Impact of Integrating Sustainability into Strategic Management on Financial and Sustainability Performance—Literature Review
Abstract
1. Introduction
1.1. Research Problem
- Study objectives:
- To provide a conceptual unified framework that organizes the discovered mechanisms and relationships to facilitate future study and managerial practice.
- To define and classify the main strategic dimensions and organizational domains through which sustainability is integrated into strategic management and planning.
- To examine the primary factors, supportive elements, and obstacles identified in the literature that affect successful SSM integration.
1.2. Theoretical Framework of Sustainability-Driven Strategic Management
2. General Overview
2.1. Sustainability Strategic Management Framework
2.2. SSM Integration Balancing Organizational Performance
2.3. Areas and Dimensions for Integrating Sustainability into Strategic Management
2.4. Factors Impacting the Integration of Sustainability into Strategic Management and Planning
2.5. Roles of Digital Technology in SSM Integration
2.6. Previous Studies on the Integration of Sustainability into SM&P
2.6.1. Strategic Aspects and Organizational Domains of Sustainability Integration
2.6.2. Factors Enabling and Constraining Sustainability Integration
2.6.3. Comprehensive Framework for Integrating Sustainability in SM
Limitations and Theoretical Tensions in Existing Sustainability–Strategy Research
3. Research Methodology
3.1. Research Design
3.2. Data Sources and Search Strategy
3.3. Inclusion and Exclusion Criteria
- Peer-reviewed journal articles;
- Published between 2015 and 2025;
- Written in English;
- Explicit focus on integrating sustainability into strategic management.
- Book chapters;
- Conference proceedings and papers;
- Reviews;
- Books;
- Early-access articles (WoS);
- Non-English publications;
- Studies lacking a clear focus on strategic management–sustainability integration.
3.4. Study Selection Process (PRISMA Procedure), Comprising Three Main Steps
3.4.1. Identification
3.4.2. Screening
3.4.3. Eligibility and Inclusion
3.5. Data Extraction and Analytical Procedure
4. Findings and Discussion
4.1. Aspects of Sustainability Integration into Strategic Management
4.2. Supporting and Hindering Factors for SSM Integration
4.3. Model and Framework for SSM Relationship
4.4. Performance Outcomes of Sustainability-Oriented Strategic Management
4.4.1. Financial Performance
4.4.2. Sustainability Performance
4.5. Consistency, Context, and Causality
4.6. Implications for Research and Practice
4.7. Integrated Analysis of Results and Observations Across the Study Objectives
5. Conclusions
6. Recommendations, Managerial Practices, and Future Research
6.1. Recommendations
6.2. Implications for Managerial Practices
6.3. Future Research Directions
- Subsequent studies should investigate the convergence and divergence identified among studies, especially the different effects of leadership, governance, metrics, and stakeholder engagement strategies in various circumstances.
- Increased focus is required on the variations in sustainability-oriented strategic management (SSM) across sectors, geographic contexts, study methodologies, and theoretical perspectives, along with its disparate effects on financial and sustainability performance.
- This study addresses methodological differences and examines the fundamental variables impacting the wide adoption of SSM. A more rigorous empirical inquiry is required to systematically validate and improve the suggested paradigm.
- Future studies should analyze the distinctions between the dynamic capabilities that facilitate digital transformation and those that promote sustainable integration, as well as the strategic alignment of these skills.
- Future studies should examine the micro-foundations of leadership and managerial cognition that convert sustainability visions into executed strategic actions.
- Future studies should investigate the dissemination of sustainability initiatives throughout organizational levels—from corporate strategy to operational implementation—and the governance frameworks that enable this coherence.
- Future studies should assess the role of digital technologies in measuring, monitoring, and institutionalizing sustainability performance within strategic management systems.
- Future studies should examine the impact of industrial, institutional, and organizational contexts (e.g., firm size) on the efficacy of sustainability-oriented strategic management frameworks.
