Purpose-driven firms and their sustainability outcomes: empirical insights from India

Abstract

This study aims to evaluate the firm-level determinants of corporate sustainability performance (CSP) among Indian listed firms and examine whether these determinants vary across sectoral and ownership contexts in the institutional environment shaped by mandatory CSR obligations, disclosure requirements and promoter-dominant governance. This study uses a panel data set of 244 Indian listed firms over 2014–2024, with persistent inclusion in the Nifty 100 ESG Index as the measure of CSP. A random-effects panel logit model forms the primary estimation approach, supported by probit estimation, random forest classification and the instrumental variable control function for robustness. Heterogeneity is examined across ESG-sensitive and non-ESG-sensitive sectors and across family-owned and non-family-owned firms. Firm size and growth opportunities positively influence sustainability performance, with firm size emerging as the dominant predictor. Leverage, systematic risk and firm age show negative effects. Notably, younger firms demonstrate stronger alignment with contemporary ESG norms than older counterparts. Heterogeneity analysis confirms that CSP drivers differ across sectors and ownership forms. The findings inform regulators, investors and managers about the institutional and firm-level drivers of sustainability adoption in India. This study treats India as an institutionally distinct setting characterised by mandatory CSR spending, BRSR-based disclosure obligations and concentrated promoter ownership. It contributes novel evidence on the negative age−CSP relationship, ownership-based asymmetry and sector-specific variation in CSP drivers.