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Creation of sustainable growth with explainable artificial intelligence: An

empirical insight from consumer packaged goods firms

Article  in  Journal of Cleaner Production · March 2023

DOI: 10.1016/j.jclepro.2023.136605

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 Creation of sustainable growth with explainable artificial intelligence: An
empirical insight from consumer packaged goods firms

Rajat Kumar Beheraa,*, Pradip Kumar Balab, Nripendra P. Ranac

Rajat Kumar Behera

a
School of Computer Engineering
Kalinga Institute of Industrial Technology (KIIT) Deemed to be University
KIIT Road, Patia, Bhubaneswar, Odisha 751024, India
rajat_behera@yahoo.com

Pradip Kumar Bala

b
Indian Institute of Management Ranchi,
Area of Information Systems & Business Analytics,
New Campus, Pundag-Nayasarai Road,
Ranchi, Jharkhand 835303, India
pkbala@iimranchi.ac.in

Nripendra P. Rana
c
College of Business and Economics
Qatar University, Doha, PO Box 2713, Qatar
nrananp@gmail.com

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© 2023 Elsevier B.V. All rights reserved.

1
 Creation of sustainable growth with explainable artificial intelligence:
An empirical insight from consumer packaged goods retailers
Abstract
Consumer packaged goods retailers can pivot quickly to find new areas of sustainable growth
and enable their businesses to compete effectively. Traditionally, they are losing ground to
more agile and technologically focused competitors who quickly adapt their operations to
shifting market conditions. As a result, such retailers must alter their core technologies.
Explainable artificial intelligence is a set of procedures and strategies that allow machine
learning algorithms and artificial intelligence models‘ results and output to understand and
trust. In the era of sustainable digitalisation, there is lack of research on the creation of
sustainable growth with explainable artificial intelligence. Therefore, this study is undertaken
to uncover how consumer packaged goods retailers can create sustainable growth with
explainable artificial intelligence by proposing a unique conceptual model. The source data
were collected from 310 individuals from consumer packaged goods retailers and the
analysis was performed with quantitative research methodology. The findings suggest that
explainable artificial intelligence has the potential to be a formidable weapon in the fight for
sustainable growth. With the employment of automated machines, the best decisions for
sustainable competitive advantage can be made. In addition, explainable artificial
intelligence-powered automated wealth management services and algorithmic trading help to
make better financial decisions. The theoretical implications argue the explainability of
artificial intelligence systems to offer insights for making impactful decisions. The
managerial implications highlight the benefits of the adoption of explainable artificial
intelligence for sustainable growth, such as increase in trust, complying with legal
regulations and providing data-driven actionable analytical insights. Sustainable growth set
more responsibility towards customers for profitable future.
Graphical abstract

Keywords: Explainable artificial intelligence, sustainable growth, sustainable competitive

advantage, information systems business value, competitive strategy
1. Introduction
Artificial Intelligence (AI) is a fundamental driver of the fourth industrial revolution that
businesses are strategically incorporating as critical services to address a wide range of
management challenge (Yu et al., 2022). Big data processing and enhanced machine learning
(ML) algorithms are driving the surge in AI technologies (Ahmad et al., 2021). AI uses models

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that learn patterns from massive amounts of data and these models are known for their
tremendous predictive power, but it has been dubbed ‗black box‘ algorithms since its internal
processes are incomprehensible to humans (Das and Rad, 2020). The cause for a decision is
often as significant as the decision itself in the critical decision-making domain wherein end
users frequently want to know how predictions are made (Alicioglu and Sun, 2022). As a result,
explainable artificial intelligence (XAI) has seen a surge in interest and development (Ward et
al., 2021). Popular XAI methods like ‗Local Interpretable Model-Agnostic Explanations‘
(Ribeiro et al., 2016) and ‗Shapely Additive Explanations‘ (Lundberg and Lee, 2017) have
shown to be effective in deciphering black box algorithm models (Man and Chan, 2021). XAI
strives to develop ML techniques that allow humans to understand, reasonably clarify and trust
AI methods and implementations (Hu et al., 2021).
Consumer packaged goods (CPG) are products with a short useful life and are often designed
for one or a few uses before being disposed of (Bocken et al., 2022). Food, beverages, personal
care, household, and pet supplies are all products of CPG (Muranko et al., 2021). People are
increasingly requesting these products in daily life (Tan et al., 2022), and the desire for these
products has been stoked by population growth (Chia et al., 2022). Furthermore, these products
satisfy customer needs in a convenient and transitory manner before the remaining material (e.g.,
packaging) enters a linear resource flow at the end of their useful life (van der Laan and
Aurisicchio, 2019). Multinational firms providing packaged goods with a brand portfolio in great
volumes and at low prices, mainly in major supermarket chains, make up the CPG industry
(Bocken et al., 2022). CPG have invested in advantageous manufacturing equipment and reduced
their profit margins to keep up with their competition (Srivastava, 2004). Therefore, CPG
retailers are setting lofty sustainability growth goals for them and in order to achieve that,
changes must be made across the entire value chain with a defined road map (Whelan and
Kronthal-Sacco, 2019). In the context of this study, sustainable growth (SG) is a CPG retailer‘s
realistically attainable growth that it can sustain without encountering difficulties. It is feasible to
couple sustainability with technologies (Munir et al., 2023) and achieving SG with XAI cannot
be an exception for CPG retailers.
The literature on SG has highlighted that policies supporting SG should be devised (Qalati et
al., 2023). Many businesses are turning to SG for differentiating themselves, boosting their brand
image and expanding into new markets (Allal-Chérif et al., 2022). Growth, sustainability, and

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innovation are three manifestations of an enterprise‘s capacity for SG (Liu et al., 2022). SG is the
outcome of a growing understanding of the value generating potential of sustainable markets, as
well as a significant shift in corporate strategies toward greater social and environmental goals
(Chen et al., 2021b). The difficulty of establishing SG is one that all developed nations must
overcome, so it is essential to understand the various strategies for doing so as well as their main
advantages (Marques et al., 2019). Strategic quality orientation has a direct impact on SG, as
well as an indirect impact through its impact on innovation capabilities (Khan and Naeem, 2018).
Scientific, technological, economic, social, and cultural growths are included in the notion of SG
(Cancino et al., 2018).
In continuation, by successfully managing the available resources, SG can be guaranteed
(Ahmad et al., 2023). The longer the economy has been growing sustainably, the more likely that
SG will be unable to maintain it in the future (Duan et al., 2022). Taking into account of the
above reasoning, literature gaps are as follows i.e., none of the studies has (1) proposed a XAI-
based unique conceptual model; (2) empirically quantify the relationship of XAI with
information system business value (ISBV); (3) discussed the literature gaps on ISBV and
sustainable competitive advantage (SCA) in CPG retail context; (4) empirically quantify the
relationship of ISBV with SCA; (5) empirically quantify the relationship of SCA with SG; (6)
considered competitive strategy (CS) as the moderator between SCA and SG. ISBV refers to the
organisational performance effects in terms of financial performance and strategic performance
(Reis et al., 2020). In the context of this study, SCA is the capability powered by XAI that
enables a CPG retailer to better meet the demands of its customers than its competitors. CS refers
to how a CPG retailer intends to gain and sustain a competitive advantage over its competitors.
CPG retailers can benefit significantly from AI, which increases productivity and introduces
new operating procedures. But, with systems that are in charge of making decisions and
performing automated tasks, explainability is absolutely essential. Powerful AI/ML models are
notoriously difficult to understand, which is dubbed as the ‗black box problem‘. A black box
problem is a situation where the end user is not aware of how AI generates insights or how ML
models draw conclusions from the data. Therefore, understanding of a model‘s behaviour is very
important and XAI is a must for creating AI/ML-powered systems. SG is a business strategy that
aims to expand customer base by creating marketplaces that support and sustain social justice,
economic equality and environmental integrity (Holliday, 2001). Therefore, CPG retailers can

4
increasingly focus their strategy and resources on SG and to appeal to the desires of a growing
number of customers, they can reassess the sustainability credentials of their products, services,
and brands. Hence, this study proposed a XAI-based conceptual model to eliminate AI‘s
explainability problem and to investigate the drivers for the increased attention to sustainability
for CPG retailers.
Following the gaps, rationale behind understanding AI//ML‘s model behaviour and increased
attention to sustainability, the literature has emphasised the importance of future study of SG i.e.,
one of the aspects in which SG‘s complicated analytical methodologies need to be improved is
the creation of technological indicator systems (Steblyanskaya et al., 2021). In future studies on
SG, it is recommended to include related intervening variables and their paths (Khan and Naeem,
2018). It is worthwhile to investigate various approaches to determine how to promote SG (Wu
et al., 2020). To create SG, researchers need to focus diligently (Pan et al., 2022). Understanding
the SG mechanism, its precise measurements, and impact analysis is crucial (Kumar et al., 2021).
Conducting surveys to obtain customer profiles would be costly, unworkable, time-consuming,
and may receive limited customer participation, so a cost-effective approach to gain insights into
SG need attention (Zhang et al., 2018). To expand on the knowledge about SG, further research
is required (Chuah et al., 2017). A prospective technique for evaluating the sustainability is also
warranted (Pan et al., 2022). Following future research, the literature highlights the challenges
i.e., many works to address the issue of SG (Popkova et al., 2022). Singla et al. (2019)
recommend looking into the effectiveness of technological push techniques for achieving SG. To
provide precise quantitative and comprehensive monitoring around the world, Bebbington and
Unerman (2020) propose integrating SG into accounting practice. For many countries, achieving
SG remains a major challenge (Bekhet and Latif, 2018). The gaps, need for future research and
challenges justify the motivation of this study.
The study is undertaken to highlight why CPG retailers consider XAI for the creation of SG.
To accomplish this, the goal of this research is to seek answers to the following research
questions (RQs), backing with literature discussion for a CPG retailer:
RQ1: A recurrent problem in information systems (IS) research is determining how the use of
information technology (IT) creates business value (Muchenje and Seppänen, 2023). Technology
has been demonstrated to strongly influence ISBV (Oesterreich et al., 2022), and XAI as the
technology cannot be an exception. The above discussion leads to the formulation on how does
ISBV (i.e., financial performance and strategic performance) be influenced by XAI? In a broader