6.3.1. Theoretical and Practical Contributions
6.3.2. Study Limitations
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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| No. | Author(s) | Year | Main Focus of the Study |
|---|---|---|---|
| 1. | Kapoor Bhasin | 2025 | Examines the integration of sustainability into corporate strategy, green innovation, leadership commitment, and sustainable supply chain management to improve financial and environmental outcomes. Emphasizes the importance of senior management in promoting sustainability, enhancing efficiency through green innovation, and aligning supply chains with long-term goals to reduce emissions [1]. |
| 2. | Mehta, A. M. et al. | 2025 | Analyzes the influence of systematic strategic planning (analysis, formulation, execution, monitoring) on the sustainable performance of SMEs. Indicates that strategic planning enhances economic, environmental, and social consequences both directly and through strategic intent [3]. |
| 3. | Monazzam, A., & Nilsson, F. | 2025 | Examines the role of sustainability reporting in the development and execution of strategy via organizational learning. Sustainability reporting detects deficiencies, directs actions, outlines duties, and improves materiality assessment and benchmarking, functioning as an essential instrument for sustainable strategic adaption [29]. |
| 4. | Shkarupeta, E., Babkin, A., & Babenyshev, S. | 2025 | Integrates Sustainable Development Goals and circular economy principles into operational strategies through a three-phase methodology for evaluating circular maturity in industrial ecosystems. Case studies of Novolipetsk Steel (NLMK) and Metalloinvest (Russia, 2016–2020) illustrate tangible advancements [26]. |
| 5. | Oliveira, H. C. et al. | 2025 | Examines integration of SDGs into corporate strategy and operations through management control systems in the energy sector. Finds that commitment to sustainability, stakeholder influence, and responsible culture facilitate integration, though changing legislation and inconsistent social/environmental criteria hinder progress [10]. |
| 6. | Mercado-Jiménez et al. | 2025 | Employs SWOT analysis to assess sustainability prospects and threats in oyster aquaculture. Emphasizes robust internal competencies and external threats while advocating for green technologies, sustainable human resource practices, green finance, traceability, infrastructure enhancements, and workforce development for sustainable operations [31]. |
| 7. | Sartzetaki et al. | 2025 | Examines the integration of sustainability into strategic decision-making through Balanced Scorecard and Fuzzy TOPSIS methodologies, highlighting the significance of multi-criteria approaches for effective sustainability management and enhancement [25]. |
| 8. | Escandon-Barbosa, D., & Salas-Paramo, J. | 2025 | Studies the role of digital technologies in strategic decision-making to improve sustainable performance. Finds that strategy combined with digital adoption and innovative business models enhances global sustainability outcomes [15]. |
| 9. | Rodriguez-Cala, A. et al. | 2025 | Qualitative analysis of CSR integration within health institutions in Catalonia. Identifies strategic planning aligned with the Sustainable Development Goals, leadership, participatory governance, communication, and staff training as essential, while resource limitations, opposition to change, inadequate accountability, and fluctuating priorities hinder sustainability. Promotes inter-institutional cooperation and stakeholder involvement [2]. |
| 10. | Sedovs, E., Volkova, T. et al. | 2025 | Bibliometric analysis of sustainability and strategic management research, highlighting rising areas such as sustainable economic growth, corporate strategies, leadership, digitalization, and Industry 4.0. Emphasizes the intricate, interconnected aspects of sustainability, particularly in the context of global problems such as COVID-19 [38]. |
| 11. | Pedersen et al. | 2025 | The study shows that the intensity and consistency of stakeholder demands significantly drive both business model innovation (BMI) and corporate sustainability (CS), with firms under stronger pressure more likely to undertake transformational changes. Resource availability further strengthens the impact of demand intensity, though it has limited influence on consistency. The findings highlight stakeholders as key drivers of organizational change, supporting Stakeholder Theory, and emphasize that managerial perceptions of these demands play a central role in shaping strategic renewal and sustainability integration while noting limitations related to geographic scope, stakeholder coverage, and the use of survey methodology [16]. |
