Purpose This study aims to investigate how a firm’s internal control effectiveness (ICE) moderates the relationship between its green R&D (GRD) intensity and its sustainable growth rate (SGR) within the specific economic and institutional context of firms operating in Egypt. Design/methodology/approach The study uses fixed effects panel regression based on 624 firm-year observations collected from Egyptian exchange-listed companies, spanning the period from 2018 to 2023. Findings The results reveal a significant positive correlation between GRD intensity and SGR. Crucially, the study finds that effective IC significantly strengthens this positive impact, indicating that the positive effect of GRD on SGR is more pronounced for firms with robust internal controls. Practical implications The findings offer practical guidance for corporate managers on optimizing green investments, highlighting the quantitative influence of ICE on the lagged returns of GRD. For investors, the study clarifies how effective internal controls amplify GRD’s long-term value creation, aiding informed decisions in emerging markets. Social implications The study demonstrates that robust corporate governance and internal controls are essential for policymakers to foster and enhance the positive contribution of green investments towards national sustainable development, supporting goals like Egypt’s Vision 2030. Originality/value This study contributes novel empirical evidence from a developing economy (Egypt), addressing a significant research gap concerning the moderating role of ICE in the GRD–SGR relationship. Theoretically, it enriches existing understanding by explicitly integrating IC into the GRD–SGR nexus, drawing upon resource-based view and dynamic capabilities theories.
Abouelela et al. (Fri,) studied this question.