5
sense, financial performance refers to how well a firm has or achieves its financial goals and
strategic performance refers to how well a firm has or achieves its strategic objectives.
RQ2: SCA depends on absorptive capacity (Algarni et al., 2023). To achieve SCA, new
knowledge creation is essential (Zhang et al., 2023). The above discussion leads to the
formulation on how does SCA (i.e., market share, productive efficiency, quality output and
customer retention) be influenced by XAI driven financial performance and strategic
performance? Market share is the ratio of a firm‘s sales to the total sales of all firms in the same
industry (Ghosh, 2004). Productive efficiency is a firm‘s ability to create a well-defined output at
a low cost (Kopp, 1981). Quality output is the sum of the characteristics or attributes of a product
that fulfil the customer‘s needs and taste during consumption or utilisation (Huemann, 2004).
Customer retention is a customer‘s long-term commitment to a firm and its offerings, as
evidenced by repeat purchases and a proclivity to promote positive word of mouth among their
social circle (Jeng et al., 2012).
RQ3: SG is of immense importance to both business and academia (Lopez et al., 2022). The
firm‘s potential to influence its SG can be improved through improved financial, environmental,
and operational capabilities (Chatterjee et al., 2023). The above discussion leads to the
formulation on how does SG is influenced by XAI-driven SCA?
RQ4: Offering greater service or charging higher prices are the two choices of CS (Liu et al.,
2022). When integrating CS for greater performance, IT is crucial (Yin et al., 2020). The above
discussion leads to the formulation on how does CS moderate the relationship between XAI-
driven SCA and SG?
To address the RQs, the study aims to empirically measure and validate SG owing to XAI for
CPG retailers. To achieve the above aim, the goal of the study is to formulate the novel
objectives: (1) to propose a unique conceptual model; (2) to provide theoretical background on
XAI, ISBV, SCA, CS; (3) to empirically validate the structural alignment of independent
variable (i.e., XAI) with the dependent variable (i.e., SG) with CS as a moderator variable.
Existing conceptual models offer valuable theoretical underpinning but limited advancements in
SG; for example, they lack consideration of XAI, ISBV dimension and SCA dimension in the
CPG retail context. This study intends to seek answers to RQs to close the research gap and
contributes to operational, economical/financial, and regulatory sustainability in the era of
sustainable digitalisation. The sustainable digitalisation specifies how IT can be used to change
the operational procedures of today‘s businesses, by including social, organisational, and
individual settings (Nyagadza, 2022). The significance of sustainable digitalisation is to (1)
provide a sustainable business environment where digital data is central to sustainability (Yuan
et al., 2021), and (2) lead sustainable transformation (Castro et al., 2021), which can be a growth
driver for CPG retailers. A unique conceptual model enhances the body of knowledge and offers
actionable insights to practitioners (Azeem et al., 2021).

6
 The structure of the paper is as follows: Section 2 articulates the theoretical background and
conceptual model followed by hypothesis development (i.e., Section 3). This is followed by
Section 4, which covers the research methodology. The results are summarised in Section 5 and
discussion is presented in Section 6. Finally, Section 7 concludes the study.
2. Theoretical framework
The issue of SG is considered as a problem of decision-making (Schwab et al., 2017) and as a
result, a theoretical framework is needed. Owing to the lack of systematic studies on the creation
of SG with XAI, a conceptual model has been developed that aims to focus on the empirical
insight of CPG retailers. Therefore, this section provides theoretical background and presents the
conceptual model.
2.1. Theoretical background
The theoretical background discusses XAI, ISBV, SCA, SG and CS in the context of CPG
retailers.
2.1.1. Explainable Artificial Intelligence (XAI)
A set of ML algorithms that enable human users to understand, appropriately trust and
effectively manage the emerging generation of artificially intelligent partners is termed as XAI
(Alicioglu and Sun, 2022). With developments in processing power and technologies, ML
techniques have achieved outstanding results in several fields (Chatzimparmpas et al., 2020)
such as in CPG. As a sub-branch of ML, neural networks (NN) have emerged as a potent tool for
detecting complex patterns in high-dimensional datasets and offers high prediction accuracy in a
variety of industries (Azodi et al., 2020) and a CPG retailer is not an exception. Because the
inner workings and decision-making mechanisms of NNs are not understood by humans, they are
classified as black-box models, which highlight one of the most significant concerns with black-
box models, i.e., transparency and explainability (Dağlarli, 2020). End users frequently want to
know how a classifier makes predictions, especially in domains such as CPG retailing, where
decisions might have a significant impact and explaining how ML models make predictions and
describing their functioning mechanisms would increase the ML model‘s transparency (Alicioglu
and Sun, 2022). Interpretable ML algorithms have been rapidly developed to understand the
underlying working mechanics of black-box models to meet this critical need (Liu et al., 2016)
and XAI is one of the most important initiatives in the development of a re-emerging discipline
(Gunning and Aha, 2019).

7
 The adoption of XAI comes with a slew of advantages and literature thoroughly highlights it
i.e., to avoid limiting the effectiveness of today‘s AI systems, XAI proposes developing a set of
ML techniques that produce more understandable models while maintaining high learning
performance (e.g., prediction accuracy) and enable humans to understand, appropriately trust,
and effectively manage the next generation of artificially intelligent partners (Arrieta et al., 2020;
Gunning and Aha, 2019). XAI analyses the psychology of explanation and draws on insights
from the social sciences (Miller, 2019) and uses a variety of ways to reveal the underlying
functioning of black-box models as well as the rationale behind its decisions (Alicioglu and Sun,
2022). XAI attempts to make state-of-the-art opaque models more transparent, and it defends AI-
based results that are backed up by a reasonable explanation, i.e., an explanation aimed at non-
technical people (Díaz-Rodríguez and Pisoni, 2020). XAI is a branch of AI that advocates a set
of tools, methodologies, and algorithms for producing high-quality interpretable, intuitive and
human-understandable explanations of AI judgement (Das and Rad, 2020). More than a formal
technological idea, XAI tends to refer to a movement, initiatives and efforts made in response to
AI transparency and trust concerns (Adadi and Berrada, 2018).
Historically, human-machine interaction is a key issue (Kun, 2018), and hence, CPG retailers
can be reluctant to implement new technology like XAI. To eliminate it, it is important to
understand how to explain AI/ML models in a way that the audience in CPG can understand.

Figure 1: Explainability of AI/ML models sought by different audience profiles of CPG retailers (Adapted
from Arrieta et al., 2020)
Figure 1 represents the explainability in AI models for different audience profiles of a CPG
retailer by answering who, why and how. The audience profile is adapted from (Arrieta et al.,
2020). It can be inferred from Figure 1 that, for a CPG retailer, XAI offers benefits for the

8
different profiles, such as managers and executive board members, industry experts/users of the
AI model, product owners and users affected by model decisions. The explainability of ML
models may vary depending on the consumer of such models. Some explanations are simple,
while others are complex, requiring training or knowledge to fully comprehend.

