INTEGRATING ESG CRITERIA INTO STRATEGIC MANAGEMENT: IMPLICATIONS FOR INNOVATION, COMPETITIVENESS, AND SUSTAINABLE CORPORATE PERFORMANCE
INTEGRATING ESG CRITERIA INTO STRATEGIC MANAGEMENT: IMPLICATIONS FOR INNOVATION, COMPETITIVENESS, AND SUSTAINABLE CORPORATE PERFORMANCE

Summary/Abstract: Environmental, social, and governance (ESG) criteria have become an increasingly important component of corporate strategy and long-term value creation. Companies are no longer evaluated solely on financial performance, but also on their ability to address environmental challenges, social responsibilities, and governance practices. In this context, integrating ESG criteria into strategic management may enhance innovation capacity and support sustainable corporate performance. The aim of this study is to examine the role of ESG integration within corporate strategy and its relationship with innovation and organizational performance. The research combines a review of the relevant literature with a simplified empirical model based on a survey of 60 managers and professionals from companies in North Macedonia. The study tests three hypotheses examining the relationships between ESG integration, innovation capacity, and sustainable corporate performance. Descriptive statistics, correlation analysis, and regression analysis were applied to examine the proposed relationships. The results indicate that ESG integration has a positive and statistically significant impact on both innovation capacity and sustainable corporate performance. Furthermore, innovation capacity demonstrates a strong positive effect on corporate performance, highlighting its mediating role in translating ESG-oriented strategies into improved organizational outcomes. The findings suggest that ESG integration should be viewed not only as a compliance requirement but also as a strategic mechanism supporting innovation, competitiveness, and sustainable corporate growth.

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