From Social Glue to Green Gold: How Organisational Social Capital Transforms SDG Adoption into Competitive Advantage in Manufacturing SMEs

Purpose

Manufacturing small and medium-sized enterprises (SMEs) face mounting pressure to adopt sustainable development goals (SDGs), yet sustainability is often perceived as a cost burden threatening financial performance rather than a source of competitive advantage. This study challenges the assumed trade-off by investigating organisational social capital (OSC) as the mechanism through which SDG adoption translates into enhanced financial performance and productivity.

Design/methodology/approach

We employ a sequential mixed-methods design: a survey of 287 manufacturing SMEs across Qatar, the UAE and Saudi Arabia, analysed via structural equation modelling, complemented by 12 in-depth case studies involving 47 interviews.

Findings

Results demonstrate that SDG integration, focusing on responsible production (SDG 12), decent work (SDG 8) and innovation (SDG 9), significantly predicts both bonding (ß = 0.64) and bridging capital (ß = 0.59). Both social capital dimensions strongly predict financial performance and productivity, fully mediating SDG–performance relationships. Moderation analyses reveal these effects are significantly stronger for smaller firms and when conventional resource availability is lower, confirming social capital functions as a strategic substitute for scarce tangible resources. Qualitative findings revealed three themes: sustainability practices signal ethical intent, activating trust and reciprocity internally, whilst embedding firms within institutionalised networks that confer legitimacy and access to resources externally.

Practical implications

The study frames sustainability as a relational investment producing improved performance, particularly for resource-constrained SMEs. Managers should prioritise SDG-aligned practices as strategic mechanisms for building social capital that substitutes for scarce tangible resources.

Social implications

By demonstrating that sustainability and profitability are compatible rather than competing objectives, this research encourages broader SME participation in achieving global development goals, particularly in resource-constrained emerging economies where adoption of sustainability has been limited.

Originality/value

This study uniquely integrates previously isolated sustainability and social capital literatures, providing rigorous mixed-methods evidence from the under-researched GCC manufacturing context. It specifies OSC as the precise mediating mechanism and identifies boundary conditions (firm size, resource availability) where relational resources become strategically indispensable, transforming social glue into green gold.