PERTANIKA JOURNAL OF SOCIAL SCIENCES AND HUMANITIES

This research examines how corporate social responsibility (CSR) influences sustainable financial performance (SFP) through frugal innovation and ambidextrous innovation as mediators. In this research, primary data was gathered from 318 CEOs, CFOs, and finance managers of Palestinian listed companies. The results were analysed using Smart-PLS software. It was found that CSR activities had a significant positive effect on the SFP of Palestinian listed companies. Moreover, innovation ambidexterity mediates the relationship between CSR and SFP, whereas frugal innovation does not. This study reveals that companies aligning their CSR activities with society's expectations will see an increase in SFP through the lens of legitimacy theory. In addition, companies adopting an ambidextrous approach to innovativeness can attract investors and increase their SFPs.