Integrating sustainability into PMM systems of small businesses: some future research directions Open Access

Today sustainability represents an imperative that every economic and social actor must pursue. The global path toward sustainability has been traced by the United Nations back in 2015 through the definition of the sustainable development goals (SDGs) – a set of 17 interconnected goals aimed at guiding the global society toward sustainable development. Each of these goals is also structured in specific targets aimed at supporting countries in their progress toward sustainability. Even though these goals are defined at the country level, the relevance of the issue is perceived at every social level. The private sector, including manufacturing and service businesses, plays a key role in addressing SDGs (Rashed and Shah, 2021).

Thanks to cultural shift supported by social pressure and initiatives such as the SDGs definition, the concept of business performance has evolved in every country and today it considers, together with the economic dimension, also the social and environmental one (Hussain et al., 2018) – i.e. the so-called triple bottom line (TBL). In the “Anthropocene” era (Crutzen, 2006), the call for sustainability is indeed mandatory because we can not think about development without considering sustainability. As supported by Bebbington et al. (2019), the adoption of an accounting perspective – defined as the provision of quantified information to support strategic and operational decision-making – is on the dot of the Anthropocene demands since it allows to measure, manage and report the impacts and results obtained by business (and more generally speaking “human”) action. As one of the challenges of sustainable development is to comprehend the impact of the business activities in terms of SDGs (Bebbington et al., 2019), firms are called to define measures and indicators aimed at monitoring the path toward sustainable development and its key dimensions – environmental, social and economic ones. Current literature has mainly focused on the reporting process of sustainability performance (Hahn and Kühnen, 2013) demonstrating a reactive approach to the issue; less explored is the proactive approach through management control practices to inform decision-making (Burritt and Schaltegger, 2010). In this context, the design and implementation performance measurement and management (PMM) are called to be adapted to include sustainability-based indicators and targets (Hansen and Schaltegger, 2016).

With the term PMM we define those control mechanisms that guide an organization toward the achievement of goals and targets to deliver its mission and strategic goals (Ouchi, 1979; Lebas, 1995; Otley, 1999; Bititci et al., 2012).

According to Taticchi et al. (2010) we may identify 3 phases (or stages) of PMM development, namely, i) performance indicators – which refer to the ability to measure specific items/dimensions of organizational performance; ii) measurement framework – which deals with the arrangement of data and performance indicators in an evaluation framework; and iii) management framework – focusing on the utilization of data to support decision-making in organizations.

Traditional PMM systems are designed to address the economic goals of firms, often neglecting the importance of environmental and social issues as well as their interrelationships with financial issues (Gond et al., 2012; Trianni et al., 2019).

In this context, the adoption of the SDG framework may provide an opportunity for both research and practice to advance and refocus PMM (Bebbington and Unerman, 2018). In achieving UN remit, PMM represents the key to translate public commitments in effective changes through the operationalization of objectives, indicators and targets at the organizational level (Bebbington and Unerman, 2020). However, today, there is a gap between the number of businesses embracing the SDGs at a strategic level and the number of firms able and/or willing to quantify their performance against SDG targets (Bebbington and Unerman, 2020). This gap depends on various factors such as organizational culture, but also managerial competences, skills and knowledge. Accounting research, and in particular PMM studies, can help to develop solutions (Bebbington and Unerman, 2020) and to create the so-called sustainability-PMM. These may be defined as “management accounting tools that connect organizational strategy with operations in a given context by providing information and direction, as well as monitoring and motivating employees to continually develop sustainable practices and procedures for future improved sustainability performance” (Johnstone, 2019, p. 34).

An important issue with respect to integration between traditional PMM and the sustainability concern is whether to conceive this integration process as a radical change – i.e. by designing “new” PMM systems – or, alternatively, as an incremental change – i.e. retooling the existent PMM system by introducing new measures. Ghosh et al. (2019) found that organization tend to prefer this second option. This approach, however, does not ensure that the business strategy effectively embraces the sustainability concerns (Beusch et al., 2022).

