Impact of Lean and Sustainability oriented innovation on Sustainability performance of Small and Medium Sized Enterprises: A Data Envelopment Analysis-based Framework

Lean and Sustainability Oriented Innovation both enhance competitiveness of small and medium enterprises (SMEs) in a sustainable way. Lean is efficiency focused, whereas sustainability oriented innovation emphasizes on responsiveness. Although lean and sustainability oriented innovation have been separately researched, there is a gap in knowledge on the combined effect of lean and sustainability oriented innovation (SOI) on SMEs supply chain sustainability. SMEs have limited resources and face numerous competition. Therefore, their supply chain sustainability can only be achieved through most appropriate trade-off between economic, environment and social aspects of business. The purpose of this paper is to understand the combined effect of sustainability oriented innovation and lean practices, on supply chain sustainability performance of SMEs. The study uses a Data Envelopment Analysis (DEA) based framework and applies this to a group of SMEs within the Eastern part of India. Lean and sustainability oriented innovation are considered as input criteria, and economic, operational, environmental and social aspects are considered as output criteria of the proposed framework. DEA segregates inefficient SMEs and suggests at least a SME to benchmark. Subsequently, the study undertakes qualitative approach to suggest improvement measures for the inefficient SMEs. The results reveal that combined lean and SOI helps achieve SMEs’ supply chain sustainability. The findings are useful for policy makers and Individual SMEs’ owners and managers to undertake measures for improving sustainability. Theoretically this research contributes a DEA-based framework to study the effect of combined lean and SOI on sustainability that helps improving SMEs’ sustainability performance.