Analyzing Factors That Affect Korean B2B Companies’ Sustainable Performance
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1. Introduction
B2B (business-to-business) refers to a business model based on transactions between companies, and B2B companies are those that engage in such transactions. The B2B market occupies a significant share in the current global environment, and its size is increasing significantly. According to the study “B2B Payments Transaction Market Size-Global Industry, Share, Analysis, Trends and Forecast 2022–2030” by Acumen Research (2022) [1], the global B2B payments transaction market size was USD 49,481 billion in 2021 and is projected to reach USD 81,840 billion by 2030, with a compound annual growth rate of 6% from 2022 to 2030. Additionally, the global B2B e-commerce market size was valued at USD 7413 billion in 2022, and it is projected to reach USD 36,108 billion by 2031, growing at a compound annual growth rate (CAGR) of 19.2% between 2023 and 2031 [2]. In the case of the United States, B2B companies generated USD 9.17 trillion of revenue in 2018, accounting for about 51% of the 2018 U.S. economy [3]. South Korean B2B market conditions are no exception. In 2019, the B2B e-commerce market size was approximately USD 1187 billion, which is about 10 times larger than the B2C (business-to-customer) e-commerce market size of USD 115 billion [4].
Given the size and importance of the B2B market, former studies have looked at the behavior of B2B companies [5,6,7,8,9]. However, many previous studies on corporate performance have been conducted without distinguishing between B2C and B2B [10,11,12,13,14]. Moreover, most prior literature on business performance has focused on the context of B2C industries. There has been relatively little research addressing B2B business performance, which has unique characteristics that differentiate it from B2C organizations.
Moreover, research to date has tended to analyze the impacts on simple corporate performance, which limits our ability to understand the factors that influence “sustainable” corporate performance. Sustainability refers to the ability to meet current demand while not compromising the ability to meet future demand [15]. Sustainability management began with the awareness that if a company neglects social and environmental issues because it is too busy maximizing profits, the survival of the company will ultimately become more difficult. As Gadenne et al. (2012) [16] noticed, in line with current economic and environmental changes, performance evaluation indicators for organizations and companies should primarily consider the performance of sustainable accounting practices. Scholars such as Asad et al. (2021) [17] argue that sustainable leadership has a significant impact on the sustainable performance of small- and medium-sized enterprises (SMEs). Asif et al. (2021) [18] highlighted the importance of knowledge exploitation, knowledge exploration, and interactive performance management. This paper contributes to the literature by empirically exploring other factors that can affect sustainable business performance in the context of B2B businesses and elucidating the relationships between these factors.
Based on the previous literature and the characteristics of the B2B industry, this research considers technological capability, the chief executive officer’s (CEO) risk-taking propensity, B2B seller skill, key account management (KAM), and environmental–social–governance (ESG) management as the main factors that might influence the sustainable business performance of B2B firms. Technological capability is a performance factor that is widely studied in many studies of both B2B and B2C. This study examines the role of this factor within a B2B environment. As competition in the industry intensifies and volatility increases, the CEO’s risk-taking propensity is selected to assess the impacts of managers’ proactive and bold attitudes on sustainable corporate performance. B2B seller skill and KAM are marketing characteristics unique to the B2B industry and have been studied overseas, but research on Korean companies is lacking. Thus, we look at how seller skill and KAM influence sustainable performance among Korean B2B companies. In particular, ESG management has recently emerged as a new paradigm in corporate valuation and is attracting attention as an essential element rather than an option for companies. Many foreign and Korean evaluation agencies (i.e., ISS-ESG, CDP, Sustainalytics, KCGS, etc.) are using various ESG evaluation metrics to evaluate sustainable management. Additionally, most sustainability management evaluation indicators and standards, including ISO 26000 [19], are centered around ESG. This reflects the fact that ESG serves as a standard for evaluating corporate sustainability and can have a long-term impact on a company’s business strategy and performance. In this study, we seek to determine the impact of ESG management on corporate sustainable performance.