Given the growing emphasis on sustainability, there is an urgent need for SMEs to shift their focus toward this area, especially considering that previous studies have primarily addressed measurement issues at the level of large enterprises (Neely, 2005; Taticchi et al., 2010). Larger firms are typically characterized by effective, well-structured information systems and management tools, as well as the necessary competencies that facilitate the transition from traditional PMM to new, sustainability-focused PMM. On the other hand, SMEs still struggle to implement effective strategic planning and PMM tools (Garengo and Bernardi, 2007; Barbosa et al., 2020 Sardi et al., 2020). They encounter significant challenges in monitoring the implementation of sustainability initiatives, primarily due to a poor alignment between strategy and management control systems (Garengo et al., 2005) and the inherent characteristics of these firms, which complicate the monitoring and reporting of sustainability information (Girella et al., 2019).

On the other hand, SMEs, which account for about 90% of global businesses and employ around 50% of the global workforce (World Bank Group, 2021), differ from large enterprises not only in size but also in their less complex organizational structures, limited financial resources and often a lack of specific expertise in both sustainability and performance management (Del Baldo, 2017). One of the key challenges at the SME level is that PMM systems and sustainability indicators – such as the ones derived from the SDG – were initially developed for large enterprises and reflect their organizational structure (Reynolds and Yuthas, 2008). This disparity makes it difficult for SMEs to adapt such systems to their specific needs, exacerbating the challenges in implementing effective strategic planning and PMM tools (Garengo and Bernardi, 2007; Barbosa et al., 2020).

Moreover, academic research on sustainability within SMEs has so far largely focused on aspects related to sustainability reporting, neglecting the critical importance of developing PMM frameworks that can be integrated into the operational practices of SMEs (Cavicchi et al., 2023). This narrow focus has overshadowed the pressing need to create sustainability management tools tailored to the specific needs of SMEs (Mengistu and Panizzolo, 2021, 2022, 2023; Barbosa et al., 2020; Zharfpeykan and Akroyd, 2022). In particular, according to Mengistu and Panizzolo (2023), sustainability metrics can help SMEs enhance the effectiveness of their efforts to measure and manage sustainability performance, making it easier and more transparent to evaluate and improve sustainability outcomes and meet stakeholder requirements.

As a result, there is a clear need for further research and practical investigation into how SMEs can develop and design more customized PMM systems that effectively integrate sustainability dimensions while also addressing the operational challenges related to limited financial resources and expertise. This study aims to fill this gap by exploring the state of the art in academic literature on the integration of sustainability into SMEs’ PMM systems, addressing a specific and innovative research stream identified within the broader PMM research agenda (Taticchi et al., 2010).

The following research questions guide this study:

To achieve these goals, a systematic literature review was conducted, focusing on key articles that explore the intersection of PMM systems and sustainability within the context of SMEs.

The article is structured as follows. The next section, Section 2, illustrates the research methodology outlining the research protocol. Section 3 reports the results obtained by the systematic literature review. Finally, in Section 4, discussion, conclusions and future research directions are presented.

The purpose of this work is to identify, evaluate and synthesize the existing literature on PMM systems by integrating the sustainability dimension in SMEs, with a specific focus on indicators. A systematic review of existing literature was chosen as the methodology, formulated around the research questions previously stated. Reviewing the literature in the field helps to identify common research topics in collected papers, through chosen labels, such as the theoretical background, empirical or theoretical research’s nature, methodologies used by researchers, qualitative or quantitative orientation, the spread of records in the geographical field and industry-wise and the pursued and reached contribution.

To ensure the robustness and reproducibility of this systematic review, a review protocol was developed in line with guidelines provided by Tranfield et al. (2003), Denyer et al. (2008) and Moher et al. (2009). The review protocol clarifies and makes replicable the selection process in the systematic review, mitigating the risk of bias and ensuring reliability. Explicating used procedure, allow readers to know how we obtained reported findings, warranting reliability of results (Slavin, 1986).

The research boundary was set to the use of the electronic databases Scopus and Isi Web of Sciences. The search was limited to peer-reviewed academic articles, excluding conferences contributions, written in English language.

