Triple Bottom Line Predictors of SMEs&rsquo; Trade Credit

Marjory  U. Legaspi,

Triple Bottom Line Predictors of SMEs’ Trade Credit

Discipline: others in business and management

Abstract:

This research aims to determine the significant effect of triple bottom line predictors to trade credit. This is essential in order to help SMEs identify predictors in granting trade credit to credit-worthy customers. The triple bottom line predictors namely, social, environmental and economic dimensions yielded a significant effect to trade credit using the multiple regression model. This research exuded a holistic approach in evaluating customers because it considers Edward Freeman’s theoretical framework and Elkington’s sustainable TBL model. Furthermore, this research used the Sequential Mixed method. Causal research design was also utilized. The participants of the study were SME entrepreneurs, finance heads, credit department heads and business owners’ representatives. Primary data were initially collected through survey questionnaires to 268 samples and later made interviews to 9 respondents of the 268 sample SME owners or their representative credit department heads who garnered the highest, lowest and average scores per dimension. This research found out that the triple bottom line – social, environmental and economic dimensions significantly affected trade credit using multi-linear regression analysis. In addition, each element per dimension on the average was considered by the SME creditors whenever they grant credit to customers. Finally, it was proven in this research that the triple bottom line dimensions can now be utilized as predictors of trade credit. There is now empirical evidence supporting the TBL model of Elkington and the holistic business perspective of Edward Freeman on Stakeholder’s Theory.

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