Shaping sustainability performance in culinary MSMES: Unveiling the impact of environmental regulation, customer pressure, and green dynamic capability

The sustainability of small and medium-sized enterprises (SMEs) in the culinary sector is increasingly important in the modern business world. However, many culinary SMEs struggle to achieve economic, environmental, and social sustainability goals, leading to issues like high waste generation, resource inefficiency, and financial vulnerability. This study examines how environmental regulation, customer pressure, and green dynamic capability contribute to enhancing the sustainability performance of culinary businesses in alignment with the SDGs. A quantitative approach was used, collecting data from 295 culinary SMEs in East Java using non-probability sampling. Structural Equation Modeling (SEM) with SmartPLS was applied to analyze the relationships among the variables. The results show that consumer influence significantly enhances sustainability outcomes, meaning that the higher the pressure from customers, the greater its contribution to improving the sustainability performance of culinary businesses. Additionally, environmental policies significantly impact sustainability outcomes, indicating that stricter environmental regulations enhance sustainability performance. Green dynamic capability plays a role in improving sustainability outcomes, though its moderating effect varies. Specifically, green dynamic capability does not strengthen the relationship between consumer influence and sustainability outcomes, but weakens the relationship between environmental policies and sustainability outcomes. This study contributes to the understanding of both internal and external factors influencing sustainability in culinary businesses and provides practical implications for policymakers and business owners to design strategies that support sustainable practices and contribute to achieving the SDGs.

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