["Corporate Social Responsibility and Environmental Management, Volume 33, Issue 3, Page 3125-3144, May 2026. ", "\nABSTRACT\nIntegrating corporate social responsibility (CSR) with a firm's strategies may not only improve the trust of various stakeholders but also enhance innovative behavior. This further positions the firm for a competitive advantage, confirming good performance in a socially responsible business environment. Most past studies have focused on external stakeholders. However, this study examines the role of both internal and external stakeholders' perceptions of CSR as pivotal drivers of sustainable competitive advantage (SCA) in the contemporary business landscape. It further examines how organizations frequently engage in greenwashing, making misleading claims about their environmental and sustainability initiatives. The study further incorporates the mediating mechanism of green ambidextrous innovation (GAI) that affects the relationship between CSR perceptions (internal and external) and SCA. Grounded in the theoretical underpinnings of upper echelons theory (UET) and resource orchestration theory (ROT), the analysis was conducted using data from 330 respondents, employing the PLS‐SEM technique. The findings reveal that perceived greenwashing has a negative impact on external CSR, but it does not affect internal CSR perceptions. The study also observed that GAI partially mediates the relationship between internal CSR, external CSR, and SCA. The study makes crucial theoretical and practical contributions that help firms to build strong relationships with stakeholders, drive innovation to accelerate sustainable efforts, and achieve a strategic competitive advantage that avoids perceived greenwashing.\n"]