Exploring the Impact of Firm Size on the Relationship between Sustainability and Performance

Mungai Saraphine, William Sang and Charity Maina
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Mungai Saraphine: Business and Leadership, St. Paul's University, Kiambu, Kiambu County, Kenya
William Sang: Business and Leadership, St. Paul's University, Kiambu, Kiambu County, Kenya
Charity Maina: Business and Leadership, St. Paul's University, Kiambu, Kiambu County, Kenya

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 15, 1251-1261

Abstract: This study examined how firm size influences the relationship between corporate sustainability and firm performance in Kenya’s commercial banking sector. Although sustainability is increasingly recognized as a strategic driver of long-term value creation, performance outcomes remain inconsistent across firms of different sizes. The study explored sustainability as a predictor of financial and non-financial performance, with firm size assessed as a moderating factor shaping this relationship. Grounded in Stakeholder Theory, Agency Theory, and Resource-Based View, the research employed a positivist philosophy and explanatory design. Data were collected from all 39 licensed commercial banks through structured questionnaires and secondary financial reports. Analysis using correlation and moderated regression revealed that sustainability practices significantly enhanced firm performance, but the magnitude of the effect varied by firm size. Larger banks benefited from economies of scale and reputational advantages that amplified the sustainability–performance link, while smaller banks recorded sharper but less sustainable gains due to limited resources. The study concludes that firm size is a decisive factor in determining the extent to which sustainability contributes to performance and recommends that banks adopt size-sensitive strategies that align ESG investments with their structural and resource capacities.

Date: 2025
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