| 12. | Valcozzena, S.; Riso, V.; Cantele, S. | 2025 | The study shows that sustainability integration begins by extracting existing sustainability initiatives from the strategic plan, which helps raise awareness and supports alignment. It identifies three key integration challenges: trade-offs between business and sustainability goals, difficulties in measuring sustainability KPIs, and organizational and cultural complexity [32]. |
| 13. | Thun, T. W. et al. | 2024 | Compares the impact of integrated versus standalone sustainability strategies on corporate performance. Analysts prefer integrated solutions, while solo sustainability initiatives receive less buy recommendations. Integration does not adversely impact analyst ratings [4]. |
| 14. | Sari, R. et al. | 2024 | Examines the effects of sustainable strategic planning and management on the performance of SMEs in ecological, social, and economic aspects. Emphasizes formal sustainable supply chain management and managerial commitment as essential facilitators of exceptional performance [17]. |
| 15. | Xie, J.; Abbass, K.; Li, D | 2024 | Ref. [18] show that stakeholder pressures, environmental ethics, and environmental awareness positively drive green product and process innovation, which in turn enhances environmental performance. Green innovation acts as a partial mediator between stakeholder pressures and environmental ethics with performance, but not for environmental awareness. Overall, the study highlights the external pressures and internal ethical factors that are key drivers of sustainability outcomes through green innovation. |
| 16. | Gandrita, D. M. et al. | 2023 | Investigates integration of environmental sustainability into strategic planning to improve employee engagement and retention. Shows that environmental factors in strategy enhance workplace safety, support, and retention [30]. |
| 17. | Mohammad, A., & Pan, Y.C. | 2022 | Examines intersections in the studies pertaining to corporate sustainability, strategic management, and decision-making. Strategic dimensions are frequently overlooked, corporate social responsibility is misconstrued, and there is an emphasis on proactive stakeholder engagement and the need for a standardized framework for sustainability adoption [21]. |
| 18. | Slacik, J., Grüb, B., & Greiling, D. | 2022 | Examines sustainability as a strategic framework and its integration through sustainability management control systems in electric utilities. Identifies the institutional logics that affect implementation, with hybrid methodologies harmonizing strategic and operational processes [39]. |
| 19. | Bredebach, C., & Rösner, T. | 2022 | Proposes a seven-step method to integrating UN SDGs into corporate strategy using the Sustainability Balanced Scorecard, encompassing goal definition, sustainability assessment, target translation, integration, TBL linkage, alignment, and performance monitoring [19]. |
| 20. | Manninen, K., & Huiskonen, J. | 2022 | Research investigates factors affecting the execution of integrated corporate sustainability strategies and presents a conceptual framework. It indicates essential factors such as organizational culture and dedication, employee motivation and knowledge dissemination, effective communication and training, market circumstances for sustainable products, and proactive external involvement to inform market direction [5]. |
| 21. | Thaher, Y. A., & Jaaron, A. A. | 2022 | Investigates the impact of Sustainability Strategic Planning and Management (SSPM) on organizational sustainable performance. It concludes that SSPM enhances economic, environmental, and social performance and suggests a five-stage framework—preparation, strategy development, implementation, evaluation, and feedback—to assist manufacturing enterprises in developing nations in incorporating sustainability into their business models [20]. |
| 22. | Fonseca, A. et al. | 2021 | Identifies 19 contextual factors affecting integration of corporate sustainability into strategic management, including commitment, stakeholder engagement, trust, resources, innovation, value co-creation, monitoring, communication, and performance indicators [24]. |
| 23. | Peters, J., & Simaens, A. | 2020 | Investigates drivers and barriers of sustainability integration in European textile and garment firms. Key drivers: consumer awareness, competitive advantage, sustainability value, reputation, top management commitment, innovation. Barriers: regulation, consumer behavior, infrastructure, value chain, data management, trade restrictions [9]. |
| 24. | Silvestre, W., & Fonseca, A. | 2020 | Introduces the Integrative Sustainable Intelligence (ISI) framework to systematically incorporate sustainability into company strategy. The theoretical framework comprises four stages: discovery, value creation, value co-creation, and consolidation, while integrating strategy, governance, operations, and learning. It underscores that sustainable sustainability requires cohesive organizational intelligence rather than fragmented activities [6]. |