2.1.2. IS Business Value (ISBV)

One of the key research topics for researchers has been and will continue to be the business value
in IS (Schryen, 2013) and the literature on IS effectiveness has a foundation in research on IS
business value (Cronk and Fitzgerald, 1999). Finding new revenue streams, restructuring current
business models and reinventing existing products and services are the instances of achieving
competitive advantage using IT (Reis et al., 2020), which creates ISBV. ISBV can also relate to
an increase in the efficiency and quality of a firm‘s internal processes (Schreck et al., 2018) and
a CPG retailer is not an exception. ISBV is a multidimensional variable (Ghobakhloo et al.,
2011) and refers to the organisational performance effects in terms of financial performance and
strategic performance discipline (Reis et al., 2020). Each of the disciplines of ISBV is further
elaborated.
Financial Performance: It relates to profitability ratios compared to a sector or industry
standard (Côrte-Real et al., 2019). The study advocates that for a CPG retailer, financial
performance is the process of calculating the monetary value of the firm‘s policies and
operations which frequently evaluates the firm‘s production and productivity performance (i.e.,
total business performance), profitability, liquidity, working capital, fixed asset performance,
fund flow performance and social performance. The financial performance of a CPG retailer has
an impact on the interests of several linked groups i.e., trade creditors are interested in the firm‘s
liquidity (Osinubi, 2020); bondholders are interested in the firm‘s ability to generate cash flow
(Omori and Kitamura, 2020); investors are interested about current and expected future earnings,
and their stability (Feng and Hu, 2014); and management interested in internal control, a better
financial situation and improved performance (Davila et al., 2018). In addition, financial
performance of a firm is influenced by liquidity, leverage and profitability measures (Vanitha
and Selvam, 2010) and a CPG retailer is not an exception.
Strategic Performance: The successful achievement of an organisation‘s strategic objectives is
referred to as strategic performance (Zou and Cavusgil, 2002). It assists organisations in defining
and achieving strategic objectives, aligning behaviours and attitudes, and as a result, improves

9
organisational performance (Micheli and Manzoni, 2010). Multiple tasks must often be
completed concurrently, successively or reciprocally for strategic performance to be achieved
(Kim et al., 2008). Strategic performance measures an organisation‘s competitiveness and
includes the most powerful position among competitors in gaining a footing in the industry,
raising the firm‘s awareness and responding to competitive challenges posed by competitors
(Chung, 2011), and a CPG retailer is not an exception. Strategic performance directs corporate
competitive positioning and includes facts about the firm‘s overall performance, i.e.,
performance in comparison to competitors and performance in comparison to other firms in the
same industry (Madison et al., 2014). The study advocates that for a CPG retailer, strategic
performance helps in implementing their strategy across the board to ensure that all objectives
are met, wherein firm leaders better assure that their employees endorse and drive business
success by establishing frequent, concise, realistic, and suitable standards and expectations.
2.1.3. Sustainable Competitive Advantage (SCA)
SCA refers to an organisation‘s business plans or strategies for increasing market share,
productivity efficiency, quality output and customer retention (Liu, 2013). The study advocates
that for a CPG retailer, SCA refers to a set of assets, characteristics, or capabilities that help to
better meet the needs of its customers than its competitors. It answers the question, what do a
CPG retailer do best in the industry, which generates a collection of traits that customers value
which is unique to the firm and valuable to customers. It has been postulated that firms with a
SCA perform better than those that do not (Krishnan et al., 2020). Firms with resources that have
the potential to provide a SCA can lead to greater performance (Wernerfelt, 1984) and a CPG
retailer is not an exception. SCA comprises the managerial decisions and action results that lead
to the organisation's higher performance when compared to that of its competitors (de Guimarães
et al., 2018). Therefore, CPG retailers should succeed online, promote revenue growth
management, strengthen supply chain resilience, and enable teams for faster decision-making to
achieve SCA. Each strategy of SCA is further elaborated for the business success of a CPG
retailer.
Market share: The study advocates that for a CPG retailer the impact of market share are
economies of scale (Kim, 2021) i.e., increased market share helps the retailer to operate on a
wider scale, boost profitability and assist the firm to establish a cost advantage over its
competitors; increased sales (Xia et al., 2020) i.e., a rise in market share help the retailer‘s

10
overall sales increase. When customers observe that a majority of their peers are loyal to a
particular brand, the remaining customers are compelled to buy such brands; increased customer
base (Fischer and Himme, 2017) i.e., a rise in market share also aids in the expansion of a
retailer‘s consumer base. When the majority of a customer base is loyal to a single brand or
product, the rest may follow suit; increased reputation (Roshan et al., 2016) i.e., a rise in market
share can benefit a retailer‘s reputation. A positive reputation, in turn, helps in increasing sales
and expanding the customer base; dominating the industry (Kim and Kim, 2022) i.e., a retailer‘s
influence over the industry it operates in increases as its market share grows; increased
bargaining power (Cain et al., 2017) i.e., a retailer can wield certain authority like bargaining
power with greater industry influence.
Productive efficiency: The study advocates that, for a CPG retailer, productive efficiency refers
to the process of creating goods and services using the best possible mix of inputs to achieve
maximum output at the lowest possible cost. To be productively efficient, the economy of a CPG
retailer must be produced at the limit of its output capability. The concept of productive
efficiency is intertwined with technical efficiency (Gong et al., 2022). When a CPG retailer
produces a product, it is technically efficient because it uses the best combination of labour and
capital, i.e., without new inputs, it is impossible to make more of a product.
Quality output: The study advocates that for a CPG retailer, quality output helps to retain
consumer satisfaction and loyalty while also lowering the risk and cost of replacing defective
products. Accreditation with a recognised quality standard can help a CPG retailer to establish a
reputation for quality. Cost rises as quality declines. If a CPG retailer does not have an effective
quality-control system in place, it may have to pay for the cost of analysing nonconforming
products to find out the root cause, as well as retesting products when they have been reworked.
In some situations, a CPG retailer might have to scrap defective products and pay extra
production costs to replace them. Therefore, managing quality output is crucial for a CPG
retailer.
Customer retention: The study advocates that for a CPG retailer, customer retention strategies
are a major priority for brands because maintaining a customer‘s loyalty is much less expensive
than attracting a new one. Brands can sustain consumer loyalty while increasing marketing
return-on-investment (ROI) by connecting with consumers as they hit major life milestones,
motivating them to share their experiences and incentivizing continuous purchases in the

11
shopping aisle. Approaching a customer when they are first in the market for a new type of
product is often the finest method to gain their loyalty. Also, gaining a customer‘s attention
during a transitional period can be enough to show loyalty, which may pay off in the long run.
2.1.4. Sustainable Growth (SG)
It is defined as the amount of real growth that a firm can sustain without running into problems
such as deterioration in the firm‘s financial structure or a fall in the dividend yield (Giammarino
and Lussier, 1998). To accomplish the sustainable development goals proposed by the United
Nations (UN), firms can maintain SG by fostering social responsibility (Zeng et al., 2022). The
study advocates that a CPG retailer that grows too quickly can have trouble financing further
growth and the firm may become stagnant if it expands too slowly or not at all. So, finding a
retailer‘s SG addresses the question i.e., how much can a retailer grow before it needs a helping
hand, e.g., to borrow money? In addition, the creation of SG is a top priority for a CPG retailer.
Obviously, given quickly shifting political, economic, competitive, and consumer trends,
accomplishing this goal will be difficult. Therefore, each of these developments poses a unique
set of problems for firm executives to look for the holy grail. To summarise, SG can be
characterised as growth that is replicable, ethical, and accountable for both the present and the
future of societies. This study advocates two central areas where XAI can drive SG for a CPG
retailer i.e., XAI-powered analytics and customer service satisfaction. Each of the areas is
discussed below.
XAI-powered analytics: A variety of data, including customer browsing habits, demographic,
social, and geographic information, can be gathered and processed by XAI. With the use of this
data, CPG retailers can decide how to effectively engage with their customers, market new
products, and gain in-depth understanding of consumer preferences, behaviours, trends, and
interests with analytics driven by XAI. As a result, XAI technology can assist CPG retailers in
developing products that the market is enthusiastic about and delivering them to customers
through the most advantageous channels and times. This study advocates that XAI-powered
analytics support ‗internal sustainability practice‘ (Vachon and Klassen, 2006), which includes
the aspect of enhancement in the workplace at the firm level and produce operational
sustainability such as quality and flexibility (Ahmadi-Gh and Bello-Pintado, 2022).
XAI-powered customer service satisfaction: Expectations are high in terms of customer
support. As a result, XAI can assist CPG retailers in communicating in a more personalised

12
manner, which can help to boost their brand reputation and spur business growth. Customers can
choose XAI-based chat support as a preferred method of engaging brands. Real-time
conversation tracking is another benefit of XAI. This study advocates that XAI-powered
customer service satisfaction support ‗external monitoring sustainability practice‘ (Vachon and
Klassen, 2006), which involves various stakeholders to improve business performance and
produce economical/financial or regulatory performance sustainability (Ahmadi-Gh and Bello-
Pintado, 2022).
2.1.5. Competitive Strategy (CS)
It is defined as a firm‘s strategy for gaining a competitive advantage over its industry
competitors (Munawaroh et al., 2021). Corporate social responsibility (CSR) is used by firms as
a CS (Hu et al., 2022). The study advocates that for a CPG retailer, CS is created with the goal of
establishing a defensive position in the CPG industry and getting a higher return on ROI. The
CPG industry is very competitive and customers are offered nearly identical products, so CS is
critical. Demanding customers, agile competitors, a plethora of sales channels and shifting
business models are just a few of the forces at work in the CPG industry to generate market
disruption. In addition, a tough regulatory environment is raising the bar on product quality, yet
the pressure on the final price has never been higher. Before developing a CS, the CPG retailer
first assesses the industry‘s strength-weakness-opportunities-threats (Behera et al., 2021)
(SWOT) and then proceeds to develop a strategy that offers a competitive advantage.
2.2. Conceptual model
SG based conceptual model has been proposed in the literature i.e., Qiao et al. (2021) proposed
productive sustainable growth (PSG) for the renewable energy industry, wherein PSG was
measured using (i) return on equity (ROE), which indicates short-term profitability and (ii)
sustainable growth rate (SGR), which reflects long-term financial profitability. The study has not
considered ISBV, CS, SCA, CS and more importantly, has not grounded on XAI and does not
take into consideration of the CPG industry. Wang et al. (2017) outlines the essential project
management factors that contribute to technology-based organisations‘ SG. The theoretical
framework for sustainable organisational growth was derived from three levels i.e., personal,
team and organisational. Instead of using a questionnaire survey, the exploratory study used a
structured interview survey method, which limited the number of respondents and the impact of
firm type and industry. Patel et al. (2020) established a strategic fit framework, arguing that