Selected key words were run on chosen databases in March 2024. This procedure will lead us to address aforementioned research questions. We chose broad search terms by electing an inclusive cut, trying to avoid the risk of excluding relevant contributions and missing specific keywords references in titles or abstracts. By using Scopus and ISI Web of Science as sources of data we reached a search strategy following specific research criteria:

TITLE-ABS-KEY (“performance manag*” OR “performance measur*” AND sustainab* OR esg* OR sdg* AND sme* OR “small business”) AND [LIMIT-TO (DOCTYPE, “ar”)].

From outed results, we collected an overall number of 113 items: 69 from Scopus and 92 from ISI Web of Science Database (48 records were duplicates).

Among these, we eliminate those articles reached out by key search string, but we do not focus on research topics. In particular, we excluded the following ones:

• articles mentioning “performance management” and “performance measurement” but not adopting these perspectives in the study;

• articles dealing with the relationship between performance and sustainability not focusing on measures and indicators; and

• articles dealing with the concerned issues but not on a SMEs’ level.

Through an in-depth analysis of the records obtained, we selected 61 articles that we have been analysed thoroughly.

To detect, scrutinize and analyse scientific contributions relevant to the selected topic, we used the PRISMA (Preferred Reporting Items for Systematic Review and Meta-Analyses) protocol (Moher et al., 2009; Tranfield et al., 2003).

The eligibility procedure was independently conducted by two authors. When there was no initial unanimous agreement, a structured approach (Moher et al., 2009), was used to resolve disagreements through discussions and brainstorming meetings. Figure 1 reports the selection process.

A data set was created to classify paper contents: theoretical background, empirical or theoretical setting, methodologies and techniques exerted by researchers, qualitative or quantitative nature, geographically location and industry field, given contribution. Moreover, this work identified a sub-group of articles focusing on the design and measure of sustainability indicators.

From the numerical distribution of papers on focused issues, we can see growing attention on the theme from 2008 to 2024: from 1 to 16 articles in 2021 and to 8 and 7 articles in 2022 and 2023 respectively, considering that year 2024 – with 1 article – brings partial results. Figure 2 reports the publishing trend per year.

Starting from a panoramic view of localization of results, we can highlight that there is a presence all over the five continents of studies led involving cases from several countries realities about the integration of sustainability measures in PMM systems from a small business perspective. The graph of Figure 3 considers the region origin of the sample reality analysed by each paper examined.

Considering the 61 results, 26 are in the European area, 26 from the Asia region, 2 from South America, 1 from Africa and 1 from Oceania; 5 results are focused on multiple continents concerning North America, Europe and Asia. Italy detects the main impact from a numerical perspective with 11 contributes. The geographical distribution of our results corresponds to the locations where the studies were conducted. This approach reveals that most of the studies were conducted in regions where SMEs are prevalent.

From Figure 4, we notice a greater incidence of empirical studies on the theme, with a low percentage of literature review articles and theoretical contributions.

In particular, Hansen and Schaltegger (2016) chose a systematic literature review to map SBSC architectures or to predict and identify future PM challenges, considering the period from 1994 to 2013 and Europe region and focusing on Germany and Switzerland. According to Corporate Social Responsibility (CSR) pillars, authors give a revelatory “contribution to the emerging SBSC [Sustainability Balanced Scorecard] literature is that the highly interdisciplinary and hitherto scattered research has been synthesised and mapped into the proposed typology of generic SBSC architectures” highlighting “links to other performance management frameworks and, given that the results are to some extent generalizable, can therefore contribute to the broader literatures on sustainability performance measurement and management and sustainability accounting” (Hansen and Schaltegger, 2016, p. 24).

Dasgupta (2023) demonstrated, through a systematic literature review, that sustainable innovations not only enhance the competitiveness of firms but also enable SMEs to focus of both monetary and non-monetary values.

Finally, using both a systematic literature review and a descriptive systematic analysis, Jones et al. (2023) organized the existing knowledge on regulatory frameworks, projects and actions that support the development of sustainable performance management in SMEs. Their research illustrates how strategic management accounting facilitates this development within the framework of circular economy. They also discuss proposed metrics, dashboards and scorecard concepts and evaluate their effectiveness.

Albeit the earlier contribution of Hansen and Schaltegger (2016) and Yanine et al. (2020), which established the trajectory for researching effective solutions in PMM as drivers of strategic objectives and perspectives, later works by Jones et al. and Dasgupta (2023) shift focus directly on the field of strategic management, based on the need “to ensure performance measurement systems relate to organization’s strategy”(Neely, 2005, p. 1269).