Business performance has many definitions and measurements. It is a complex construct influenced by many drivers [20,21]. Chandler and Hanks (1993) [22] argue that business results include financial benefits such as revenue, profit, and market share. In contrast, Walker and Brown (2004) [23] define business performance as non-financial benefits such as customer satisfaction, entrepreneur and employee satisfaction, business reputation, retention, goodwill, and the relationship environment. As Hwangbo et al. (2022) [24] pointed out, in the case of innovative companies, the financial performance and non-financial performance should be examined to consider the critical timing for survival and growth. Subjective performance indicators of companies, as well as objective performance indicators, can also be crucial because they can enable comparisons with competitors. In fact, various studies on business performance have been conducted on both financial performance and non-financial performance [25,26,27,28]. In Le (2022), Le and Ferasso (2022), and Spillan and Parnell (2006) [29,30,31], the sustainable performance assessment considers profit growth, increased market share, expanded customer database, efficiency in resource utilization, social welfare contribution, and environmental performance through environmentally friendly work methods as essential aspects. In sum, given that sustainable performance refers to the financial, social, and environmental performance of an organization, sustainable management performance should include objective data derived from financial indicators such as balance sheets and profit and loss statements, as well as related financial factors derived from non-financial factors such as corporate values, employee satisfaction, corporate image, and customer satisfaction. Therefore, this study adopts sustainable “financial” performance and “non-financial” performance to measure sustainable corporate performance.
5. Concluding Remarks
This study selected experts with work experience in the B2B industry, whose importance is increasing, and analyzed key elements related to sustainable financial and non-financial performance. The findings of this study are expected to provide valuable insights and references for a variety of B2B management practitioners and policymakers interested in performance and sustainability.
First, priority should be given to the CEO’s risk-taking propensity and B2B seller skills to enhance sustainable financial performance. These results underscore that sustainable financial performance is achieved through the combined efforts of all members, from top management to frontline staff. Hence, management should continue to make bold decisions, maintain a strong focus on business operations, and establish infrastructure to enhance the sales team’s capabilities through training, investment, and system implementation. Sales personnel must leverage CEO support to improve their product and technical knowledge and customer communication skills and develop customized sales strategies, thereby boosting sustainable revenue and profitability.
Next, sustainable non-financial performance can be enhanced by focusing on technological capability and the CEO’s risk-taking propensity. Thus, improving sustainable non-financial performance requires organization-wide efforts. Company leaders must make daring decisions, invest in potential opportunities, and establish systems to build technological capability through innovation, organizational structuring, and strategic planning. These findings offer practical insights that emphasize the importance of boldness, aggressive execution, high investment, and focus on the part of CEOs as priorities in achieving successful sustainable business performance.
In particular, the results of this study demonstrate that when companies practice ESG management, they can magnify the impacts of factors on sustainable corporate performance. This supports the argument that ESG management plays an important role in various aspects of a company, including building trust with partners, meeting customer requirements, securing funding, ensuring legal compliance, and creating business opportunities. Accordingly, investing in and implementing ESG management is essential for the sustainable growth of a company. Therefore, through ESG management, companies must protect the environment, consider the socially vulnerable, and follow legal and ethical requirements. Internally, they need to imprint the importance of ESG management on their employees so that they can prepare themselves to put it into practice. Furthermore, their image as a good company should be enhanced by making consumers aware that they practice ESG management.
One of the limitations of this study is that, while this paper examines determinants of a company’s sustainable financial and non-financial performance, there may also be other factors that can affect sustainable corporate performance. In other words, the survey questionnaire may not be comprehensive enough to capture all the factors that impact sustainable corporate performance. Moreover, the sample size appears to be small due to the convenience sampling method used in this study. Future research will include more comprehensive samples and analyze various strategic factors not covered in this study to derive effective ways for companies to increase performance and sustainability. Additionally, given that the results indicate the importance of ESG management in sustainable business performance, we will explore the factors that contribute to good ESG management practices. Researchers should focus on this area.
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