IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i4p2270-d751314.html
   My bibliography  Save this article

Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation

Author

Listed:
  • Luca Di Simone

    (Department of Economic and Social Sciences, Università Cattolica del Sacro Cuore, 29122 Piacenza, Italy)

  • Barbara Petracci

    (Department of Management, University of Bologna, 40126 Bologna, Italy)

  • Mariacristina Piva

    (Department of Economic Policy, Università Cattolica del Sacro Cuore, 29122 Piacenza, Italy)

Abstract

The growing attention to sustainability has generated increasing interest in its relevant determinants and a possible relationship with economic growth’s main drivers. Our paper contributes to this literature in three ways, by proposing the following empirical analysis of most innovative companies listed worldwide (909 firms over the 2013–2017 time-span): firstly, market-perceived innovation—proxied by the interaction between R&D intensity and the market-to-book ratio—has a positive impact on economic sustainability; secondly, when the three ESG pillars are considered, the social one turns out to have the highest effect on economic sustainability; thirdly, results are confirmed even when we control for context-specific conditions.

Suggested Citation

  • Luca Di Simone & Barbara Petracci & Mariacristina Piva, 2022. "Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation," Sustainability, MDPI, vol. 14(4), pages 1-16, February.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:4:p:2270-:d:751314
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/4/2270/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/4/2270/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fatemi, Ali & Glaum, Martin & Kaiser, Stefanie, 2018. "ESG performance and firm value: The moderating role of disclosure," Global Finance Journal, Elsevier, vol. 38(C), pages 45-64.
    2. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    3. Bauer, Rob & Frijns, Bart & Otten, Rogér & Tourani-Rad, Alireza, 2008. "The impact of corporate governance on corporate performance: Evidence from Japan," Pacific-Basin Finance Journal, Elsevier, vol. 16(3), pages 236-251, June.
    4. Hao Liang & Luc Renneboog, 2017. "On the Foundations of Corporate Social Responsibility," Journal of Finance, American Finance Association, vol. 72(2), pages 853-910, April.
    5. Rick Edgeman & Jacob Eskildsen, 2014. "Modeling and Assessing Sustainable Enterprise Excellence," Business Strategy and the Environment, Wiley Blackwell, vol. 23(3), pages 173-187, March.
    6. Eduardo Duque-Grisales & Javier Aguilera-Caracuel, 2021. "Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack," Journal of Business Ethics, Springer, vol. 168(2), pages 315-334, January.
    7. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
    8. Baruch Lev & Theodore Sougiannis, 1999. "Penetrating the Book-to-Market Black Box: The R&D Effect," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3-4), pages 419-449.
    9. Tze San Ong & Ah Suat Lee & Boon Heng Teh & Hussain Bakhsh Magsi, 2019. "Environmental Innovation, Environmental Performance and Financial Performance: Evidence from Malaysian Environmental Proactive Firms," Sustainability, MDPI, vol. 11(12), pages 1-18, June.
    10. Sandra Cavaco & Patricia Crifo, 2014. "CSR and financial performance: complementarity between environmental, social and business behaviours," Applied Economics, Taylor & Francis Journals, vol. 46(27), pages 3323-3338, September.
    11. Mónica LópezPuertas-Lamy & Kurt Desender & Mircea Epure, 2017. "Corporate social responsibility and the assessment by auditors of the risk of material misstatement," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 44(9-10), pages 1276-1314, October.
    12. Wagner, Marcus, 2010. "The role of corporate sustainability performance for economic performance: A firm-level analysis of moderation effects," Ecological Economics, Elsevier, vol. 69(7), pages 1553-1560, May.
    13. Nazim Hussain & Ugo Rigoni & Elisa Cavezzali, 2018. "Does it pay to be sustainable? Looking inside the black box of the relationship between sustainability performance and financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1198-1211, November.
    14. Wellalage, Nirosha Hewa & Fernandez, Viviana, 2019. "Innovation and SME finance: Evidence from developing countries," International Review of Financial Analysis, Elsevier, vol. 66(C).
    15. Mariacristina Piva & Marco Vivarelli, 2018. "Technological change and employment: is Europe ready for the challenge?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 13-32, March.
