Businesses’ alignment with the United Nations’ Sustainable Development Goals (SDGs) is enthusiastically highlighted in practitioner and academic literature. However, based on the existing evidence, it is still debatable whether the adoption of SDGs correlates with firm performance, especially in developing countries. Using Association of Southeast Asian Nations (ASEAN) manufacturing firms as a case study, we investigate the effects of businesses in developing countries aligning themselves with the SDGs might affect productivity and efficiency.
Using 3471 firm-level data from the World Bank’s Enterprise Survey, our results reveal that aligning business strategies with the United Nations’ SDGs helps promote productivity and efficiency. Paying higher wages (SDG 8) and promoting skills development (SDG4) can significantly boost productivity and efficiency. Investment in market innovation (SDG9), fostering foreign direct investment (SDGs 5–9), and adopting ISO certifications (SDGs 1–9 and 12–15) help firms increase their productivity and efficiency as well. Although a higher proportion of female workers correlate with reduced productivity and efficiency, supporting female workers with higher skills development (SDGs 4 and 5) and female CEOs (SDG 5) can increase productivity and efficiency. Therefore, policymakers in developing countries should provide supports and incentives for businesses to align their business strategies with the SDGs.