The Testing Effect of Social Sustainability Implementation on Company Resilience and the Economic Impact of COVID-19

Abstract

This study aims to examine the effect of implementing social sustainability on company
performance. This study took a sample of 250 employee respondents at all levels from
160 companies in the motorcycle supply chain that were able to survive the pandemic.
Using management commitment variables and financial support as exogenous variables,
company performance as an endogenous variable, and social sustainability as mediator
variables. The data was processed using SEM-PLS with a degree of variability of 5%
to evaluate the direct and indirect relationship to company performance. The research
findings show that all variables, namely management commitment, financial support,
and social sustainability, are positively and significantly correlated with company
performance. Different results are shown when measuring its indirect effect on
company performance. Management commitment through the implementation of social
sustainability consistently shows a positive and significant correlation, while financial
support shows a positive correlation although it is not significant to the company’s
performance. This result is influenced by the direct relationship of financial support
to social sustainability, which, although positively correlated, is not significant. This
study also succeeded in identifying the implementation of social sustainability that
was meaningful for the manufacturing sector being studied. This finding is a strong
indication of a positive reciprocal relationship between the implementation of social
sustainability—employee loyalty—and company resilience. Hopefully, this kind
of research can be expanded with different variables, indicators, and conditions to
complement and enrich knowledge of sustainability.