    16. Rafael La Porta & Florencio Lopez‐de‐Silanes & Andrei Shleifer & Robert W. Vishny, 2000. "Agency Problems and Dividend Policies around the World," Journal of Finance, American Finance Association, vol. 55(1), pages 1-33, February.
    17. Gabriele Pellegrino & Mariacristina Piva, 2020. "Innovation, industry and firm age: are there new knowledge production functions?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 65-95, March.
    18. Yu-Shan Chen & Shyh-Bao Lai & Chao-Tung Wen, 2006. "The Influence of Green Innovation Performance on Corporate Advantage in Taiwan," Journal of Business Ethics, Springer, vol. 67(4), pages 331-339, September.
    19. Dosi, G. & Piva, M. & Virgillito, M.E. & Vivarelli, M., 2021. "Embodied and disembodied technological change: The sectoral patterns of job-creation and job-destruction," Research Policy, Elsevier, vol. 50(4).
    20. Laura Barbieri & Mariacristina Piva & Marco Vivarelli, 2019. "R&D, embodied technological change, and employment: evidence from Italian microdata," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 203-218.
    21. Julio Pindado & Valdoceu De Queiroz & Chabela De La Torre, 2010. "How Do Firm Characteristics Influence the Relationship between R&D and Firm Value?," Financial Management, Financial Management Association International, vol. 39(2), pages 757-782, June.
    22. Antoine Dechezleprêtre & Cal B. Muckley & Parvati Neelakantan, 2021. "Is firm-level clean or dirty innovation valued more?," The European Journal of Finance, Taylor & Francis Journals, vol. 27(1-2), pages 31-61, January.
    23. Shah, Syed Zulfiqar Ali & Stark, Andrew W. & Akbar, Saeed, 2009. "The value relevance of major media advertising expenditures: Some U.K. evidence," The International Journal of Accounting, Elsevier, vol. 44(2), pages 187-206, June.
    24. Nicola Grassano & Hector Hernandez & Peter Fako & Alexander Tuebke & Sara Amoroso & Aliki Georgakaki & Lorenzo Napolitano & Francesco Pasimeni & Francesco Rentocchini & Ramon Compano & Serena Fatica &, 2021. "The 2021 EU Industrial R&D Investment Scoreboard," JRC Research Reports JRC127360, Joint Research Centre.
    25. Indranil Bardhan & Viswanathan Krishnan & Shu Lin, 2013. "Research Note ---Business Value of Information Technology: Testing the Interaction Effect of IT and R&D on Tobin's Q," Information Systems Research, INFORMS, vol. 24(4), pages 1147-1161, December.
    26. Shane A. Johnson & Theodore C. Moorman & Sorin Sorescu, 2009. "A Reexamination of Corporate Governance and Equity Prices," The Review of Financial Studies, Society for Financial Studies, vol. 22(11), pages 4753-4786, November.
    27. Brown, Lawrence D. & Caylor, Marcus L., 2006. "Corporate governance and firm valuation," Journal of Accounting and Public Policy, Elsevier, vol. 25(4), pages 409-434.
    28. Castellani, Davide & Piva, Mariacristina & Schubert, Torben & Vivarelli, Marco, 2019. "R&D and productivity in the US and the EU: Sectoral specificities and differences in the crisis," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 279-291.
    29. Thomas Dyllick & Kai Hockerts, 2002. "Beyond the business case for corporate sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 11(2), pages 130-141, March.
    30. Timo Busch & Maximilian Schnippering, 2022. "Corporate social and financial performance: Revisiting the role of innovation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 635-645, May.
    31. Baruch Lev & Theodore Sougiannis, 1999. "Penetrating the Book‐to‐Market Black Box: The R&D Effect," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3‐4), pages 419-449, April.
    32. Víctor Meseguer-Sánchez & Francisco Jesús Gálvez-Sánchez & Gabriel López-Martínez & Valentín Molina-Moreno, 2021. "Corporate Social Responsibility and Sustainability. A Bibliometric Analysis of Their Interrelations," Sustainability, MDPI, vol. 13(4), pages 1-18, February.
    33. Louise Ellis & Claire Bastin, 2011. "Corporate social responsibility in times of recession: Changing discourses and implications for policy and practice," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 18(5), pages 294-305, September.
    34. Michael Magill & Martine Quinzii & Jean‐Charles Rochet, 2015. "A Theory of the Stakeholder Corporation," Econometrica, Econometric Society, vol. 83(5), pages 1685-1725, September.
    35. Shubo Liu & Min-Ren Yan, 2018. "Corporate Sustainability and Green Innovation in an Emerging Economy—An Empirical Study in China," Sustainability, MDPI, vol. 10(11), pages 1-29, November.
    36. Tracy Artiach & Darren Lee & David Nelson & Julie Walker, 2010. "The determinants of corporate sustainability performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(1), pages 31-51, March.