| 25. | Rajnoha, R. et al. | 2019 | Found that integrating sustainability into firms’ strategic objectives strongly depends on a clear corporate vision emphasizing sustainable development. Firms with sustainability-oriented visions conduct deeper environmental analyses and are more likely to monitor and report environmental impacts, while firms focused mainly on short-term profitability show lower engagement with environmental assessment [7]. |
| 26. | Kiesnere, A. L., & Baumgartner, R. J. | 2019 | Finds that sustainability integration requires top management support and an open culture. Implementation is top-down, expanding environmental and HR management before embedding in vision/strategy; bottom-up initiatives need middle management action and a change-promoting leader [11]. |
| 27. | Baumgartner, R., & Rauter, R. | 2017 | Suggests a framework for the strategic integration of business sustainability, connecting strategy process, content, and context. It underscores the integration of sustainability into managerial decisions, connecting programs with organizational culture, stakeholders, and regulatory frameworks. The framework posits that sustainability improves competitiveness, fosters innovation, and boosts long-term performance while also yielding environmental and social advantages, thus establishing a basis for future inquiries into sustainability-oriented strategic management [40]. |
| 28. | Witjes, S., Vermeulen, W., & Cramer, J. | 2017 | Examines corporate sustainability integration via continuous improvement, organizational structure, and culture, proposing the LEAP-FROCS framework. Finds that integration methods are context-specific and inform future sustainability initiatives [33]. |
| 29. | Katsikeas et al. | 2016 | Examines the integration of sustainability in product creation, connecting organizational inputs to ecologically sustainable results. Commitment from senior management and environmental policies enhance projects, although incentives exert minimal influence, with results differing based on operational complexity [8]. |
| 30. | Spiegel et al. | 2015 | Analyzes how sustainability strategies are implemented across corporate, business, and operational levels in manufacturing firms. The study finds that effective sustainability integration requires alignment between strategic intent at the corporate level, competitive positioning at the business level, and execution through operational processes. It highlights that fragmentation across these levels weakens sustainability outcomes, whereas coherent, multi-level integration enhances both environmental performance and operational efficiency. The authors emphasize that embedding sustainability into daily operations—through processes, technologies, and performance management—is essential for translating high-level strategic commitments into tangible results [35]. |
| Step | Procedure | Description | Purpose |
|---|---|---|---|
| 1 | Study Selection | Final sample of 30 studies identified after screening (Scopus and Web of Science) | Ensure relevance and quality of included studies |
| 2 | Data Extraction | Extraction of bibliographic details, study characteristics (design, methodology, theoretical framework), SSM integration mechanisms, enabling and constraining factors, and strategic management phases | Provide a structured and consistent dataset for analysis |
| 3 | Coding Framework Development | Development of a coding scheme and extraction template prior to analysis using a hybrid deductive–inductive approach | Ensure systematic and theory-informed coding |
| 4 | Deductive Coding | Initial codes derived from existing SSM literature and theoretical frameworks (RBV, DC, IT, ST) | Ground analysis in established theory |
| 5 | Inductive Coding | Emergent themes identified and incorporated during full-text analysis | Capture new and context-specific insights |
| 6 | Coding Process | All studies coded by a single author using iterative review, cross-checking, and refinement of categories | Ensure internal consistency and reduce bias |
| 7 | Comparative Analysis | Cross-study comparison using constant comparison approach to identify patterns, similarities, and differences | Enable thematic synthesis across studies |
| 8 | Theme Development | Aggregation of codes into higher-order themes (e.g., internal capabilities, external pressures, strategic processes, performance mechanisms) | Derive analytical insights from coded data |
| 9 | Framework Development | Integration of themes into a conceptual framework linking capabilities, processes, and external drivers | Provide a structured theoretical contribution |
| 10 | Reliability Assurance | External audit of coding framework and subset of studies by an independent academic peer; feedback used to refine coding | Enhance credibility and methodological rigor |
| Stage | Study Focus | Key Characteristics |
|---|---|---|
| Early stage | CSR and philanthropy | Sustainability practices focus on reputation or ethical considerations |