For what concerns industry distribution, we may notice that the main represented sector is the manufacturing one, followed by several branches of services. This can be explained by the fact that manufacturing is usually the sector impacting the most in terms of environmental and social conditions. As for example, the manufacturing industry reveals a prevalence of SMEs in the Asian continent dealing with the production of electronic products, jewellery, apparel and information technology (Baral et al., 2021), gensets and home-appliances (Singh et al., 2018) or manufacturing-textile field (Ali, 2023). Singh et al. (2018) and Sulong et al. (2015) focused on the automotive sector with the aim of assessing SMEs propension to embark on environmental initiatives.

Another relevant sector in which the topic has been explored by the literature is the food one in which we detected two articles located in Europe: Austria and Greece. The first one, is on the brewery SMEs, by demonstrating that SBSC development in SMEs is possible when the specific organizational conditions are taken into account; by providing insights into the supporting factors and challenges frequently faced in such development processes (Falle et al., 2016). The second one (Bourlakis et al., 2014) aims at identifying through a measurement system the supply-chain members who over-perform or underperform in a selected set. The other two articles are located in Asia: Turkey and Vietnam. The first one (Acar et al., 2019) aims to demonstrate that social sustainability is positively related to environmental sustainability and to flexibility, quality and responsiveness, as selected operational performance criteria. The second one (Le, 2023) aims to provide empirical evidence to demonstrate that food supply chain performance is strongly related to the firm’s food supply chain resilience.

The services industry is taken into account by papers on several sectors such as: waste treatment (Cavicchi et al., 2023), transport (Gruenbichler et al., 2021), fintech assistance (Okfalisa et al., 2022) and banking (Calderon and Chong, 2014), with the prevalence of tourism cluster from various countries like Italy (Bianchi and Vignieri, 2020), Iraq (Alhamawndi and Almahmoud, 2020), Thailand (Ngo and Vu, 2021) and New Zealand (Battisti et al., 2013). Figure 5 reports industry distribution percentage.

The theoretical background analysis carried out in our sample shows that management accounting and control literature is the mainstream literature focusing on this topic, followed by operations management, strategic management and CSR and corporate sustainability. Figure 6 reports the counting by theoretical background.

Management accounting and control studies focuses on the processes aimed at directing the behaviours of employees, to pursue organizational objectives by the means of different mechanisms among which we find PMM ones (Malmi and Brown, 2008). Management accounting and control scholars are dealing with the design of sustainability-specific control systems. For instance, Cavicchi et al. (2023) focused on how SMEs could modify their management control systems to improve their environmental sustainability strategy; Tsang et al. (2023), aimed to provide a customized ESG performance measurement framework through the case study with several logistics practitioners. Then SMEs can develop their ESG capabilities and benchmark their ESG performance against their competitors. This theoretical framework also includes balanced scorecard (BSC) and dynamic performance management (DPM). According to the BSC framework (Kaplan and Norton, 1996; Barbosa et al., 2020), our selected literature focus on the design and implementation of Sustainability BSC (Falle et al., 2016; Hristov et al., 2019; Yanine et al., 2020).

DPM is an approach developed by Bianchi et al. (2015) combining PMM with system dynamics to provide a dynamic view of firm performance control (Cosenz and Noto, 2016). This has been used by Bianchi et al. (2015) and Bianchi and Vignieri (2020) as an approach to design performance drivers supporting the sustainable growth of SMEs.

Another interesting perspective on this cluster is advanced by Cristofaro et al. (2024). In particular, the authors focused on the cognitive biases that hinder the development of a sustainable PMM systems in medium enterprises proposing some corrective actions to reduce the impact of the most critical ones.

Operations management (Stevenson, 2012) is a breach of business dealing with business practices oriented at maximize firms’ efficiency by designing (and re-designing) business production processes. In this category we included articles focusing on supply-chain management, green-lean thinking, lean six-sigma, etc.

