Firm strategy and financial performance: What is the role of sustainability? Evidence from the banking system of an emerging market

Abstract

This study investigated the moderating effect of sustainability performance (SP) on the relationship between firm strategy (FS) and financial performance (FP) in the context of the UAE's banking system. The data were obtained through the content analysis by using the annual reports of all listed commercial and Islamic banks of the UAE published from 2009 to 2019. By using panel data regression, the results showed that the FP of the banks is directly enhanced by the bank's strategy. The study also found that SP plays a moderating role in the relationship between FS and FP. However, it is revealed that if the bank's SP is high, FS does not have a statistically significant impact on FP. This finding is a significant contribution to strategy and sustainability literature as it highlights the moderating role played by SP in the relationship between FS and FP.

Keywords: firm strategy, financial performance, sustainability