IDEAS home Printed from https://ideas.repec.org/a/ibn/ijbmjn/v20y2025i6p261.html

Sustainability and Competitive Advantage: The Impacts of ESG Practices on Business Performance

Author

Listed:
  • Sui Yan

Abstract

The integration of environmental, social, and governance (ESG) practices into corporate strategy has become a defining feature of modern business. This article investigates the role of ESG as both a determinant of business performance and a source of sustainable competitive advantage. Drawing on stakeholder theory, legitimacy theory, and the resource-based view, it develops a conceptual framework that links ESG adoption to enhanced financial and non-financial outcomes, ultimately contributing to long-term strategic positioning. Methodologically, the article employs a narrative literature review and conceptual synthesis of peer-reviewed studies published between 2019 and 2024. Findings highlight that ESG practices positively influence firm outcomes through multiple pathways- strengthening brand reputation, driving innovation, improving risk management, and expanding access to capital. However, the analysis also reveals persistent challenges, including greenwashing, the cost-benefit dilemma of ESG investments, and the absence of standardized reporting metrics. Comparative insights across industries such as finance, manufacturing, and technology show that ESG's impact is highly context-dependent, shaped by sector-specific dynamics and institutional environments. The article contributes to theory by positioning ESG within established strategic management perspectives and to practice by offering actionable implications for managers, investors, and policymakers. It concludes that ESG should no longer be considered an optional add-on but rather a strategic imperative central to sustainable business performance. Recommendations include stronger reporting standards, targeted incentives for adoption, and further research into industry- and country-level variations in ESG effectiveness.

Suggested Citation

  • Sui Yan, 2025. "Sustainability and Competitive Advantage: The Impacts of ESG Practices on Business Performance," International Journal of Business and Management, Canadian Center of Science and Education, vol. 20(6), pages 261-261, December.
    • Handle: RePEc:ibn:ijbmjn:v:20:y:2025:i:6:p:261
    as

    Download full text from publisher

    File URL: https://ccsenet.org/journal/index.php/ijbm/article/download/0/0/52543/57225
    Download Restriction: no
    File URL: https://ccsenet.org/journal/index.php/ijbm/article/view/0/52543
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Snyder, Hannah, 2019. "Literature review as a research methodology: An overview and guidelines," Journal of Business Research, Elsevier, vol. 104(C), pages 333-339.
    2. Lee, Michael T. & Raschke, Robyn L., 2023. "Stakeholder legitimacy in firm greening and financial performance: What about greenwashing temptations?☆," Journal of Business Research, Elsevier, vol. 155(PB).
    3. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mandler, Timo & Sezen, Burcu & Chen, Jieke & Özsomer, Ayşegül, 2021. "Performance consequences of marketing standardization/adaptation: A systematic literature review and future research agenda," Journal of Business Research, Elsevier, vol. 125(C), pages 416-435.
    2. Obradović, Tena & Vlačić, Božidar & Dabić, Marina, 2021. "Open innovation in the manufacturing industry: A review and research agenda," Technovation, Elsevier, vol. 102(C).
    3. Huanhuai Zhou & Hongming Xie & Xiaoping Chen, 2024. "Sustainable Development of Platform Enterprises: A Synthesis Framework," Sustainability, MDPI, vol. 16(11), pages 1-20, May.
    4. Malisić, Bojana & Tinaj, Sandra & Popović, Jovana & Lukovac, Lidija & Vlačić, Božidar, 2025. "Internal dynamics and innovation: A cross-disciplinary review and future research agenda," Technology in Society, Elsevier, vol. 81(C).
    5. Scheuer, Luca Joachim & Thaler, Julia, 2023. "How do dynamic capabilities affect performance? A systematic review of mediators," European Management Journal, Elsevier, vol. 41(6), pages 914-931.
    6. Bakeshloo, Khashayar Afshar & Agnihotri, Raj & Mohammadzadeh, Mohammad, 2025. "Metaverse and B2B marketing: untapped research opportunities," Journal of Business Research, Elsevier, vol. 200(C).
    7. Amanda Haarman & Marcus M. Larsen & Rebecca Namatovu, 2022. "Understanding the Firm in the Informal Economy: A Research Agenda," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 3005-3025, December.
    8. Štěpánka Hronová & Miroslav Špaček, 2021. "Sustainable HRM Practices in Corporate Reporting," Economies, MDPI, vol. 9(2), pages 1-34, May.
    9. Ge Ren & Ping Zeng & Xi Zhong, 2024. "Differentiation strategies and firms' environmental, social and governance: The different moderating effects of historical and social performance shortfalls," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 719-740, January.
    10. Meier, Andrea & Eller, Robert & Peters, Mike, 2025. "Creating competitiveness in incumbent small- and medium-sized enterprises: A revised perspective on digital transformation," Journal of Business Research, Elsevier, vol. 186(C).
    11. Anne Heider & Marcel Hülsbeck & Leopold Schlenk-Barnsdorf, 2022. "The role of family firm specific resources in innovation: an integrative literature review and framework," Management Review Quarterly, Springer, vol. 72(2), pages 483-530, June.
    12. Amr S. Abdallah & Hala Amin & Mohammed Abdelghany & Ahmed A. Elamer, 2025. "Antecedents and consequences of intellectual capital: a systematic review, integrated framework, and agenda for future research," Management Review Quarterly, Springer, vol. 75(4), pages 3067-3118, December.
    13. Marina Dabić & Jane Maley & Leo-Paul Dana & Ivan Novak & Massimiliano M. Pellegrini & Andrea Caputo, 2020. "Pathways of SME internationalization: a bibliometric and systematic review," Small Business Economics, Springer, vol. 55(3), pages 705-725, October.
    14. Ron Tidhar & Benjamin L. Hallen & Kathleen M. Eisenhardt, 2025. "Measure Twice, Cut Once: Unit Profitability, Scalability, and the Exceptional Growth of New Firms," Organization Science, INFORMS, vol. 36(1), pages 88-120, January.
    15. Jonathan H. Reed, 2022. "Operational and strategic change during temporary turbulence: evidence from the COVID-19 pandemic," Operations Management Research, Springer, vol. 15(1), pages 589-608, June.
    16. Maryono, Maryono & Killoes, Aditya Marendra & Adhikari, Rajendra & Abdul Aziz, Ammar, 2024. "Agriculture development through multi-stakeholder partnerships in developing countries: A systematic literature review," Agricultural Systems, Elsevier, vol. 213(C).
    17. Witold Nowiński & Wanda Nowara, 2011. "Stopień i uwarunkowania internacjonalizacji polskich małych i średnich przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 29-45.
    18. Fumihiko Isada, 2021. "Changes in the International Network of Japanese Electronics Manufacturers," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 9(1), pages 47-62, May.
    19. Ali Zackery & Joseph Amankwah-Amoah & Zahra Heidari Darani & Shiva Ghasemi, 2022. "COVID-19 Research in Business and Management: A Review and Future Research Agenda," Sustainability, MDPI, vol. 14(16), pages 1-32, August.
    20. Gregorio Rius-Sorolla & Sofía Estelles-Miguel & Carlos Rueda-Armengot, 2020. "Multivariable Supplier Segmentation in Sustainable Supply Chain Management," Sustainability, MDPI, vol. 12(11), pages 1-16, June.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijbmjn:v:20:y:2025:i:6:p:261. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.