13
enterprises with a greater rate of SG are more likely to succeed in industries with a higher return
on invested capital. The study, however, cannot be generalised to countries other than Portugal.
To sum up, none of the studies empirically validate SG owing to XAI and not confined to
CPG retailers. Moreover, literature has proposed theoretical models highlighting the impact of
SG on various digital technologies across various contexts, products, industries and markets
(Lopez et al., 2022; Skare and Porada-Rochon, 2022; Rubio et al., 2021; Wang et al., 2017). But,
none of the studies have highlighted the importance of explainability. Therefore, this study
strongly argues for the importance of the AI/ML model‘s explainability behaviour for the main
reasons, like understanding and fixing the model‘s unusual behaviour; controlling the model‘s
actions to prevent bias and reducing societal bias; increasing human readability by providing an
explanation of why each individual input receives a specific outcome; introducing the model to a
non-technical group of people who are interested in a specific use case. Table 1 captures the
advantages of different audience profiles of CPG retailers when explainable AI techniques are
included in the AI/ML models.
Table 1: XAI advantages in AI/ML models
Product owners, managers, and Users affected by model decision CPG industry expert
executive board members
Improve understanding Increase trust Provide compliance and regulation
Improve performance Increase transparency Provide trust and transparency
Evaluate the usage of data quality Understand the importance of their Ensure the proper use of sensible
actions data
Avoid bias Be aware of shared data Avoid bias and discrimination

Therefore, CPG retailers must create accurate AI/ML models and rise to the challenge of
explaining the models‘ findings in a way that is understandable to a non-technical audience in
order to gain from explicability (see Figure 2). The figure depicts the developing XAI approach
yielding explainable models for accomplishing the goal for a CPG retailer.

Figure 2: Goal accomplishment with XAI

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 With the consideration of the above discussions, the study proposed an XAI-based unique
conceptual model to measure and validates SG for CPG retailers. The conceptual model aims to
propose the constructs to verify SG for CPG retailers owing to XAI. This unique conceptual
model adds value to the body of knowledge by providing managers with new insights into how
to better understand and manage knowledge sharing in order to create ISBV, SCA, and SG for
CPG retailer owing to XAI. The definition for each construct is discussed in Table 2.
Table 2: Construct definition
Construct Definition Reference
Explainable Artificial A set of ML algorithms that enable human users of CPG retailers Alicioglu and Sun,
Intelligence (XAI) to understand, appropriately trust and effectively manage the 2022
emerging generation of artificially intelligent partners.
Financial Performance Profitability ratio of a CPG retailer compared to CPG industry Côrte-Real et al.,
(FP) standard. 2019
Strategic Performance Successful achievement of a CPG retailer strategic objective. Zou and Cavusgil,
(SP) 2002
Sustainable A CPG retailer‘s business plans or strategies for increasing market Liu, 2013
Competitive share, productively efficiency, quality output and customer
Advantage (SCA) retention.
Sustainable Growth Amount of real growth that a CPG retailer can sustain without Giammarino and
(SG) running into problems Lussier, 1998
Competitive Strategy A CPG retailer‘s strategy for gaining a competitive advantage Munawaroh et al.,
(CS) over the competitors of CPG industry. 2021
The theoretical underpinnings of the proposed constructs are further justified. As a
burgeoning sub-field within the broader AI research field, XAI is well established (Bunn, 2020)
i.e., Gilpin et al. (2018) attempted to create a taxonomy to organise a variety of interpretability
methodologies and approaches, such as linear proxy models, automatic rule extraction, salience
mapping, attention networks, and disentangled representations. Financial performance is the
most important metric for evaluating the performance of an organisation (Weerasekara and
Bhanugopan, 2022). Flexibility and cost reduction have been the emphasis of strategic
performance (Naranjo-Gil, 2009). The ability to maintain a SCA is critical to an organisation‘s
long-term viability and success (Anwar et al., 2018). SG demonstrates a business's ability to
grow over time without facing financial, structural or strategic challenges (Ali et al., 2014). The
CS of a firm is used to achieve a better knowledge of the human capital, reverse engineering and
firm growth nexus (Adomako et al., 2022). In addition, the study has considered firm size as a
covariate between SCA and SG. Firm size has a beneficial impact on technical innovation (Zhou
et al., 2021).
The study depicts the conceptual model (see Figure 3) including four hypotheses between the
constructs. Hypotheses H1a to H1b, H2a to H2b and H3 represent the direct effect, H4 represents

15
the moderating effect and firm size represents the covariate effect in the model. The positive sign
(i.e., +) denotes the positive relationship between constructs.

Figure 3: Conceptual model (Adapted from Alicioglu and Sun, 2022; Côrte-Real et al., 2019; Zou and Cavusgil,
2002; Liu, 2013; Giammarino and Lussier, 1998; Munawaroh et al., 2021)
3. Hypotheses development
The study aims to validate four RQs through hypothesis‘ results, hence RQ1 relates from H1a to
H1b. RQ2 relates from H2a to H2b. RQ3 relates to H3. RQ4 relates to H4. Each hypothesis is
discussed below.
3.1. Explainable artificial intelligence and IS business value
To improve financial performance, a CPG retailer can place the customer at the centre of its
strategy and employ XAI on big data to better understand and target customer portfolios,
uncover hidden data and forecast trends. In today‘s era of smart data, intelligent information has
a high added value, and XAI platforms can help with data segmentation and internal information
exchange, opening up new avenues for consumer involvement and thus, improving financial
performance. Literature suggests that investments in IT that include intermediate business
processes are associated with improved financial performance (Wang et al., 2018). The
emergence of XAI is expected to transform knowledge management, particularly in terms of
assisting organisations in focusing on knowledge retention, collaboration and customer service;
and financial performance is improved by knowledge management strategies (Battisti et al.,
2022). However, there will be no meaningful gains unless there is a greater understanding of
how to bridge any potential financial performance gap between algorithms, functioning models
and real-world situations (Schreck et al., 2018). The study advocates that XAI can also improve
the financial performance of a CPG retailer by increasing visibility to discover faults and
unknown vulnerabilities to increase trust, which assures XAI system operation; understanding
how the AI and ML model works and making decisions to improve performance; enhancing
decision-making, as well as revenue, customer behaviour and employee turnover; increasing the
XAI system‘s control; recognising and correcting errors as soon as they spotted. Therefore, it is
hypothesised:

16
H1a: For a CPG retailer, XAI is expected to play a positive role in financial performance (FP).
Key performance indicators (KPIs) define a CPG retailer‘s strategy and XAI may assist in
determining which outcomes to monitor, how to measure them, and how to prioritise them. The
executives of a CPG retailer share a shared goal i.e., discovering what products, services, and
processes XAI might enhance or inspire to sharpen competitive edges, as they believe a
comprehensive strategy for XAI is essential for success. Literature suggests that AI affects
dynamic capabilities of organisations (Hercheui and Ranjith, 2020) and superior strategic
performance is achieved through dynamic capability processes (Bingham et al., 2015). However,
strategic performance is directly impacted by technological uncertainty (Gelderman et al., 2016).
The study advocates that XAI can improve the strategic performance of a CPG retailer by
segmenting customers and products into groups based on their habits and needs; predicting
customer purchases and churn risk; estimating a customer‘s or a product's lifetime value;
increasing uptime through optimising manufacturing supply chains and performing predictive
maintenance. Therefore, it is hypothesised:
H1b: For a CPG retailer, XAI is expected to play a positive role in strategic performance (SP).
3.2. IS business value and sustainable competitive advantage
A CPG retailer‘s financial prioritisation reflects not only stakeholder expectations but also the
forward-thinking character of SCA. The CPG industry is a fast-paced, competitive and often cut-
throat business in which the firm who stays ahead of the game is more likely to win. As a result,
financial performance and SCA are what sets firms apart from their competitors. Literature
suggests that SCA is significantly impacted by financial performance (Wijayanto et al., 2019).
Through SCA, managerial competence has an indirect effect on financial performance
(Kamukama et al., 2017). SCA is a predictor of positive financial performance (Jeong and
Chung, 2022). The capacity of a business to maintain a competitive advantage and its financial
performance are interrelated (Mugoni et al., 2023). It is necessary to focus on securing
sustainable financial performance and business value (Attah-Boakye et al., 2022). The study
advocates that from the standpoint of financial performance, there are several ways to achieve
SCA, but the two most prevalent are price cutting and differentiation. In highly competitive
marketplaces, a CPG retailer relies on price cuts to entice customers to switch from one retailer
to another. From the perspective of industry, the CPG retailer gains SCA when it can improve
the efficiency of its operations and production lines, lowering the cost of producing whatever it is

