CORPORATE SOCIAL RESPONSIBILITY IN LINKING GREEN FINANCE, DIGITALIZATION, AND SUSTAINABLE BUSINESS PERFORMANCE OF SMES IN EMERGING ECONOMIES

Abstract

This study investigates the role of Corporate Social Responsibility (CSR) in linking Green Finance, Digitalization, and Sustainable Business Performance (SBP) among Small and Medium Enterprises (SMEs) in emerging economies like Pakistan. It examines in depth the direct and mediating relationships among the selected variables green finance, digitalization, CSR, and SBP, with a clear focus on how the combined effect of these factors can boost the sustainability and distinct competitiveness of SMEs. In order to collect data from 250 SMEs, the research used a structured questionnaire survey from different targeted sectors. The main focus was to test direct and indirect relations among all selected variables; we used structural equation modelling (PLS-SEM) with SmartPLS-4 and the Statistical Package for the Social Sciences (SPSS). The outcomes point out that green finance has a positive influence on CSR, but it does not have a direct, noteworthy impact on sustainable business performance. Digitalization to some extent, has a stronger positive influence on both CSR and SBP, emphasizing its critical role in refining operational efficiency and market competitiveness. CSR was found out to be important factor in improving CSR practices, but did not markedly mediate the relationship between green finance, digitalization, and SBP. These results suggest that while green finance and digitalization are key drivers of sustainability in SMEs, the combination of CSR practices requires further development to translate these practices into measurable financial outcomes. In this study, an impactful contribution has been made to the literature on sustainable business practices in SMEs, giving powerful insights and advice for SME owners, policymakers, and financial institutions to enhance sustainability through better integration of green finance, digital tools, and CSR. Above all, this research work supports the Sustainable Development Goals of the United Nations’ 2030 Agenda for Sustainable Development.