The Impact of Sociocultural and Sustainability Factors on the Financial Performance of Companies

Studying company performance and its determinants is fundamental to improving the development of internal and external strategies, understanding how they help increase adaptability to market demands, create healthy organizations, and improve stakeholder relations. This study considers over 100 companies in the EU between 2018 and 2023, with the aim of analysing the sociocultural and sustainability factors that can impact financial profitability (ROE) in the current macroeconomic conditions. The conclusions show that entities operating in countries where the economic environment is healthy, where laws are clear and correctly applied, where the government performs its functions in an efficient and transparent manner tend to perform much better due to the fact that they provide considerably more trust to investors, customers, suppliers, and employees. Better performance and more trust provided to stakeholders are also recorded by companies that invest in sustainability, having a higher ESG (environmental, social, and governance) score.