17
selling. If a CPG retailer is unable to lower its costs, it can still gain a SCA by adding unique
features to the product, implementing effective marketing methods or inventing any other
approach that distinguishes the product and increases its value to customers. In such situations,
XAI can assist or drive price cutting and product differentiation. Therefore, it is hypothesised:
H2a: For a CPG retailer, XAI driven financial performance (FP) is expected to play a positive
role in possessing SCA.
CPG retailers rarely operate alone and their competition is usually a vital aspect of any
marketplace, which implies that firms must develop strategies to attract customers to their
products while keeping them away from competitors‘ products. XAI driven strategic
performance can possess SCA in the competition. Literature suggests that instead of settling for
gradual improvements, a few more market shares or a few percentage points of cost reduction,
managers establish lofty targets for themselves, and if met, will result in a SCA for their
organisation (Gluck et al., 1980). To acquire SCA in any industry, a firm must be able to offer a
set of benefits to customers at a lower cost than competitors, or give customers a package of
benefits that its competitors cannot match (Kak and Sushil, 2002). Customer satisfaction, brand
reputation, new product introduction and market share are just a few of the factors that contribute
to gaining a SCA (Erensal et al., 2006). In technologically competitive marketplaces,
technological competencies constitute a significant potential source of SCA (Krishnan et al.,
2020). By accepting uncertainty in cross-border operations and taking calculated risks, more
entrepreneurially oriented organisations have an opportunity to create valuable strategic
competences that support strategic performance (İpek et al., 2023). The study advocates that to
operate successfully, a CPG retailer requires a clear and well-defined XAI driven strategic
performance. Consequently, strategic performance helps a CPG retailer to gain SCA, improve
market share and plan for its future. Therefore, it is hypothesised:
H2b: For a CPG retailer, XAI driven strategic performance (SP) is expected to play a positive
role in possessing SCA.
3.3. Sustainable competitive advantage and sustainable growth
A CPG retailer of any size should have SG strategies. SG involves providing a CPG retailer with
the tools in the form of SCA (i.e., market share, productive efficiency, quality output, and
customer retention) which requires them to stay afloat in the market and industry. Through SCA,
SG is the road map or plan for a CPG retailer‘s future survival and success. Literature suggests
that organisational innovation has a crucial role in building SCA (Kising‘u et al., 2016) and

18
innovative working behaviour has a positive effect on the organisation's SG (Stenholm, 2011).
Quality control is a critical component of business strategy that enables a firm to develop an SG
strategy (Syapsan, 2019). Businesses must focus on SCA techniques and address sustainability in
their business models and plan to achieve more growth (Singh et al., 2021). Adaptability
resembles one of the crucial requirements for SCA and SG in a demanding and complex
corporate environment (Iranmanesh et al., 2022). The study advocates that SG can be achieved
by focusing on the following business strategies or plans (SCA) i.e., (1) excellent customer
service: make an extra effort to impress and support consumers. Concentrate on their
requirements and make their experience enjoyable; (2) quality: offer a one-of-a-kind or high-
quality product or service; (3) innovation: meet the demands of customers in a novel way. To
attract them and keep them coming back, strive to be the first to offer new products or services;
(4) specialisation: establish as a subject matter specialist and build a market niche. Furthermore,
it is critical to instil in customers the belief that they are receiving better value than competitors.
Therefore, it is hypothesised:
H3: For a CPG retailer, XAI driven SCA is expected to positively influence SG.
3.4. The moderating role of competitive strategy
The greater the competition in the CPG industry, the more difficult it is for a CPG retailer to
sustain.In such a competitive environment, a CPG retailer must thoroughly analyse competitors‘
strengths, weaknesses, advantages as well as all potential threats to establish a successful
business. If a CPG retailer has a carefully considered CS, they can make better judgments and
continually improve their products. Literature suggests that businesses are under pressure to
build a CS and follow a plan for sustainable growth (Kharub et al., 2022). The effect of CS as a
moderator is considered (Adomako et al., 2022). Firms operating in emerging markets must
make appropriate CS choices in response to the unique challenges of fast change and institutional
voids to create improved firm performance (Yin et al., 2020). Every firm that competes in an
industry, whether explicitly or implicitly, must have a CS (Kuncoro and Suriani, 2018). The
study advocates that CS includes approaches that prescribe various ways to build SCA and
subsequently the SG. For a CPG retailer, the goal of CS is to win customers‘ hearts by meeting
their demands, and subsequently to achieve SCA, followed by SG, and out-compete the
competitors. A CPG retailer may struggle to find a CS that provides both SCA and SG, and
therefore, the managers of such a CPG retailer can build those by adopting the following

19
measures of CS, i.e., focusing on building blocks of SCA and SG; developing unique
capabilities; creating a learning environment in the workplace; developing mechanisms for
continuous improvement; putting in place optimal practises; getting beyond changes‘ stumbling
blocks. Therefore, it is hypothesised:
H4: For a CPG retailer, competitive strategy (CS) moderates the relationship between SCA and
SG.
4. Methodology
To meet the objective of the study, the study discussed data sources, data collection procedure,
CPG retailers and respondents‘ demographic profile, sampling, measurement items, research
settings, common method bias and data analysis.
4.1. Data sources
The sources of the data were CPG retailers operating out of India in the categories of food,
beverages, clothes, over-the-counter drugs and household products. The rationale behind
consideration of CPGs is as follows. CPGs are dedicated to enacting significant environmental
change through (Chuah et al., 2016) more eco-friendly, cleaner, and cost-effective distribution
methods. An all-encompassing strategy for sustainable development is replacing as a result of
industrialisation (Arshad et al., 2023), and the industrial revolution enable CPG retailers to
preempt the shoppers. In sustainable digitalisation, customers choose CPG retailers that use
ethical sourcing, a sustainable product lifecycle, and sustainable packaging. Large firms CEOs
around the globe think that addressing sustainability issues is crucial for the success of business,
and firms across all industries are under pressure to operate more sustainably from customers,
investors, and even employees. As a result, to achieve sustainability objectives, CPG businesses
are increasingly integrating environmental, social, and corporate governance programmes.
The rationale behind consideration of India is as follows. India, a developing economy with
the world‘s fastest-growing lower-middle-income country and is the third-most attractive
touristic destination, is anticipated to receive between $120 and $160 billion in FDI by 2025
(Chandrika et al., 2022). The Indian government is strongly committed to achieving
sustainability while reaping financial rewards (Digalwar et al., 2022). In line of political
commitment to the sustainable development goals (SDGs), India has given various ministries the
responsibility of achieving the SDG targets (Priyadarshini and Abhilash, 2022). Future
predictions indicate that India will surpass China as the world‘s most populous nation by 2027
due to its fast expanding population (Nayak-Luke et al., 2022) and considering such prediction,
20
the importance of SG has grown for CPG retailers. India is working to achieve social equity and
economic sustainability to improve living standards (Singh et al., 2022).
The rationale behind consideration of CPG retailers operating out of India is as follows. CPG
is the fourth-largest economic sector in India (Mohan and Sequeira, 2016). In terms of segment-
wise distribution, healthcare, and food and beverage account for 31% and 19% of the pie
respectively, while household and personal care products constitute 50% of the total. The
distinguishing features of such Indian CPG retailers are that they constantly invest in advertising
in an effort to raise recognition and encourage sales. After safeguarding their businesses from
COVID-19, such retailers devise new strategies to find micro pockets of growth amid shifting
consumer preferences and market dynamics. Post COVID-19, such retailers were compelled to
ramp up production to meet never-before-seen customer demand surges. Retailers use AI (e.g.,
predict the on-shelf product range, optimal price points, manufacturing, shipping levels needed
to meet customer demand by store and date, and sales of new products entering the market) to
communicate with their customers by sending the right information to intended customers. They
were exploring XAI for high performance computing, data storage, machine intelligence, which
can continuously take in vast amounts of real-time data about every action in and around
operations for SG.
4.2. Data collection procedure
Data were collected in two stages using online interviews i.e., stage I (February 2022 to April
2022) and stage II (May 2022 to July 2022). A pilot study was undertaken in stage I. Stage I
findings were used to improve the measures used in stage II. Stage II‘s rigorous technique was
used to obtain the necessary data because stage I‘s data collection was slow. A consent form and
an information sheet were provided for those who accepted to participate in the survey. The
interview was conducted via video calls by ten interviewers who were experienced at conducting
personal interviews in English. This study advocates that ten interviewers where each
interviewer spent between one and two hours per participant were considered to be adequate.
The interviewers recorded the online interview to strengthen the reliability of the study i.e.,
to eliminate or reduce respondent induced bias and interviewer induced bias. Respondent
induced bias includes (1) faulty memory: due to faulty memory, some responders may simply
give an inaccurate response to a question, and recoding is the key to solving this issue; (2)
Incorrectly answering a question: the respondent may not want to respond or may not pay