Many studies classified in this category by focusing on supply chain sustainability measurement (Bourlakis et al., 2014; Epoh and Mafini, 2018; Wu et al., 2018; Ali, 2023; Baral et al., 2021; Dey et al., 2021; Manville et al., 2021; Aldaas et al., 2022). These articles are mainly focused on the factors of enabling performance measurement of supply chain in terms of sustainability and on the related method that can be applied to do that.

Another topic explored in this theoretical background is lean management. Lande et al. (2022) developed an index to evaluate the extent to which lean six sigma concepts are followed in SMEs. Ahmad et al., 2021 presented a framework for lean-green manufacturing system implementation by identifying green-lean performance enablers and by ranking them as per their importance using the best-worst method approach.

Strategic Management cluster includes articles dealing with business models, innovation management, resource-based theory. The articles in this cluster often consider regional development characteristics and/or outcomes when assessing SMEs sustainable performance (Gerolamo et al., 2008; Battisti et al., 2013; Alhamawndi and Almahmoud, 2020; Kim, 2021). Samadhiya et al., 2023 aim to detect as the top five key success factors to be measured to address social sustainability: employee health and safety, organizational culture, top management commitment, employee engagement and effective communication and effective workplace management.

The articles belonging to CSR and CS framework are mainly proposing TBL indicators to achieve business sustainability goals (Nigri and Del Baldo, 2018; Mengistu and Panizzolo, 2021, 2022) and highlight the lack of suitable indicators tailored to manufacturing SME’s needs, innovation performance assessment and key enabling technologies evaluation (Dušková, 2021).

Circular Economy is an emerging and promising research theory which studies new model of sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In the last years this paradigm has been applied also to studies on PMM and sustainability in SMEs (Blasi et al., 2021; Nudurupati et al., 2022; Subramanian and Suresh, 2022).

Following knowledge management (KM) theory (Nonaka, 1994; Mårtensson, 2000; Awad, 2007) Cardoni et al. (2020), it highlights the importance of relationships among KM, PMS and SME’s economic sustainability in knowledge-intensive sectors SMEs located in Italy.

Finally, Calderon and Chong (2014) focused on PMM and sustainability in SMEs in the perspective of sustainable lending.

The various distribution described of background theories gives an image of the multiple perspectives adopted in studies with a crosswise prevalence, as shown, of management control and operation management focuses.

For what concerns the methodological approaches used by the selected studies, we found a preference for statistical-based analyses, followed by case study analysis. Figure 7 reports the counting by methodology used.

Statistical analyses are often carried out through structural equation modelling (SEM). SEM was mainly adopted as a tool to assess SMEs measures within a regional area. Its applications take into account the whole cluster of SMEs operating in a certain territory to inform and guide policymakers’ actions (Epoh and Mafini, 2018; Alhamawndi and Almahmoud, 2020; Baral et al., 2021).

A performance measurement approach combining SEM and data envelopment analysis (DEA) techniques is also suggested as a valuable tool for both policymakers and SME managers, helping to “develop causal relationships among the criteria through hypotheses testing, which also enables SMEs to decide on how to enhance their performance effectively” (Dey et al., 2021).

Other statistic-based tools applied in our selection are ordinary least squares analysis (Cardoni et al., 2020), confirmatory factor analysis (Haseeb et al., 2019; Binh et al., 2020; Ngo and Vu, 2021; Ali, 2023) statistical analysis partial least square SEM (Ngo and Vu, 2021; Acar et al., 2019), Cronbach’s alpha and exploratory factor analysis (Tuan and Rajagopal, 2022; Alkhodary, 2021), multigroup analysis with the use of software like EViews (Ciemleja and Lace, 2011), ANOVA (Battisti et al., 2013; Bourlakis et al., 2014), AMOS (Binh et al., 2020; Ali, 2023) and descriptive analyses combined with qualitative approaches (Cristofaro et al., 2024).

Case study analysis (Yin, 2009) is widely used as well by the authors focusing on PMM for sustainability in SMEs. Case studies are carried out through triangulation of different data collection sources such as documents, workshops, focus groups and (mainly) semi-structured interviews.

Case studies have been carried out through the use of different techniques such as fuzzy analytical hierarchal process (FAHP), fuzzy inference system (FIS) approach, quality function deployment (QFD), analytic hierarchy process (AHP) (Wu et al., 2018-case study) and so on.

