Innovation and sustainability as judged by the market

The aim of this research is to describe the impact of innovative and sustainable investments made by listed companies on their market performance. The research methodology applied to this paper is the qualitative method through the application of the multiple case study analysis. Sources of analysis were company and market data, financial statements and sustainability reports for the financial years 2022, 2023 and 2024 of a sample of Italian listed companies selected for their commitment to innovative and sustainable investments. We investigated the relationship between these investments and their market capitalisation. The results achieved demonstrate a positive relationship between investments and market performance. It emerged that companies which incorporate such investments into their strategies, drawing on their knowledge management expertise, make the market aware of their operational efficiency (as well as creating shared value) and attract investors willing to invest in such companies. In fact, the market views the company’s investment commitment favourably, as it is seen as the foundation for greater operational efficiency. Innovative and sustainable investments lead to higher market prices, thereby contributing to growth in market capitalisation. The study focuses not only on the promotion and execution of investments by listed companies, but also on their ability and willingness to both innovate and operate sustainably, by investing substantial resources towards these ends, and on the market’s response to such actions. This represents a departure from the traditional literature, which focuses primarily on a company’s ability to invest in either innovation or sustainability but has not yet explored the impact that joint investment in both areas may have on market capitalisation. The paper enriches the existing literature through studies and findings that provide a useful reference point for both the academic and practical implications of developments in research on the adoption of innovative and sustainable corporate investments, and the functional link between these and market reactions.