IMPACT OF CORPORATE GOVERNANCE AND PROFITABILITY ON SUSTAINABLE COMPETITIVE ADVANTAGE AND ITS IMPACT ON FINANCIAL SUSTAINABILITY AND INVESTMENT EFFICIENCY

Abstract

Organizations in emerging markets increasingly face the dual challenge of maintaining financial resilience and aligning with sustainable governance practices amid institutional instability. While corporate governance and profitability have been individually linked to firm performance, their combined effect through sustainable competitive advantage remains underexplored, particularly in resource-constrained environments like Pakistan. The primary aim of this study is to investigate how corporate governance and profitability influence financial sustainability and investment efficiency through the mediating role of sustainable competitive advantage, using the Resource-Based View as the guiding theoretical framework. A quantitative, cross-sectional survey design was adopted. Data were collected from senior managers and board members of publicly listed manufacturing firms in Pakistan via structured questionnaires. Structural Equation Modeling (SEM) using SmartPLS 4.0 was applied to test the hypothesized relationships among the constructs. The results confirm that both corporate governance and profitability significantly contribute to sustainable competitive advantage. Sustainable competitive advantage strongly influences financial sustainability and moderately enhances investment efficiency. These findings highlight the strategic role of internal capabilities in achieving sustainable performance outcomes, particularly in emerging markets.

Keywords: Corporate Governance, Profitability, Financial Sustainability, Investment Efficiency, Sustainable Competitive Advantage