21
enough attention to or consideration to the questions posed if rapport has not been effectively
established. Additionally, if the respondent does not fully understand a question, he may provide
undesirable responses. As a result, when an online interview is being recorded, the interviewer
must make sure the respondent completely understands the questions being posed and is
responding in the proper context.
In continuation, interviewer induced bias includes (1) desire to assist the respondent: the
conduct of the interview and the findings can be impacted if the interviewer exhibits too much
empathy with the respondent‘s issues and circumstances. Objectivity was maintained at all times
owing to the recording; (2) responses to reactions: Sometimes, the interviewers react when
respondents respond to questions. The respondent‘s subsequent answers are easily influenced by
a note of surprise or disbelief. Owing to recording, interviewers answer with a consistent display
of polite interest.
4.3. CPG retailers and respondents’ demographic profile
The respondents as well as their firm profiles are listed in Table A1 of Appendix A. According to
the table, 38% of the retailers are from household products, followed by food and beverages with
32%. The Table also shows that 66% of respondents have worked for firms whose existence is
more than 10 years. The inclusion criteria of the respondents includes English speaking and
writing; adults with more than 18 years and less than 60 years of age; job profile of users or
product owners or industry expert managers or executive board members; a permanent employee
with a CPG retailer; Indian citizen; AI knowledge base. The exclusion criteria include lack of
English reading and writing ability; retired or layoff CPG employees; incapable of completing
the online survey; not having Internet access; poor quality of fundamental knowledge on AI.
4.4. Sampling
The authors reached out to those retailers that were interested in participating in the study. The
authors employed convenience sampling for data collection because (Ruhl, 2004) it is widely
used and relatively cost-effective. The snowball sampling approach was employed to obtain
respondent responses after convenience sampling was used to identify retailers. The study drew a
total of 70 retailers who volunteered to participate. After validation, a total of 65 CPG retailers
and 310 valid respondent responses were considered for analysis. As per Bag et al. (2020), the
N
sampling formula is n = [1 + N ∗ e 2 ] where n is the sample size, N is the population and e is the

22
margin of error. The population is 1378 respondents, the sample size is 310, and the value of e is
5%, indicating a 95% confidence level.
4.5. Measurement items
For the CPG retailers and the respondents, a five-point Likert scale questionnaire ranging from
‗1‘ (strongly disagree) to ‗5‘ (strongly agree) was developed. The details of the questionnaire are
captured in Table A2 of Appendix A. The measurement items of XAI were adapted from (Oh et
al., 2019), FP from (Côrte-Real et al., 2019), SP from (Reis et al., 2020), SCA from (Chang,
2011), SG from (Faulks et al., 2021) and CS from (Sigalas et al., 2013).
4.6. Research settings
The participants of CPG retailers were briefed about the background and working of XAI, the
need for XAI for SG, dramatic success of ML in AI applications, explainable model,
comfortability of humans with the XAI model, why XAI should be used in operation, types of
explanation, how to achieve transparency while harnessing the efficiencies AI brings, overview
of XAI algorithms (i.e., self-explainable, global explainable), XAI driven financial performance
and strategic performance. They were also briefed about the linkage of XAI to SCA, SG and CS.
More importantly, they were briefed about how XAI systems would be able to explain reasoning,
identify strengths and weaknesses, and communicate an explanation through AI/ML models.
4.7. Common method bias (CMB)
This study is susceptible to CMB because it is a self-administered survey in which respondents
were urged to score construct items on a standard scale and (Podsakoff et al., 2003) they are
asked questions that influence independent and dependent factors simultaneously. As a result,
Harman's single-factor test (Malhotra et al., 2006), the most widely used technique for evaluating
CMB, was adopted in the study. It states that the estimated cumulative variance value should be
less than 50%, and the study result 38.34%, which is less than 50%, indicating that CMB is not
present.
4.8. Data analysis
Structural Equation Modeling (SEM) using IBM AMOS is used to verify the validity. For a
model‘s covariance, SEM is widely used as a structural analysis (Cao et al., 2012). As the study
is a factor-based model, AMOS was used. As per Hair et al. (2006), the sample size should be
between 200 and 400 when SEM is used for data analysis, and the study used 310 samples. Since
the purpose of this study is to test the hypothetical constructs rather than establishing theory, so

23
covariance-based SEM (CB-SEM) is used instead of variance-based SEM (VB-SEM) (Behera
and Bala, 2023; Hew et al., 2019).
5. Results
The results were made through a two-step approach including a measurement model and a
structural model (Anderson and Gerbing, 1988).
5.1. Measurement model
Convergent reliability of all the factors considered in the measurement model was achieved with
factor loading (FL), average variance extracted value (AVE) values of more than 0.50 (Hair et
al., 2006) and Cronbach‘s alpha (CA), composite reliability (CR) values of more than 0.70
(Fornell and Larcker, 1981a). Table A3 of Appendix A shows the construct‘s CA, CR, AVE and
item‘s FL. The Table illustrates CA and CR values greater than 0.70, and FL, AVE values
greater than 0.50. As a result, it is considered that the measurement model‘s factors are
reasonably reliable and the convergent validity conditions have been met.
To determine the discriminant validity, Fornell and Larcker‘s criterion (Fornell and Larcker,
1981b) was assessed, which states that each construct‘s square root of the AVE must be greater
than its correlation to the other constructs. Table A4 of Appendix A shows that all diagonal
elements (representing the square root of the AVE) were higher than off-diagonal elements in the
respective rows and columns, and all estimates of inter-correlation were less than 0.655,
confirming discriminant validity.
5.2. Structural model
The hypothesis is supported by a p-value of less than 0.05, which is regarded as statistically
significant (Grabowski, 2016). Table A5(a) of Appendix A summarises the direct effect and
justifies the support of H1a to H1b, H2a to H2b and H3. The hypothesised relationship between
independent variables and dependent variable is described by the path coefficient (β).
Table A5(b) of Appendix A summarises the moderator‘s (i.e., competitive strategy) effect
which justifies the support of H4. The moderating impact of a latent interaction (SCA x CS with
the SG) was estimated using the (Marsh et al., 2004) matched-pairs technique. All potential
interactions were evaluated and to minimise problems that typically occur when analysing
instruments with a large number of items, the highest loading interaction indications were chosen
where no indicator appeared more than once (Marsh et al., 2004).

24
 The R2 value of FP is 0.187, SP is 0.264, SCA is 0.336 and SG is 0.334 and such a value
demonstrates the model‘s potential value. The model fit indices are shown in Table A6 of
Appendix A and it is deemed to be an excellent fit.
The t-statistics (i.e., t-value), standard error (i.e., std. error) and a significance level (i.e., p-
value) are used to examine the covariate analysis. A p-value of less than 0.05 indicates that the
result of covariate analysis is to be accepted (Grabowski, 2016). Table A7 of Appendix A
summarises the covariate (i.e., firm size) effect on the relationship between SCA and SG. For the
analysis, firm size data were divided into three groups (i.e., 5-50, 51-500 and more than 500) of
CPG retailers and validated separately in the model. The ternary classification of the firm size is
discussed in the literature (Karlsson, 2021) and is considered as per the World Bank definition
(2001). The multi-group evaluation criteria were then conducted to determine whether firm size
control the SG of CPG retailers and the analysis showed that firm size did not differ among the
groups. It is primarily due to the fact that CPG retailers, irrespective of firm size, have
substantial influence on sustainable growth due to the potential value of XAI and its implication
on business value.
6. Discussion
The primary goal of this study is to measure SG of CPG retailers owing to XAI. RQ1‘s validity
was confirmed with the support of H1a and H1b, RQ2 with the support of H2a and H2b, RQ3
with the support of H3, and finally, RQ4 with the support of H4. The RQ1 validity addresses the
research gap i.e., empirical measurement of the structural relationship between XAI with ISBV.
The validity of RQ2 addresses the research gap i.e., empirical measurement of the structural
relationship between ISBV and SCA. The validity of RQ3 addresses the research gap i.e.,
empirical measurement of the structural relationship between SCA and SG. The validity of RQ4
addresses the research gap i.e., empirical measurement of the moderator relationship of CS
between SCA and SG. The literature gap on ISBV in the context of CPG retailers is achieved
with comprehensive discussion in the theoretical background. In addition, the literature gap on
SCA, SG and CS is also achieved with the comprehensive discussion on the theoretical
background. Hence, adoption of XAI is recommended for CPG retailers with the consideration
of ISBV, SCA and SG.
The study also validates the perceptions regarding the importance of XAI for SG with
previous studies and the finding is in line with it, i.e., AI-based solutions are gaining traction in a

25
variety of research domains such as sustainable growth (Galaz et al., 2021). With the purpose of
accomplishing sustainable development goals, businesses are turning to sustainable
manufacturing (Bag and Pretorius, 2020). To ensure that AI technology fulfils sustainable
industry standards, AI professionals who understand the industry and business must be formed
and retained (Siala and Wang, 2022). AI requires a broad overall view of the design and update
of its enterprise architecture in order to be more effective for sustainable growth of a business
(Iansiti and Lakhani, 2020). Therefore, based on the above discussion, XAI and its related
technology can be adopted and implemented by CPG retailers for SG.
In addition, the study analysed each theoretical concept (i.e., four dimensions of sustainable
competitive advantage, two dimensions of ISBV) in the context of empirical results and
emphasised the findings. First, due to XAI, the speed of change in a CPG retailer continues to
accelerate in SG. As consumers embrace omnichannel shopping, CPG retailers integrate XAI
technologies to meet rising customer demands for personalisation, speed and cost. Owing to
XAI, CPG retailers have a unique learning opportunity in terms of stronger advertising, loyalty,
and consumer data tactics, which help them to position themselves more favourably. To increase
revenue, CPG retailers adopt the strategy to prioritise the customer and employ XAI on big data
to better understand and target customer portfolios, uncover hidden data and forecast trends,
which adds a lot of value to finance departments in today‘s era of smart data. The finding is
important for operational category of sustainability practice (Sobieralski, 2022), and is consistent
with the prior research by Mikalef et al. (2021) i.e., AI in business adds value to the bottom line
for a profitable future. Operations strategies, tactics, procedures, and operational policies that
support SG are referred to operational sustainability. The significance of sustainable operations
not only gives organisations a competitive edge but also improve customer and human resource
benefits. In sustainable digitalisation era, sustainable operations can develop key strength by
producing better results more quickly for CPG retailers.
Second, owing to XAI-enabled business value, CPG retailers can employ automated
machines to analyse a comprehensive view of the firm‘s objectives that allows them to make the
best decisions for SCA. CPG retail owners can identify and resolve problems in financial
performance and strategic performance by facilitating decision-making on market share, return
on sales, profitability, efficiency, customer satisfaction and productivity. XAI can provide the
precise prediction of discrepancies within the organisation, as well as the correction of human

