Driving sustainable performance: ESG strategies, corporate reputation, innovation capability and green finance in manufacturing firms

Abstract

This study investigates the relationship between Environmental, Social, and Governance (ESG) strategies and Sustainable Management Performance (SMP) in Egyptian manufacturing firms. It examines the mediating role of innovation capability and corporate reputation, and the moderating influence of green finance, to assess how ESG adoption enhances competitiveness in a developing economy. A quantitative research design was applied using survey data from 367 respondents across 33 manufacturing firms in Egypt. Structural Equation Modeling (SEM) tested the proposed relationships among ESG strategies, innovation capability, corporate reputation, green finance and SMP. ESG practices significantly enhance corporate reputation and innovation capability, but do not directly affect SMP; instead, sustainable performance is driven by corporate reputation and innovation capability, explaining 39.2% of its variance. The mediation analysis confirms that ESG influences SMP only indirectly through corporate reputation and innovation capability, while Green finance, as a moderator, strengthens the ESG–reputation relationship. For practitioners, integrating ESG into core strategies enhances reputation and innovation, ultimately driving sustainable performance. Policymakers should strengthen green finance mechanisms and technological infrastructure to enable innovation in manufacturing firms. This study is the first to analyze the indirect effects of ESG strategies on SMP through innovation capability and corporate reputation, while considering the moderating role of green finance in Egyptian manufacturing firms. It extends ESG scholarship to developing economies, offering fresh insights into sustainable strategic management.