Linking Sustainable Business Strategies to Firm Performance: A Cross-Functional Model of Marketing, Finance, and Innovation

Abstract

This study investigates how sustainable marketing strategy and sustainable investment strategy influence firm performance, considering the mediating roles of perceived corporate social responsibility (CSR) and sustainability-driven innovation, and the moderating role of digital transformation. The research aims to provide a comprehensive framework linking sustainability strategies to performance outcomes within firms operating in a developing economy context. A quantitative approach was employed, using a structured questionnaire administered to 345 mid- to senior-level managers in Pakistani firms. Validated scales from previous research were adapted for measurement. Data were analyzed using SmartPLS 4, applying Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the proposed direct, indirect, and moderated relationships. The results indicate that both sustainable marketing and investment strategies have a significant positive impact on firm performance. these relationships are significantly mediated by perceived CSR and sustainability-driven innovation. furthermore, digital transformation positively moderates the effects of both mediators on performance, enhancing the strength of these indirect relationships. This study integrates sustainability, innovation, and digital transformation into a unified performance model, extending the Resource-Based View and Stakeholder Theory. It provides valuable insights for managers seeking to align sustainability initiatives with digital capabilities to enhance firm competitiveness and long-term value creation.