Benchmarking strategic trade-offs: financial and sustainability performance in the Portuguese metal wholesale sector

Abstract

Purpose This study aims to examine how firms manage competing performance objectives by analysing the trade-offs associated with financial structure, sustainability engagement and export activity. The study explores how strategic decisions intended to improve specific performance dimensions may simultaneously constrain others in resource-intensive firms. Design/methodology/approach The analysis is based on an unbalanced panel of 362 Portuguese firms operating in the wholesale trade of metals and metal ores during 2015–2024. To account for endogeneity, unobserved heterogeneity and performance persistence, the study employs the system generalised method of moments (System GMM) estimator. Findings The results reveal significant performance trade-offs. Firm size positively affects all performance measures, whereas leverage exerts a consistently negative effect. Environmental expenditures increase return on equity but reduce earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, while social expenditures reduce return on assets and return on equity. Export activity improves return on assets but negatively affects return on equity and EBITDA margin. These findings demonstrate that environmental and social sustainability dimensions generate contrasting performance outcomes and that performance improvement depends on balancing financial, sustainability and internationalisation objectives. The results have implications for business competitiveness, environmental sustainability and the strategic allocation of resources to social initiatives. Originality/value Unlike previous studies that examine financial structure, sustainability and internationalisation separately, this study analyses these dimensions simultaneously as competing objectives within a multidimensional performance management framework. The study contributes by revealing an environmental, social and governance asymmetry whereby environmental initiatives are associated with improved shareholder returns, while social expenditures are linked to lower short-term profitability, highlighting the trade-offs involved in sustainability-oriented decision-making.