role of entrepreneurial orientation, whereby the impact of sustainable development practices on financial performance is stronger for firms that are more innovative, proactive and willing to take risks. Taken together, these findings provide support for firms to holistically implement sustainable development practices and adopt an entrepreneurial orientation.

Suggested Citation

  • Thi Thu Hien Phan & Hiep Xuan Tran & Trung Thanh Le & Ninh Nguyen & Simon Pervan & Manh Dung Tran, 2020. "The Relationship between Sustainable Development Practices and Financial Performance: A Case Study of Textile Firms in Vietnam," Sustainability, MDPI, vol. 12(15), pages 1-20, July.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:15:p:5930-:d:388502
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