Exchange Rate Volatility, Oil Revenue Implications, and Their Impact on the Construction Supply Chain Sustainability Using SEM

Abstract

The study seeks to describe the effect of exchange rate risk (ERR) and oil revenue implications (ORI) factors on the sustainability performance of the construction supply chain. Going beyond the scope of macroeconomic reserves and secondary data analysis, the study utilizes online accessible data and the structural equation model (SEM) approach to describe the performance of the three pillars of sustainability within the construction industry, namely the economic (ESU), environmental (ENS), and social (SUS) aspects. Using the SmartPLS version 4.1 in the path analysis of the data, the findings emerge to be complex. The effect of exchange rate risk is found to be harmful to the environmental and social aspects of sustainability performance but statistically insignificant to the economic aspects of sustainability performance. Significantly and surprisingly, ORI factors are found to be positively enhancing the economic perspective of sustainability performance and show that the fiscal policy of the oil industry provides stability and continuity of construction projects. Contrary to the anticipated outcomes, the SEM analysis shows that ORI factors are harmful to the environmental perspective of sustainability performance but bear no consistent influence on the SUS construct within the total sample of the data.