Abstract
Despite the growing interest in corporate sustainability, empirical research remains fragmented and inconclusive regarding the impact of social and environmental sustainability on SMEs' competitiveness. Drawing on stakeholder theory and institutional theory, this meta-analytic literature review synthesizes quantitative empirical findings across the extant literature to establish the extent to which corporate sustainability (i.e., social and environmental sustainability) influences SMEs´ competitiveness. The study analyzes 83 studies using psychometric meta-analysis via a random-effects model, with 172,740 observations and 112 study effects. The results of this study can be summarized into several key points. Firstly, both social and environmental sustainability have a significant but moderate effect on SMEs' competitiveness. However, environmental sustainability has a stronger significant effect on SMEs’ competitiveness than social sustainability. Secondly, the impact of social and environmental sustainability on non-financial competitiveness is larger than financial competitiveness. Lastly, contextual factors like economic development, global sustainable competitiveness index (GSCI), and culture (power distance) play a moderating role in the social and environmental sustainability—SME competitiveness relationships. Our findings suggest that implementing sustainability practices by SMEs may require significant costs and resources, albeit investing in these practices can generate a sustainable competitive advantage that outweighs implementation costs for SMEs. This implies that SMEs can strategically invest in social and environmental sustainability, such as by adopting green business models, green chemistry, green messages, circular economy, eco-friendly technologies, and socio-environmental technologies, to enhance their competitiveness in the long run. This comprehensive analysis is crucial as it constructs a more unified understanding of how sustainability practices can contribute to the competitive advantage of SMEs. Theoretically, the study offers a quantitative review of the empirical findings on the relationship between social and environmental sustainability and SMEs' competitiveness to clarify the anecdotal findings and explore the boundary-spanning factors that may explain some of the reasons for the mixed results.