Sustainability performance of firms in the emerging economy: The role of corporate governance and corporate strategy

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Abstract

Despite the significance of the company’s strategy decisions in shaping the governance of the board toward sustainable performance, an inadequate study has focused on the role of corporate strategy in the association between corporate governance (CG) and sustainability performance (SP). This study examines the direct influence of corporate governance on sustainability performance, as well as through corporate strategy (CSTR) as a mediating variable. A panel data mediation methodology based on a series of panel data regression analyses was conducted using data from 126 listed non-financial firms over the 2012–2021 period. The study finds that corporate governance has a positive and significant contribution to sustainability performance. Furthermore, this study demonstrates that corporate strategy acts as a mediator that influences the link between corporate governance and sustainability performance. The findings of the study shed fresh light on the board members, practitioners, and policymakers for planning and promoting sustainability practices, as well as strategies and firm governance necessary for sustainable development. The paper concludes that companies with effective corporate governance structures stand a better chance of demonstrating better sustainability performance, specifically with strategy decisions targeted at sustainability integration. Our findings support the agency and stakeholder theoretical points of the study and are also consistent with Ludwig and Sassen’s (2022) findings.

Keywords: Corporate Governance, Sustainability Performance, Sub-Saharan Africa, Corporate Strategy, Emerging Economy

Authors’ individual contribution: Conceptualization — P.K. and K.O.A.; Methodology — P.K. and K.O.A.; Writing — Original Draft — P.K. and J.A.A.; Writing — Review & Editing — K.P. and J.A.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M40, M41, M49

Received: 23.06.2023
Accepted: 16.10.2023
Published online: 18.10.2023

How to cite this paper: Kwarteng, P., Appiah, K. O., & Agana, J. A. (2023). Sustainability performance of firms in the emerging economy: The role of corporate governance and corporate strategy. Corporate Governance and Sustainability Review, 7(3), 21–33. https://doi.org/10.22495/cgsrv7i3p2