Do fintech adoption and financial literacy improve corporate sustainability performance? The mediating role of access to finance

Abstract

Corporate sustainability performance (CSP) has recently garnered considerable traction worldwide. Adopting industry 4.0 technologies such as financial technology (Fintech) and leveraging critical organizational resources are of great importance to the sustainability and performance of firms. This study draws upon the ecological modernization theory (EMT) and resource-based view (RBV) to assess the effects of a firm's Fintech Adoption (FA) and Financial Literacy (FL) on different dimensions of its sustainability performance. We also examine the mediating role of Access to Finance (AF) in the associations among these understudied variables. Empirical data was collected from 262 firms in the Bangladeshi apparel industry, and the CB-SEM approach was employed to assess the proposed hypotheses. The findings revealed that FA and FL are significant drivers of firms' sustainability performance. Additionally, access to finance was found to have a robust mediating impact on both the fintech adoption-sustainability performance relationship and the financial literacy-sustainability performance relationship. Moreover, the findings indicated that access to finance positively spurs a firm's sustainability performance. These results are robust to several sensitivity checks. Our findings extend the EMT and RBV theories' scope by establishing FA, FL, and AF as valuable resources for firms to drive their sustainability performance. Given the dearth of primary-data-based research, our empirical study addresses the gaps in the fintech, FL, and sustainability literature and yields crucial implications for theory and practice. Our research provides managers of RMG enterprises and policymakers with a constructive model for implementing fintech and managers' FL to enhance firms' access to credit and sustainability performance.