Green Transformation in Portfolio: The Role of Sustainable Practices in Investment Decisions

Abstract

Amidst the green transformations around sustainable drives, organizations are striving to integrate green business strategies (GBSs) to enhance their financial viability. This research argues that green strategies promote organizational efficiency that, in turn, improves financial performance and channel investments. Checking the mediating role of organizational efficiency through process improvement, product improvement, and organizational innovation focuses on financial performance and investment decisions. The study further postulates the moderation of management control system on the links between GBS and organizational efficiency parameters. The data were gathered by using surveys of 552 firms’ managers and investors at the Shenzhen Stock Exchange, China. PLS-SEM was applied to check the psychometric properties and analyze the data. The results confirm that GBS improves organizational efficiency and financial performance, exerting significant mediation effects. The study finds that moderation helps transform the green business strategy into tangible financial goals by amplifying the positive impact of GBSs. The study enriches the understanding of GBSs, organizational efficiency and investment decisions. The study also lauds the integration of GBSs that effectively transform financial performance and investment decisions.