Singh et al. (2018) used FAHP method to settle weights for business performance measures and indicators. The weighted performance ratings are then used as inputs to FIS that is used to derive sustainability performance. QFD has been adopted to investigate how a SME can achieve sustainable supply chain management (Wu et al., 2018). The development of a performance measurement system focusing on economic, environmental and social performance is carried out through AHP (Wu et al., 2018). AHP supported the weighting of each indicator to design sustainable supply chains. It proposes a holistic approach which could assist in determining which internal skills to improve on and set up (Wu et al., 2018).

Mengistu and Panizzolo (2023), through a multiple case study analysis, identify a set of metrics for measuring and managing the sustainability performance of SMEs in Italian footwear industry.

Considering cross-sectional analysis approach (Christie, 1987) leveraged on semi-structured interviews, Johnstone (2021) surveyed type and use of sustainability control in SMEs through the adoption of an environmental management system certified to ISO. He built a cross-case interview approach to explain control in SMEs through the implementation of an environmental management system, highlighting that formalized controls tend to be characteristically formal and compliance-based to ensure environmental performance improvements according to ISO certification. Notwithstanding this is stated, the effectiveness of these formal control tools is augmented by external organizational factors, such as engaging non-managerial employees through both extrinsic and intrinsic rewards, which align closely with sustainability objectives.

The same method has been used to explore the status of research on the critical aspects of the implementation of the SBSC and to create an Adjusted SBSC (Hristov et al., 2019). Moreover, Sezer (2015) used cross-sectional analysis to analyze the use of sustainability indicators, highlighting that performance measures are used by SMEs and large firms with great differences.

Delphi analysis is a systematic and qualitative method based on the collection of opinions from a group of experts (Dalkey and Helmer, 1963). This has been used to select indicators with the aim to identify, analyse and select suitable measures for assessing SMEs sustainability (Mengistu and Panizzolo, 2021).

As previously anticipated, among the selected studies, we devoted a particular attention to those focusing on the building, selection and design of a set of indicators and the related measurement and management framework.

In particular, we identified 16 contributions, over the 61 records, advancing knowledge on this area. The following table reports the list of these articles. As the reader may notice, for each article we examined whether the indicators proposed are framed according to the most recurring adopted framework, i.e. in the TBL dimensions (economic, social and environmental) and the SDGs. Table 1 reports papers focussing on indicators.

What emerges is that building a set of indicators to assess sustainability in SMEs is a tailor-made work. Although some measures (mainly economic ones) are common across the studies analysed, most of the indicators are designed and selected accounting for the peculiarity of each single business (e.g. governance, sector, activity, etc.). As such, this activity may be supported by the so-called “materiality analysis” that is not often mentioned in our sample, but that is largely applied and discussed in the sustainability reporting literature (Eccles et al., 2012). Interestingly, although strongly suggested and promoted by the accounting literature (Bebbington and Unerman, 2018) the referral to SDGs objective is found exclusively in 3 out of the 12 studies published after the 2015 (year in which the Agenda 2030 was issued). The environmental dimension is considered by 14 articles over 16, the economic and social one by 15 publications.

The economic dimension is usually populated by traditional performance indicators focused on profits, cost, market share, etc. Within the environmental dimension, we may find sub-dimension such as waste, energy consumption and green-house-gas emissions. For what concerns the social dimension, this consists of performance indicators aimed at measuring “employee satisfaction”, “customer satisfaction”, “employees training” and “gender distribution”.

At the methodological level, we may notice that both qualitative and quantitative approaches have been adopted to carry out research on sustainability performance indicators. This is likely due to the novelty and complexity of the issue. On the one hand, qualitative methodologies allow for an in-depth understanding of how each business approaches sustainability-PMM practices. On the other hand, quantitative methodologies support the adoption of a systemic view and enable the generalization of results.

Many of the analysed studies started their analysis by taking into account measures suggested in previous studies by carrying out literature reviews (Winroth et al., 2016; Calderon and Chong, 2014; Mengistu and Panizzolo, 2022).

Case study methodology was used to understand the development process of indicators definition and, thus, to answer to the question “how” to build indicators (Bianchi et al., 2015; Falle et al., 2016; Mengistu and Panizzolo, 2023).