26
errors in strategic planning and as a result, the organisation‘s attainment of its objectives. XAI-
enabled business value offers an excellent way to identify lags in the business early on before it
creates serious damage in the future. XAI, in general, detects correlations between data,
generates hypotheses, stores and recalls results, and constantly updates itself based on previous
successful experiences, which is beneficial to CPG retailers in the digital world. It also helps to
improve the effectiveness of various teams and sectors, allowing businesses to scale, grow
revenue and help to achieve a sustainable competitive advantage. The finding is important for
economical/financial category of sustainability practice (Alsakka et al., 2022; Abid et al., 2022),
and is consistent with the prior research by Hradecky et al. (2022) i.e., AI has the ability to
provide new players with a competitive advantage for a profitable future. The act of saving
financial resources to establish long-term economical/financial stability that support SG is
referred to economical/financial sustainability. The significance of economical/financial
sustainability enables a positive image for revenue as well as the business. In sustainable
digitalisation era, economical/financial sustainability can develop productive capacity of
economics/finance for CPG retailers.
Third, if a CPG retailer grows too quickly, it may be difficult to fund the growth. In general,
optimum sustainable growth is the goal of CPG retailers and such retailers try to seek answers to
the question: how much can the business grow before it needs to borrow money? Therefore, CPG
retailers intend to keep a target capital structure without issuing new equity; keep a desired
dividend payment ratio; grow revenues as quickly as market conditions allow. XAI assists CPG
retailers in making quick decisions and correcting potential errors while seeking answers to the
above questions. In addition, XAI-powered automated wealth management services and
algorithmic trading help to make better financial decisions. Deep learning, ML, natural language
processing, predictive capabilities and intelligent grid systems are all tools that XAI can use to
manage the return on equity (RoE). Therefore, XAI has the potential to be a formidable weapon
in the fight for SG. The finding is important for regulatory category of sustainability practice
(Leisen et al., 2019), and is consistent with the prior research by Lu et al. (2018) i.e., AI is a
critical technology that contributes significantly to SG which reset more responsibility towards
customers. The regulation of redirecting financial sources to more sustainable investments and
activities such as to deliver its best performance and to ensure quality and fulfilment in a timely
manner towards the customers that support SG is referred to regulatory sustainability. The

27
significance of regulatory sustainability enables significant impact on a business‘s desire for
long-term growth and commercial success, which leads to the achievement of noteworthy ROI.
In sustainable digitalisation era, regulatory sustainability can develop legal regulation and
regulation of sustainability for CPG retailers.

6.1. Theoretical implications

The study has radical theoretical implications. First, the study discussed the explanation model
and the study postulates its type based on the literature (Bhatt et al., 2020; Hall et al., 2019) i.e.,
audience benefit, audience acceptance, regulatory compliance, systems development and
operator benefit. Audience benefit type of explanation is intended to provide information about
an output to the audience of XAI systems. Audience acceptance type of explanation is intended
to build trust and acceptance among the audience of XAI systems. Regulatory compliance type
of explanation assists the audience with regulatory compliance. Systems development type of
explanation assists in the development, improvement, debugging and maintenance of AI
algorithms or ML models. Operator benefit type of explanation benefits the operator of XAI
systems. This theoretical contribution enhances the capability of AI systems with the
incorporation of explainability i.e., AI has the capacity to automate decisions, and such decisions
can have both favourable/unfavourable effects on CPG and explainability offers insights into
how AI/ML models operate, which helps in making impactful decisions. In addition, this
implication extends operational category of sustainability practice.
Second, the study pointed to XAI algorithms (i.e., self-explainable, global explainable and
per-decision explainable). Self-explaining algorithms provide an explanation when viewed and
queried. These algorithms provide self-explanatory explanations without revealing model details
and Class Activation Mappings (Zhou et al., 2016) is one such example. A model that
approximates the non-interpretable model is produced via a global explanation algorithm and
Shapley Additive Explanations (Lundberg and Lee, 2017) is one such example. Per-decision
explanations provide each decision with its own explanation and counterfactuals (Wachter et al.,
2017) are one such example. This theoretical contribution can enhance algorithmic thinking
(Kong and Wang, 2021) of the model developer with the IF-THEN-ELSE process. IF represents
the situation, THEN represents the behaviour and ELSE represents the alternative situation. By
understanding and improving XAI algorithms, there is an opportunity to improve and optimise
XAI systems. The study advocates that algorithmic thinking can lead to substantial gains in

28
human performance in model building and XAI systems development. In addition, this
implication extends operational category of sustainability practice.
Third, the study discuss SCA and a Venn diagram approach can help a CPG retailer to
monitor and seek answers on how to identify business plans or strategies of SCA, i.e., increase
market share, efficiency, quality output and customer retention (refer Figure 4).

Figure 4: Venn diagram to monitor and seek answers on SCA strategies identification
The approach is adapted from Koll et al. (2022). Each section of the Venn diagram is further
elaborated. For the identification of strengths of a CPG retailer, XAI can be applied to determine
SWOT as it assists a CPG retailer in the identification of valuable strengths in SCA business
plans or strategies by monitoring and seeking answers to valuable questions. For the
identification of customer wants and needs, XAI can be applied to customer research and
customer analysis data/information for the customer‘s top wants and needs that a CPG retailer
intends to solve. Subsequently, from the list of customer‘s top wants and needs, XAI can find the
overlap that can be solved to provide unique value in SCA. Finally, XAI can be applied to axe
the overlapping of strength of competitors and customer wants and needs. If the SCA is not
unique to a CPG retailer and the competitors also have it, it is called a table stake, which should
be axed. In a similar notation, if the SCA is unique to competitors and a CPG retailer does not
have it, it is called vulnerability, which should be axed. As a concluding remark, the overlapping
of each section is not workable in the context of SCA for either a CPG retailer or its competitors.
This theoretical contribution enhances the capability of the Venn diagram in the CPG industry
and operational category of sustainability practice.

29
6.2. Managerial implications
The study has substantial practical implications and will be particularly valuable to CPG
retailers. First, the benefits of adopting XAI for sustainable growth yield benefits such as an
increase in trust, complying with legal regulations and finally, providing data-driven actionable
and reliable analytical insights. The increasing trust positively influences consumer behaviour
(Skripnuk et al., 2021). The harm to privacy caused by customer data is balanced by complying
with legal regulations (Feng et al., 2021). The three primary types of data-driven insights
produced by XAI-powered analytics are descriptive, predictive, and prescriptive. Dashboards,
scorecards, and other sorts of visualisation can be used by CPG retailers to gain insight into what
has transpired in the past. To generate predictive insight, CPG can examine relationships
between data to forecast future trends and forecasting models to understand future possibilities.
To generate prescriptive insight, CPG can run optimisation tests to check how it improves
service levels while lowering costs.
Second, the explanations in AI differ depending on the context, i.e., some explanations are
simple, while others are more in-depth and necessitate training or skill to fully comprehend.
Based on literature, there are five types of explanations (Bhatt et al., 2020) i.e., user benefit,
societal acceptance, regulatory and compliance, system development and owner benefit. The
above-listed literature-based explanations in AI were observed in CPG. The user benefit
explanation is intended to inform CPG business leaders about the outcome of the AI model, i.e.,
what will be the future products to be released? What kind of discounts will appeal to Internet
visitors and when will they do so? What is the purchasing power of the most valuable customers?
and which marketing method is most effective in attracting new customers? The societal
acceptance form of AI explanation is intended to foster society‘s trust and acceptance, i.e., if the
XAI system generates an unexpected result, the explanation may assist users in understanding
why this output was generated. Regulatory and compliance explanations help in audits to ensure
compliance with regulations, safety standards and other requirements. The audience for the
explanation includes users who need a great deal of information and users who interact with the
XAI system. System development type of explanation assists or facilitates XAI algorithm or
system development, improvement, debugging, and maintenance. Technical staff, product
managers and executives are among this category‘s consumers for a CPG retailer. Owner benefit
type of explanation benefits the operator of the XAI system. Explanation in AI-powered

30
recommendation can suggest personalised products for a given customer which can directly help
to increase sales and attract more customers. Therefore, the study recommends CPG retailers to
use XAI for a variety of applications.
Third, the CPG has access to an expanding amount of data (Odważny et al., 2018), owing to
traditional enterprise data and IoT devices, but such retailers are struggling to make use of this
data (Russell and Swanson, 2018). However, they can turn XAI investments into profits i.e.,
there can be use cases ranging from product design to supply chain and marketing, but the
transition to an explainable driven AI adoption does not happen quickly. From board-level
decision-making to day-to-day operations, the process necessitates fundamental changes in how
CPG people work. With the consideration of a use case in customer feedback i.e., Natural
language processing (NLP) approaches for sentiment analysis are commonly used to obtain
feedback from end customers at scale. However, analysing customer sentiment is only the first
step and a complete XAI-driven system can include explanations for getting this information to
the proper individuals so that necessary changes can be implemented. Another use case on
planning and forecasting i.e., older modelling methodologies fail to incorporate the large variety
of data sources required to create findings precise enough for the CPG retailer in the age of AI
and algorithms. XAI-driven systems can more accurately forecast the amount of merchandise
required and the time it will take to restock it with explanation.

