Linking HRM with Sustainability Performance Through Sustainability Practices: Unlocking the Black Box

In response to the triple‐bottom‐line sustainability challenges facing today's world, organizations are increasingly incorporating sustainability principles into their strategies; however, this is challenging for small and medium‐sized enterprises (SMEs) with limited resources. While sustainable human resource management (HRM) has recently gained scholarly prominence, the impact of sustainable HRM practices on an organization's sustainability performance remains under‐explored. Anchored on signalling theory, we address this gap by examining the impact of sustainable HRM on an organization's sustainability performance. Drawing upon survey data collected from 254 employees across SMEs in Vietnam, we found that sustainable HRM practices and managerial competency positively impact sustainability practices, which in turn predict sustainability performance, while sustainability practices mediate these relationships. Employee sustainability participation and long‐term orientation strengthen the relationship between sustainability practices and sustainability performance. Further, co‐worker sustainability support moderates the relationship between sustainable HRM practices and managerial competency and sustainability practices. We discuss the contributions to theory and practice and provide future research directions.