Do Sustainability and Innovation Drive Competitiveness and Valuation? Firm-Level Evidence from the Eurozone
Birjees Rahat, Alexandra Horobet, Dan Gabriel Dumitrescu, Anca Gabriela Ilie
Keywords:
firm competitiveness, corporate sustainability, innovation intensity, market valuation
Abstract:
This study investigates how corporate sustainability performance and innovation intensity influence firm competitiveness and valuation within the Eurozone. Using a panel dataset of non-financial firms from 2016 to 2023, the research investigates how ESG performance, innovation intensity, as well as their interaction, influence revenue growth, market share, Tobin’s Q, and EV to EBITDA. The results show that sustainability and innovation are positively associated with firm-level outcomes, and their interaction further amplifies these effects. Firms that integrate ESG into their innovation strategies consistently outperform peers in growth, competitiveness, and market valuation. In contrast, firms involved in ESG-related controversies exhibit weaker performance, highlighting the importance of credibility in sustainability practices. These findings suggest that the alignment of ESG and innovation enhances strategic coherence and market confidence. The study contributes to emerging research on the financial materiality of ESG and offers new insights into how firms can leverage sustainability and innovation to achieve long-term advantage.
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 Do Sustainability and Innovation Drive Competitiveness and Valuation? Firm-Level Evidence from the Eurozone [PDF file] [Filesize: 550.88 KB]
 10.7441/joc.2026.02.14
Rahat, B., Horobet, A., Dumitrescu, D. G., & Ilie, A. G. (2026). Do Sustainability and Innovation Drive Competitiveness and Valuation? Firm-Level Evidence from the Eurozone. Journal of Competitiveness 18(2), 361–388. https://doi.org/10.7441/joc.2026.02.14
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