6.3. Limitations and future research directions

There are a few limitations of the study. First, the study did not discuss the fundamental ethical
principles of XAI systems. The interaction of the XAI systems with the human recipient of the
information has a big impact on these principles. So, the study lacks discussion on four ethical
issues (i.e., privacy, accuracy, property and accessibility) defined by Mason in this information
age (Mason, 1986). Second, the study has not measured SG in the industry 4.0 (I4.0)
measurement model (i.e., manufacturing context) lens since I4.0 allows for flexibility, self-
organisation, real-time monitoring, and sustainable resource management (Sahu et al., 2022).
Therefore, the study lacks discussion on how XAI can enable flexibility, self-organisation, real-
time monitoring and sustainable resource management for a CPG retailer. Third, the research
methodology has not adopted the data triangulation approach (Jick, 1979). Therefore, the study
lacks consideration of datasets from industries other than CPG, which could have further
enhanced the validity and credibility of the findings by and large.

31
 For future study, the study proposes to conduct a quantitative research methodology to
explore the ethical principles of XAI systems for social benefits. A governance framework
narrating how CPG retailers should address the ethical challenges around XAI and ML models to
make XAI responsible. In addition to the four ethical issues proposed by Mason (Mason, 1986),
additional principles (i.e., fairness, transparency and explainability, human contentedness) can be
considered. Second, a qualitative research and scale development approach can be conducted to
operationalise flexibility, self-organisation, real-time monitoring and sustainable resource
management to integrate I4.0 with XAI for a CPG retailer. Third, the study proposes a data
triangulation approach (using datasets from different times, industries and audience) to further
enhance the validity and credibility of the findings. Fourth, a mixed approach can be conducted
to explore how SG can (Abbasi et al., 2022) encourage sustainable rural development.
7. Conclusions
The novelty of this study is the proposed unique conceptual framework with XAI as an
independent variable, competitive strategy as moderator variable and sustainable growth as
dependent variable. In particular, this study discussed XAI, IS business value, sustainable
competitive advantage, sustainable growth and competitive strategy in the context of CPG
retailers. A quantitative research methodology with 310 respondents from CPG retailers was
used for the empirical analysis and the findings yield three outcomes. First, due to explainable
artificial intelligence, the speed of change in a CPG retailer continues to accelerate in sustainable
growth, and is vital for operational sustainability. Second, owing to XAI-enabled business value,
CPG retailers can employ automated machines to analyse a comprehensive view of the firm‘s
objectives that allow making the best decisions for sustainable competitive advantage and is vital
for economical/financial sustainability. Third, XAI has the potential to be a formidable weapon
in the fight for sustainable growth and is vital for regulatory sustainability. In today‘s sustainable
digitalisation, a CPG retailer must have sustainable competitive advantages for cost and
differentiation advantages. The significance of the findings justifies that for a secure and
prosperous future, sustainable growth should refocus on greater customer responsibility. The
main goal of CPG retailers is to create sustainable growth by paying attention to the
fundamentals of growth strategy. To ensure a high standard of living and to reduce poverty,
sustainable growth is important. For a CPG, XAI can be an effective tool for addressing growing
ethical and legal concerns as well as crucial how-and-why questions surrounding AI systems. As

32
a result, XAI has been recognised by AI researchers as a crucial component of trustworthy AI,
and explainability has recently attracted more attention. To conclude, the study contributes to
information systems track, sustainability and the CPG industry.
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Appendix
Table A1: CPG retailers and respondents demographic profile
Characteristics # of firms Firm proportion # of respondent Respondent proportion
Firm size
Less than 50 10 15% 70 23%
51 to 500 15 23% 90 29%
More than 500 40 62% 150 48%
Existence in years
Until 10 years 15 23% 105 34%
More than 10 years 50 77% 205 66%
Category
Food and beverages 20 32% 100 33%
Clothes 12 18% 50 16%
Over-the-counter drugs 8 12% 30 9%
Household products 25 38% 130 42%
Table A2: Measurement items
Construct Items Scale Item Source
To check sustainable growth owing to XAI for a CPG retailer, please indicate how much you agree with each of the
following items:
Explainable Artificial XAI1 I am very familiar with XAI. Oh et al., 2019
Intelligence (XAI) XAI2 I agree that XAI has useful applications in CPG industry.
XAI3 In the future, I would use XAI to make decisions.
With the adoption of XAI for a CPG retailer, please indicate how much you agree with each of the following items:
Financial FP1 The retailer‘s earnings before interest and taxes will be Côrte-Real et al.,

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Performance (FP) consistently higher than the industry average. 2019
FP2 The retailer‘s return on investment (ROI) will be consistently
higher than the industry average.
FP3 The retailer‘s return on sale will be consistently higher than the
industry average.
With the adoption of XAI for a CPG retailer, please indicate how much you agree with each of the following items:
Strategic Performance SP1 The application of XAI to financial business processes opens up Reis et al., 2020
(SP) new possibilities.
SP2 The application of XAI to marketing and sales processes opens
up new possibilities.
SP3 The use of XAI to business processes opens up new
possibilities.
To check sustainable growth owing to XAI enabled business value for a CPG retailer, please indicate how much you
agree with each of the following items considering the business plans or strategies of increasing market share,
productively efficiency, quality output and customer retention:
Sustainable SCA1 The business products or services will be of higher quality than Chang, 2011
Competitive those offered by competitors.
Advantage (SCA) SCA2 The profitability of the business will improve.
SCA3 The business corporate image will be superior to competitors.
SCA4 It will be difficult for competitors to match the business
competitive advantage.
To check sustainable growth owing to XAI for a CPG retailer, please indicate how much you agree with each of the
following statements:
Sustainable Growth SG1 The business image will be improved. Faulks et al., 2021
(SG) SG2 The business will increase its market share.
SG3 The business standing in the market will be improved.
SG4 The business profits will be soared.
To check sustainable growth owing to XAI and competitive strategy for a CPG retailer, please indicate how much you
agree with each of the following statements
Competitive Strategy CS1 The business will take advantage of every market opportunity Sigalas et al., 2013
(CS) that has been provided to CPG industry.
CS2 The business will utilise the market prospects that have been
offered to CPG industry to the fullest extent possible.
CS3 The business will neutralise all threats posed by competitors in
CPG industry.
CS4 The business will completely neutralise the competitive threats
posed by CPG industry competitors.
Table A3: Convergent validity and internal reliability
Construct Items FL CA CR AVE
XAI XAI1 0.857 0.864 0.867 0.686
XAI2 0.828
XAI3 0.858
FP FP1 0.822 0.853 0.854 0.661
FP2 0.813
FP3 0.772
SP SP1 0.807 0.849 0.855 0.664
SP2 0.786
SP3 0.729

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 SCA SCA1 0.779 0.858 0.860 0.607
SCA2 0.810
SCA3 0.839
SCA4 0.730
SG SG1 0.815 0.915 0.914 0.727
SG2 0.803
SG3 0.820
SG4 0.802
CS CS1 0.831 0.809 0.810 0.587
CS2 0.799
CS3 0.828
Table A4: Correlation matrix of constructs
Constructs SG SCA FP SP CS XAI
SG 0.853
SCA 0.483 0.779
FP 0.603 0.420 0.813
SP 0.655 0.518 0.538 0.815
CS 0.432 0.377 0.375 0.383 0.766
XAI 0.350 0.388 0.396 0.480 0.237 0.828
Table A5(a): Hypothesis result of direct effect
Hypothesis Relation β Std. Error t-value p-value Result
H1a XAI  FP 0.43 0.106 6.634 < 0.001 Supported
H1b XAI  SP 0.51 0.071 8.047 < 0.001 Supported
H2a FP  SCA 0.27 0.041 4.336 < 0.001 Supported
H2b SP  SCA 0.46 0.064 6.870 < 0.001 Supported
H3 SCA  SG 0.43 0.090 6.269 < 0.001 Supported
Table A5(b): Hypothesis result of moderator effect
Hypothesis Relation Std. Error t-value p-value Result
H4 SCA x CS  SG 0.090 5.601 < 0.001 Supported
CS  SG 0.067 3.956 < 0.001 Supported
Table A6: Model fit indices
Test Value Reference value Reference
CMIN/DF 2.923 1-3 Hooper et al., 2008
RMSEA 0.079 < 0.08 Kline, 2015
CFI 0.914 > 0.90 Hair et al., 1998
TLI 0.900 > 0.90
IFI 0.915 > 0.90
AGFI 0.818 > 0.80
NFI 0.876 > 0.90
Table A7: Covariate analysis by firm size
Firm size Std. error t-value p-value
<50 0.225 3.774 < 0.001
51-500 0.148 2.605 0.009
> 500 0.138 3.629 < 0.001

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