Environmental sustainability mediates the nexus between strategic orientations and firm performance in emerging markets manufacturing firms

Growing environmental challenges and rising stakeholder expectations are propelling companies to integrate sustainability into their main strategic plans for long-term resilience and to gain a competitive advantage. The objective of this study is to determine the effects of multiple strategic orientations (i.e., Sustainability, Market, Digital, Entrepreneurial) on Corporate Environmental Sustainability (CES), and the mediating role of CES in connecting these orientations to Firm Performance (FP) through dynamic capabilities and stakeholder theory. We surveyed 206 large manufacturing firms in Ethiopia and analyzed the data using Partial Least Squares-Structural Equation Modeling. The results show that Sustainability Orientation (SO), Proactive Market Orientation (PMO), Digital Orientation (DO), and Entrepreneurial Orientation (EO) influence CES. Conversely, Responsive Market Orientation (RMO) does not have a statistically significant impact. Moreover, CES has a positive and significant effect on FP. The mediation result shows that CES partially mediates the impacts of PMO, EO, and DO on FP, and fully mediates the effect of SO on FP. However, it does not support RMO as a mediator. This study contributes to the existing literature on sustainability and strategic management by providing empirical evidence on the strategic imperatives of CES in turning entrepreneurial, proactive market, sustainability, and digital strategies into firm performance in emerging economies. From a practical standpoint, managers should integrate environmental sustainability efforts with their strategic orientations to boost performance outcomes. Policymakers should expand digital infrastructure, innovation ecosystem, and support firms’ sustainability efforts to help achieve the UN SDGs 9, 12, and 13.