Sustainability Strategy and Financial Performance in SMEs—On the Role of Sustainability Management Control Systems

Emmi Hasu, Minna Saunila and Juhani Ukko

Corporate Social Responsibility and Environmental Management, 2025, vol. 32, issue 4, 4819-4834

Abstract: This paper investigates the interplay among sustainability strategy, sustainability management control systems (SMCSs) and financial performance among small‐ and medium‐sized enterprises (SMEs). The research focuses on two distinct SMCS aspects: interactive and diagnostic control systems. With data collected from 271 out of 5656 randomly selected Finnish SMEs in 2021, this research aimed to investigate how sustainability strategy affects financial performance and whether SMCSs can moderate the connection between a company's sustainability strategy and financial performance. The ordinary least‐squares analysis of the results shows that economic strategy positively affects financial performance, while environmental strategy negatively affects financial performance. No significant effect was detected between social strategy and financial performance. Furthermore, interactive control systems drive the connection between economic strategy and financial performance, while diagnostic control systems drive the relationship between environmental strategy and financial performance. By being somewhat contradictory to the current research, the findings provide novel insights into how financial performance is affected differently by various aspects of sustainability strategy. It is speculated that contradictions exist because SMEs lack resources, Finland is a developed country and the research focuses on short‐term effects. The findings also suggest that the moderating the influence of SMCS depends on the strategic sustainability aspect and the chosen SMCS method, indicating a need for further research. Similarly, it is speculated that the complexity and novelty of the strategic goal affect the usability of SMCS methods.

Date: 2025
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https://doi.org/10.1002/csr.3218

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:32:y:2025:i:4:p:4819-4834

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