Sustainability practices and firm performance: The moderating role of firm-, industry-, and country-level factors

The purpose of this study is to examine the effect of sustainability practices on firm performance and the moderating role of firm, industry, and country-level factors on that association. The samples of our study are listed firms in ASEAN 5 (Indonesia, Singapore, Malaysia, Thailand, and the Philippines), with total observations are 1069 from the years 2004–2019. We use regression analysis to test our hypotheses. We find that sustainability performance has a significant positive association with firm performance, which supports our prediction. By engaging in socially responsible activities, companies can gain trust and loyalty from customers and other stakeholders, maintain their competitive advantage, and thus higher financial performance. However, there are no significant differences in the financial performance between firms that issue stand-alone sustainability reports and those that do not. We cannot find any significant moderating role of the firm, industry-, and country-level factors on the association between sustainability practices and firm performance. We have not found any extant studies that have examined firm-, industry-, and country-level factors simultaneously on the association between sustainability practices and firm performance. Our study also contributes to a better understanding of the impact of sustainability practices on firm performance in ASEAN, where sustainability practices are expected to be in greater demand than in mature markets due to the higher social and environmental concerns in such regions.