Unraveling environmental performance determinants: a dual analysis using FsQCA and PLS-SEM

Abstract This study aims to investigate the key financial and governance-related determinants of environmental performance among firms in an emerging market context. Given the increasing global emphasis on sustainability, understanding the drivers of corporate environmental engagement is both timely and necessary. Despite extensive research in developed countries, there remains a gap in identifying how firm-specific attributes contribute to environmental outcomes in less regulated environments. To address this, the study adopts a dual methodological approach, combining Partial Least Squares Structural Equation Modeling (PLS-SEM) and Fuzzy Set Qualitative Comparative Analysis (fsQCA). PLS-SEM identifies the net effects of variables such as firm size, profitability, intellectual capital, and board structure, while fsQCA reveals multiple configurations of conditions that lead to high environmental performance. The findings underscore the role of both financial strength and governance mechanisms in promoting sustainable practices. This study contributes to the literature by integrating linear and configurational methods and by offering empirical evidence from a developing economy.