Cross sectional analysis based on semi-structured interviews has been largely used to assess which indicators have been used in real practices of SMEs (Calderon and Chong, 2014; Sezer, 2015; Hristov et al., 2019).

Mengistu and Panizzolo (2021, 2022) adopted Delphi analysis to select and validate a scorecard of indicator. This methodology looks promising to support PMM system designers as already suggested by other literature (Rabbani et al., 2010; Noto et al., 2022).

For what concern quantitative analysis, the studies analysed proposed AHP, SEM and DEA. The first one has been used to weight indicators based on their relevance for the management (Singh et al., 2018; Wu et al., 2018). SEM was mainly adopted to assess the relationship between the indicators representing sustainability items at the business level (Acar et al., 2019; Dey et al., 2021). Finally, DEA was used to put in place benchmarking practices and sustainable performance evaluation (Dey et al., 2021).

Based on the results obtained, although the sustainability-PMM literature on SMEs has made significant advances in defining and selecting indicators, as well as in developing measurement frameworks, only recent works have begun to consider how these may impact and support decision-making and strategy (see, for instance, Cavicchi et al., 2023). This aligns with what Taticchi et al. (2010) refer to as the “management framework”.

The result of our analysis provides multiple insights for current practices and future research.

Considering that we are dealing with a relevant and trendy topic in the management literature – i.e. sustainable development – and that SMEs, as stated in the introduction of this work, represents an important share of the production system all over the world, we found a limited set of paper dealing with the analysed topic. This means that much has to be done in terms of research on SMEs’ PMM system addressing and integrating the sustainability concerns. Southern Europe and South-East Asian countries are producing research on the topic. This is probably related to the vast presence of SMEs in these countries. However, call for papers specifically addressed in engaging Anglo-Saxon countries in this debate may be needed.

Most of the research analysed adopts an incremental change approach. PMM systems addressing sustainability goals in SMEs tend to be the results of the adaptation of existent and traditional mechanisms integrating new quantitative and qualitative targets. Just few of the articles analysed propose radical change approaches (e.g. Bianchi et al., 2015). Identifying sets of indicators to move SMEs in a “proactive” strategy of development urges to be deeper considered by researchers (Bebbington et al., 2017).

Moreover, although the multiple calls of accounting research to embrace SDGs targets and goals at the business level and to create tool to monitor and report the related results (Bebbington et al., 2017; Bebbington and Unerman, 2020), just 3 out of the 16 articles focusing on performance indicators are referred to them (Acar et al., 2019; Mengistu and Panizzolo, 2022, 2023). This evidence highlights that future research in this area may further investigate the contribution of SDGs on SMEs’ PMM systems in an even more impactful manner.

Research streams contributing to SMEs’ PMM evolution toward sustainable development belong to the management control area and to the operation management one. The first one focuses on the design of PMM systems and their consistency with strategy (Bianchi et al., 2015; Falle et al., 2016; Hristov et al., 2019). The second one is mainly concerned on analyses at the supply-chain level (Acar et al., 2019; Aldas et al., 2022; Ali, 2023; Baral et al., 2021; Manville et al., 2021).

A common trait in the development of PMM systems integrating sustainability concerns is the adoption of the TBL dimensions. Contrary to what found by Trianni et al. (2019), research in this domain proposes a balanced set of indicators in which all the three dimensions – i.e. economic, social and environmental – are equally represented. This may thus represent a common measurement framework adopted by literature and practices (reported by the literature) to structure PMM systems in SMEs aiming at measuring and monitoring their contribution in terms of sustainable development.

At the methodological level, both qualitative and quantitative method are largely used by the selected literature to advance research. Due to the complexity of the issue investigated, mixed methods are probably particularly suitable in supporting researchers when producing new knowledge. Case studies, cross sectional analysis and Delphi analysis are particularly suitable in the phase of the design and population (with indicators) of PMMs (Bianchi et al., 2015; Calderon and Chong, 2014; Mengistu and Panizzolo, 2022; Sezer, 2015; Falle et al., 2016); while quantitative analyses are suitable in the process of weighting, ranking and benchmarking indicators and their results (Singh et al., 2018; Wu et al., 2018; Acar et al., 2019; Dey et al., 2021).

