Exploring The Relationship Between Corporate Sustainability Practices And Corporate Financial Performance In Pakistan Testing The Moderating Role Of Ceo Characteristics And R And D
Abstract
Background: Climate change, dwindling resources, and increased demands on social responsibility are all factors that have made corporate sustainability practices (CSP) become important across the world. Nevertheless, in young economies such as Pakistan, the CSP-corporate financial performance (CFP) nexus is under-investigated.
Objective: This paper examines the CSP and CFP relationship in Pakistan and how CEO characteristics and research and development (R&D) investment mediate this relationship.
Design and Setting: The study employs a quantitative, secondary panel data design, using firm-level data drawn from annual reports, financial statements, and sustainability disclosures of publicly listed Pakistani companies across various industries such as manufacturing, technology, and energy.
Participants: The sample included large and medium-sized firms that have been in business for at least five years. We gathered the data through structured surveys of CEOs and senior executives, supplemented by secondary financial and sustainability reports.
Measures: CSP (environmental, social, and governance dimensions) is an independent variable. Dependent variable: CFP (return on assets, return on equity, ROI, market value). Moderators: the attributes of the CEO (education, experience) and investment in research and development.The study also includes R&D expenditure (percentage of annual revenue allocated to research and development) as a key moderating variable to assess how innovation intensity affects the CSP–CFP relationship.
Results: It was found that CSP demonstrates a significant effect on CFP (b = 0.45, p < 0.01). This relationship was positively moderated by CEO education and experience (b = 0.12, p < 0.05), and R&D investment increased the impact of CSP on financial performance (b = 0.15, p < 0.01).
Conclusions: CSP is associated with social and financial factors in Pakistan. They play very important roles in enhancing this connection by leadership qualities and investing in innovation. The paper has implications on the corporate strategy and policymaking, which focus on integrating sustainability in the business practice so as to attain a competitive edge. Longitudinal designs should be used in future studies, and investigations into other possible moderating variables like institutional pressures and cultural forces should follow.
