Stakeholder-Oriented Strategies and Sustainable Profitability in Islamic Banking

A Moderated Mediation Analysis of SDGs, Digitalization, and Market Share

Abstract

Objective: This study examines how stakeholder-oriented strategies, particularly those aligned with the Sustainable Development Goals (SDGs), influence sustainable profitability in Islamic banking, with market share as a mediating variable and digitalization as a moderating factor.
Methodology: A quantitative approach was employed using SmartPLS to analyze secondary panel data from Bank Syariah Indonesia (2019–2024). The model tested both mediation and moderation effects using Partial Least Squares Structural Equation Modeling (PLS-SEM).
Findings: The results confirm that SDGs implementation significantly improves market share and profitability. Market share mediates the relationship between SDGs and profitability, while digitalization positively moderates the effect of SDGs on profitability. The model explains 59.1% of the variance in ROA, indicating strong predictive relevance.
Theoretical and/or Methodological Contributions: The study integrates stakeholder theory into an Islamic banking context with a moderated mediation framework, offering new insights into how digitalization strengthens the financial impact of sustainability initiatives.
Research/Practical Implications: The findings emphasize the strategic value of combining SDG alignment and digital innovation to improve market competitiveness and profitability in Islamic banks. Policymakers and practitioners can use this model to design stakeholder-driven, technology-enabled sustainability strategies.