Technological Integration and Sustainable Performance in Manufacturing Firms

An excellent way of maintaining business performance is through sustainability; one of the essential elements of the sustainability transition process is the development of an innovative and constructive corporate culture through integration. This study therefore aims to determine the relationship between the integration of technology and sustainable performance. It focuses on Malaysian Standard (MS) ISO (International Organization for Standardization) 14001 certified manufacturing firms in Malaysia. Self-administered surveys were used to gather data and information for the study from 722 organizations operating in Malaysia. The Statistical Package for Social Science (SPSS) was used to analyze the data. The results identify significant associations between technology integration and sustainable performance from the perspective of economic, environmental and social performance. Technological integration has always been a significant predictor of sustainable performance, as it is a necessary and key driver in most industries in the environmental achievements of manufacturing firms. The findings from the study provide specific details on the relationship between the variables employed. Technological integration has been found to have a positive relationship with three dimensions of sustainable performance (the economic, environmental and social). A basis for future research and practical application is provided by a framework of identified associations to improve sustainability performance.

Economic performance; Environmental performance; Social performance; Sustainability performance; Technology integration

Sustainable business performance can be achieved when a firm or organization develops continuous value for its stakeholders and shareholders, while keeping abreast with environmental requirements (Brent & Labuschagne, 2004). An outstanding way of maintaining business performance is through sustainability, and one of the essential features of the sustainability transition process is the development of an innovative and constructive corporate culture through integration (Chen et al., 2010). Such a healthy culture would be able to create a better organizational performance and make optimum use of existing assets in order to create beneficial economic, environmental and societal outcomes (Dunphy, 2011). The results from economic, environmental and social sustainability would ensure satisfaction among shareholders, suppliers, customers, employees and society. According to the International Energy Annual Report (2007), manufacturing industries are globally responsible for the huge and significant amount of waste generation and resources. Across the world, the manufacturing section is responsible for the generation of 36 percent of carbon dioxide emitted into the atmosphere (OECD, 2009). 

According to Kusrini et al. (2015), the development and application of green engineering principles in the academic, industrial and government sectors should be explored in order to promote sustainability and to add value to products. Therefore, the different paradigm focusing on the effects of manufacturing firms’ stakeholders, such as customers, employees, shareholders and regulators, requires manufacturing organizations to be more responsive to the environment with respect to their processes and products (Amrina & Yusof, 2011). Innovations in technological integration and the development of new material products, such as waste-to-energy (alternative energy), composting, anaerobic digestion, pyrolysis and gasification, material recycling, and design modeling that lead to sustainable practices, are essential in achieving a safe and clean environment (Kusrini et al., 2015).

Green Supply Chain Management (GSCM) has been a point of significant interest for practitioners and researchers of supply chain management and operation, due to the awareness of environmental protection on a global level (Abdullah et al., 2014). GSCM concerns the delivery of products and services from suppliers and manufacturers to end customers through material flow, information flow and cash flow, in the context of the environment. To improve sustainable performance among manufacturing firms, GSCM is now considered as an important management tool. GSCM also refers to all the stages of Supply Chain Management (SCM) that must comply with the requirements of environmental protection (Zhu & Sarkis, 2007). Requirements with regard to the involvement of green supply chain partners have led to the introduction of Green Supply Chain Integration (GSCI), an approach to GSCM. GSCI can be considered as a novel concept when firms develop an approach to strategically integrate with suppliers, customers, logistic, and technology to reduce environmental impacts (Wong et al., 2015). Manufacturers are required to employ GSCI to integrate environmental management practices within their companies, and with suppliers and customers (Shi & Lin, 2003). This action will enhance inter-firm cooperation and encourage mutual GSCM, as well as influencing firms’ sustainable performance (Wu, 2013). Thus, the creation of new technologies that foster research and stimulate innovation is required to accelerate sustainable development in all fields of study related to manufacturing (Berawi, 2017a). 

Technological integration has been found to have a positive relationship with the three dimensions of sustainable performance. As a result, all the hypotheses proposing a linkage between technology integration and sustainable performance (economic, environmental and social) can be supported. These results significantly prove the positive relationship between technological integration and sustainable performance. The study fills the gap in the literature on technological integration as a crucial variable of GSCI, despite being an excellent tool for integrating green supply chain partners more efficiently, leading to the enhancement of environmental performance. Based on the multiple regression analysis, the results reinforce the fact that technological integration is a necessity and a key driver in most industries towards environmental achievements. Although there are certain challenges to technological integration, such as the difficulty in obtaining the latest green manufacturing technologies, the high cost, the considerable requirement of managerial techniques, and the expertise needed, manufacturing firms in Malaysia should consider technological integration as a strong predictor of sustainable performance. However, such integration still requires involvement from suppliers, customers and internally to improve the exchange of technological knowledge. The findings of the hypothesis testing have established that the use of an integrated technological process along with the green supply chain would improve sustainable performance. Technological integration has been found to have a significant influence on sustainable performance. 

We would like to express our gratitude to the Research and Innovation Management Centre (RIMC), Universiti Utara Malaysia (UUM) for giving us the opportunity to conduct this beneficial research through a CoE Research Grant (S/O code 13734).

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