Strategic Financial Management and Its Impact on Corporate Performance and Sustainable Business Growth

Abstract

Financial management has evolved from a narrow function concerned with bookkeeping, funding and compliance into a strategic discipline that shapes a firm’s direction, competitiveness and long-term value. This article examines strategic financial management (SFM), defined as the integration of financial decision-making with corporate strategy to create sustainable value. It reviews the core components of SFM: investment and capital budgeting, financing and capital structure, working capital management, payout policy, risk management, and financial planning and performance measurement. Drawing on finance and strategy research, it assesses how these decisions affect corporate performance, including profitability, shareholder value, resilience and governance quality. The article then links SFM to sustainable business growth, using the concept of the sustainable growth rate and recent evidence on environmental, social and governance (ESG) performance. Particular attention is given to the Indian context, including the Companies Act 2013, the mandatory corporate social responsibility provision, the adoption of Indian Accounting Standards and the Insolvency and Bankruptcy Code 2016. The article concludes that firms achieve durable growth when financial decisions are aligned with strategy, disciplined by sound governance and extended to account for long-term social and environmental risks.