THE IMPACT OF CORPORATE SUSTAINABILITY PRACTICES ON FINANCIAL PERFORMANCE - AN EMPIRICAL STUDY ON LISTED MANUFACTURING COMPANIES OF SRI LANKA

Abstract

The modern world business organizations tend to operationalize the concept of sustainability into their bottom line in order to gain the competitive advantage and meet the increased demands of various stakeholder groups. Following the notions of Stakeholder Theory (ST) and Resource Based View (RBV), this study aims to assess whether Corporate Sustainability Practices (CSP) contribute towards enhancing the Corporate Financial Performance (CFP) in listed manufacturing companies of Sri Lanka over the period of 2012-2017. Further this paper addresses the timely need of research on the holistic concept of Sustainability, which has been replaced with constricted corporate social responsibility neglecting economic and environmental dimensions of the broader concept. The research design of this study deploys content analysis as the qualitative method and statistical analysis (panel data regression model) as the quantitative method. Disaggregated measures of sustainability have been used to assess CSP using the checklist following Taib, Ameer and Haniff (2012), while the CFP is assessed on the dimensions of Return on Assets (ROA). This paper reported that there is significant positive relationship between CSP and CFP in listed manufacturing companies of Sri Lanka.