FinTech Adoption as a Driver of Sustainable Performance: Exploring the Mediating Role of Innovation Capability and Digital Transformation, and the Moderating Role of Ethical Leadership

Abstract

The accelerating digital transformation of global business environments has underscored the strategic importance of financial technologies (FinTech) in driving sustainable organizational performance. In emerging markets, characterized by institutional voids and resource constraints, firms increasingly depend on technological innovation to align their operations with broader environmental, social, and governance (ESG) objectives. However, despite the growing integration of FinTech solutions, there remains a limited understanding of how such technologies contribute to sustainability, especially when interacting with internal capabilities and leadership practices. This study fills the gap by investigating the influence of FinTech adoption on sustainable performance, with the mediating role of innovation capability and digital transformation, and the moderating effect of ethical leadership. Guided by the Resource-Based View (RBV) theory, this research employs a quantitative, cross-sectional design using data collected from 329 middle and senior managers working in FinTech-integrated banking institutions across Pakistan. A structured questionnaire was administered, and data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to evaluate the hypothesized relationships. The findings reveal that FinTech adoption significantly enhances sustainable performance both directly and indirectly through innovation capability and digital transformation. Innovation capability emerged as a stronger mediator, suggesting that the ability to reconfigure digital tools into strategic innovations plays a more critical role in achieving sustainability outcomes than digital infrastructure alone. However, the moderating effect of ethical leadership was not statistically significant, indicating that leadership ethics may not significantly alter the FinTech–performance relationship within this specific context.

Keywords: FinTech Adoption, Innovation Capability, Sustainable Performance, Digital Transformation and Ethical Leadership