| Strategic stage | Strategic integration | Sustainability is embedded into competitive strategy |
| Capability stage | Dynamic capabilities | Firms develop adaptive capabilities for sustainability |
| Digital stage | Technology-enabled sustainability | AI, big data, and digitalization support sustainability strategies |
| No. | Study | SSM Domain Focus | Key Themes Identified | Theoretical Lens | Role in Synthesis |
|---|---|---|---|---|---|
| 1 | Kapoor (2025) [1] | Strategy, innovation | Leadership, green innovation, SSCM | RBV, DC | Core internal drivers |
| 2 | Mehta et al. (2025) [3] | Strategic planning | Planning stages, strategic intent | RBV | Strategy process integration |
| 3 | Thun et al. (2024) [4] | Corporate strategy | Sustainability–performance link | RBV | Competitive advantage |
| 4 | Manninen & Huiskonen (2022) [5] | Implementation | Culture, motivation, knowledge sharing | DC | Internal capability enablers |
| 5 | Silvestre & Fonseca (2020) [6] | System integration | Governance, operations, learning | RBV, DC | Holistic framework |
| 6 | Rajnoha et al. (2019) [7] | Strategy formulation | Vision alignment, goal setting | RBV | Strategic embedding |
| 7 | Peters & Simaens (2020) [9] | External integration | Regulation, market pressure | IT, ST | External drivers |
| 8 | Pedersen et al. (2025) [16] | Business model innovation | Stakeholder pressure, innovation | ST | Innovation driver |
| 9 | Xie et al. (2024) [18] | Green innovation | Ethics, awareness, performance | ST, RBV | Competitive sustainability |
| 10 | Rodriguez-Cala et al. (2025) [2] | Governance, SDGs | Institutional alignment, CSR | IT, ST | Institutional enabler |
| 11 | Fonseca et al. (2021) [24] | Contextual factors | Engagement, monitoring, commitment | DC, ST | Integration determinants |
| 12 | Sartzetaki et al. (2025) [25] | Performance tools | BSC, evaluation systems | RBV | Measurement integration |
| 13 | Shkarupeta et al. (2025) [26] | Circular economy | CE maturity, industrial ecosystems | RBV | Operational sustainability |
| 14 | Monazzam & Nilsson (2025) [29] | Reporting | Double-loop learning | DC | Strategic adaptation |
| 15 | Valcozzena et al. (2025) [32] | Strategy complexity | Trade-offs, integration challenges | RBV | Strategic constraints |
| 16 | Oliveira et al. (2025) [10] | SDG integration | Metrics, alignment challenges | IT | Measurement barriers |
| 17 | Spiegel et al. (2015) [35] | Multi-level strategy | Corporate–business–operational link | DC | Strategy execution |
| 18 | Escandon-Barbosa & Salas-Paramo (2025) [15] | Digital strategy | Data analytics, decision-making | DC | Digital enabler |
| 19 | Mohammad & Pan (2022) [21] | CSR evolution | CSR vs. strategic sustainability | IT | Early-stage integration |
| 20 | Kiesnere & Baumgartner (2019) [11] | Organizational factors | Culture, leadership, alignment | DC | Internal integration |
| 21 | Bredebach & Rösner (2022) [19] | SDG tools | SBSC, measurement systems | RBV | Performance alignment |
| 22 | Gandrita et al. (2023) [30] | Strategic planning | Sustainability–performance link | ST | External influence |
| 23 | Baumgartner & Rauter (2017) [40] | Framework | Strategy process/content/context | RBV | Foundational model |
| 24 | Witjes et al. (2017) [33] | Organizational design | Structure, culture, processes | DC | Organizational integration |
| 25 | Thaher & Jaaron (2022) [20] | Implementation model | 5-stage framework | DC | Process integration |
| 26 | Sedovs et al. (2025) [38] | System evolution | ESG, Industry 4.0, trends | DC | Evolutionary perspective |
| 27 | Mercado-Jiménez et al. (2025) [31] | Strategic tools | SWOT, planning models | RBV | Decision-making support |
| 28 | Slacik et al. (2022) [39] | Institutional logics | Hybrid logics, control systems | IT | Institutional complexity |
| 29 | Sari et al. (2024) [17] | SME strategy | Business models, performance | RBV | SME integration |
| 30 | Katsikeas et al. (2016) [8] | Innovation strategy | Eco-product development | RBV | Sustainability–performance link |
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Ali, A.A. Impact of Integrating Sustainability into Strategic Management on Financial and Sustainability Performance—Literature Review. Sustainability 2026, 18, 4137. https://doi.org/10.3390/su18084137
Ali AA. Impact of Integrating Sustainability into Strategic Management on Financial and Sustainability Performance—Literature Review. Sustainability. 2026; 18(8):4137. https://doi.org/10.3390/su18084137
Chicago/Turabian StyleAli, Albadri Albaloula. 2026. "Impact of Integrating Sustainability into Strategic Management on Financial and Sustainability Performance—Literature Review" Sustainability 18, no. 8: 4137. https://doi.org/10.3390/su18084137
APA StyleAli, A. A. (2026). Impact of Integrating Sustainability into Strategic Management on Financial and Sustainability Performance—Literature Review. Sustainability, 18(8), 4137. https://doi.org/10.3390/su18084137

