<p>Traditionally, firms have pursued the objective of maximizing firm value. However, the concept of business ethics has undergone a transformation and is now referred to as corporate social responsibility (CSR), which holds significant importance in today’s business landscape. The contemporary understanding of CSR emphasizes that a firm, as a corporate citizen, is not only accountable for its economic obligations but also for its social and environmental commitments. Built on this new definition, this study aims to empirically investigate the relationship between corporate sustainability development and performance of small and medium enterprises (SMEs) over the period from 2002 to 2018. By analyzing empirical data within an international context, the main finding reveals that fulfilling CSR has a significantly positive impact on firm profitability. However, the nonlinear model demonstrates that the development of corporate sustainability follows a U-shaped curve in relation to firm performance in terms of profitability, financial fragility, and market value. Additionally, our findings highlight that the impact of sustainability development on firm performance is more pronounced in countries with high government spending. The implication suggests that firms should consider socially responsible investment as an integral business strategy, as it has the potential to foster sustained growth. By adopting this approach, firms can simultaneously fulfill their role as responsible corporate citizens while enhancing their overall long-run performance.</p>