STRATEGIC TRADE-OFFS: BALANCING SHORT-TERM PROFITABILITY AND LONG-TERM SUSTAINABILITY IN CORPORATE STRATEGY

In an increasingly complex global economy, companies are challenged to balance short-term profitability with long-term sustainability. Financial performance alone is no longer a sufficient measure of business success, as environmental and social accountability have become essential elements of corporate strategy. This dissertation examines how medium-sized enterprises can align financial objectives with sustainable practices through governance and stakeholder engagement. The research is based on the Triple Bottom Line (TBL) and Stakeholder Theory frameworks. The TBL expands performance evaluation beyond profit to include social and environmental dimensions—people, planet, and profit. Stakeholder Theory complements this by emphasizing that organizations must create value for all stakeholders, including employees, clients, suppliers, and society. A qualitative case study was conducted on a Portuguese medium-sized business group operating in Portugal, Angola, and Mozambique. Data were collected through semi-structured interviews with four key decision-makers, exploring how sustainability principles are integrated into governance, strategy, and culture. Thematic analysis was used to identify patterns and insights regarding sustainable profitability. Findings reveal that sustainability in medium-sized enterprises often develops organically through leadership values and company culture rather than formal ESG structures. The organization studied demonstrates strong social sustainability, prioritizing employee well-being, inclusivity, and responsible practices. Environmental initiatives are emerging but remain less structured and largely driven by client expectations. The study concludes that sustainable profitability is achievable when companies view financial performance, social responsibility, and environmental impact as interconnected goals. Leadership commitment, stakeholder collaboration, and transparent governance are key to embedding sustainability into business strategy. This research contributes to the understanding of how medium-sized enterprises can pursue long-term resilience and competitiveness while creating shared value for society and the environment.