The introduction of the SDGs has significantly influenced the focus of research, as evidenced by an analysis of selected papers. These studies examine the evolution of sustainability-PMM models, confirming trends highlighted in previous literature (Neely, 2005; Taticchi et al., 2010). This growing attention underscores the impact of the SDGs on shaping scholarly inquiry in this area.

Drawing from the PMM development phases outlined by Taticchi et al. (2010), our literature review reveals that research on sustainability-PMM systems has effectively addressed the definition of performance indicators, as demonstrated by studies such as Mengistu and Panizzolo (2021, 2022, 2023) and Tsang et al. (2023), along with Dey et al. (2021). Additionally, it appears that the TBL is the measurement framework most commonly adopted by these studies, organizing performance indicators into three primary dimensions: economic, social and environmental. Although not yet fully realized, there is a growing interest in integrating SDGs dimensions into these frameworks, which are currently only mentioned in some indicator-focused articles. The managerial implications of these findings can serve as a crucial catalyst for societal change. The introduction of the SDGs is not coincidental; through them, governments have established a clearly defined common framework to be jointly followed. Just as at a high societal level, where managing people and countries involves coordinated efforts, the transition from reporting to management within firms is similarly connected to practical instruments such as performance indicators and measurement frameworks to drive and ensure change. In this process, academic research may play (and is playing) a pivotal role in linking the SDGs, firms and society by identifying, defining and providing these key managerial tools.

Less developed is the scholars’ debate on the third PMM development phase, that is management framework. In fact, although most of the articles addresses topics such as the definition of performance metrics and their effectiveness, few papers are focused on the adoption of such measures to inform and guide decision-making processes.

This gap is closely tied to the characteristics of SMEs. These businesses often face a lack of human capital, managerial skills, a reactive approach and limited financial resources (Garengo et al., 2005; Sardi et al., 2020). As the primary goal of small businesses is to survive and grow sustainably, the transition from reporting to measuring and managing (Taticchi et al., 2010) reveals complex challenges. Using proactively sustainability performance data to support decision-making requires organizations to recognize sustainability as both a value and performance driver.

Figure 8 reports the state of the art of the literature of sustainability-PMM in SMEs according to Taticchi et al.’s (2010) development stages.

Based on these results of our research, we can outline some directions for future research on SMEs’ PMM systems addressing sustainability.

First of all, future research may better engage with ESG standards that are poorly considered by the current literature examined. This kind of research can be considered as promising taking into account that studies on sustainability reporting, that are inevitably linked with the topic here explored, are widely relying on the ESG criteria.

Second, new empirical evidence is needed to assess the effectiveness of current PMM systems in guiding SMEs toward sustainable development. Studies aimed at collecting such evidence may contribute to provide important feedback on the design and implementation of PMM systems.

Third, empirical evidence on the adoption and the country distribution of PMM systems to address sustainable development in SMEs is needed to understand what macro environmental factors may be influencing the development of such tools. In this perspective, combining the explored topic with Entrepreneurial ecosystem literature (Cavallo et al., 2019) may be promising, although challenging.

Finally, as indicated in Figure 8, future research should explore the transition from measurement to management frameworks in sustainability-PMM. Specifically, the literature needs to examine how sustainability measures and frameworks, designed at the SME level, can be used by managers and entrepreneurs to guide employee behaviours and support decision-making processes. This involves addressing research questions such as defining targets, attributing organizational responsibilities and linking remunerations and rewards to sustainability-based targets. Furthermore, research may also look at the relationship between PMM systems, sustainability and management competences (and other internal factors) in SMEs. This kind of firms face indeed important barriers in recruiting and developing high-skilled human resources due to cultural and financial constraints.

Positive implications for society could arise from a deeper reflection on the suggested challenge. In market contexts, SMEs serve as the connecting link between individuals – including families – and complex organizations. Much like the “butterfly effect” (Lorenz, 1963), the impact of SMEs on society may appear individually small but is significantly broad when viewed as part of the whole. PMM systems, when effectively used in implementing sustainable development, should be considered a value driver and a solution for managing future challenges.