    37. Chen, Long & Zhao, Xinlei, 2006. "On the relation between the market-to-book ratio, growth opportunity, and leverage ratio," Finance Research Letters, Elsevier, vol. 3(4), pages 253-266, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Towards sustainable development: How does ESG performance promotes corporate green transformation," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Giovanna Morelli & Cosimo Magazzino & Antonia Rosa Gurrieri & Cesare Pozzi & Marco Mele, 2022. "Designing Smart Energy Systems in an Industry 4.0 Paradigm towards Sustainable Environment," Sustainability, MDPI, vol. 14(6), pages 1-20, March.
    3. Mark Schoor & Ana Patricia Arenas-Salazar & Irineo Torres-Pacheco & Ramón Gerardo Guevara-González & Enrique Rico-García, 2023. "A Review of Sustainable Pillars and their Fulfillment in Agriculture, Aquaculture, and Aquaponic Production," Sustainability, MDPI, vol. 15(9), pages 1-20, May.
    4. Li, Chao & Ba, Shusong & Ma, Kejia & Xu, Yueling & Huang, Wenli & Huang, Niyuan, 2023. "ESG Rating Events, Financial Investment Behavior and Corporate Innovation," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 372-387.
    5. Michael Graham Parkes & Rebekah O’Rourke & Tiago Domingos & Ricardo F. M. Teixeira, 2023. "An Experimental Portuguese Social-Enterprise Project in Urban Agriculture: A Case Study on the Influence of the Interaction of Stakeholder Roles on Sustainable Governance," Sustainability, MDPI, vol. 15(4), pages 1-19, February.
    6. Cristina Nicolau & Eliza Nichifor & Daniel Munteanu & Oana Bărbulescu, 2022. "Decoding Business Potential for Digital Sustainable Entrepreneurship: What Romanian Entrepreneurs Think and Do for the Future," Sustainability, MDPI, vol. 14(20), pages 1-21, October.
    7. Julien Hanoteau, 2023. "Do foreign MNEs alleviate multidimensional poverty in developing countries?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 719-749, December.
    8. Muhammad Kashif Ali & Muhammad Khurram Zahoor & Asif Saeed & Safia Nosheen, 2023. "Moderating effect of vertical integration on the relationship between sustainability and performance: evidence from oil and gas energy sector," Future Business Journal, Springer, vol. 9(1), pages 1-11, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. DasGupta, Ranjan & Roy, Arup, 2023. "Firm environmental, social, governance and financial performance relationship contradictions: Insights from institutional environment mediation," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    2. Montobbio, Fabio & Staccioli, Jacopo & Virgillito, Maria Enrica & Vivarelli, Marco, 2022. "Robots and the origin of their labour-saving impact," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    3. Thi Thu Tra Pham & Thai Vu Hong Nguyen & Son Kien Nguyen & Hieu Thi Hoang Nguyen, 2023. "Does planned innovation promote financial access? Evidence from Vietnamese SMEs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 281-307, June.
    4. Liu, Xianda & Hou, Wenxuan & Main, Brian G.M., 2022. "Anti-market sentiment and corporate social responsibility: Evidence from anti-Jewish pogroms," Journal of Corporate Finance, Elsevier, vol. 76(C).
    5. Hsiao-Yen Mao & Wen-Min Lu & Hsin-Yen Shieh, 2023. "Exploring the Influence of Environmental Investment on Multinational Enterprises’ Performance from the Sustainability and Marketability Efficiency Perspectives," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    6. Dosi, G. & Piva, M. & Virgillito, M.E. & Vivarelli, M., 2021. "Embodied and disembodied technological change: The sectoral patterns of job-creation and job-destruction," Research Policy, Elsevier, vol. 50(4).
    7. Jacopo Staccioli & Maria Enrica Virgillito, 2021. "Back to the past: the historical roots of labor-saving automation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 27-57, March.
    8. Ho, Ly & Bai, Min & Lu, Yue & Qin, Yafeng, 2021. "The effect of corporate sustainability performance on leverage adjustments," The British Accounting Review, Elsevier, vol. 53(5).
    9. Jasmine Mondolo, 2022. "The composite link between technological change and employment: A survey of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1027-1068, September.
    10. Marshall, Andrew & Rao, Sandeep & Roy, Partha P. & Thapa, Chandra, 2022. "Mandatory corporate social responsibility and foreign institutional investor preferences," Journal of Corporate Finance, Elsevier, vol. 76(C).
    11. Borsato, Andrea & Lorentz, André, 2023. "The Kaldor–Verdoorn law at the age of robots and AI," Research Policy, Elsevier, vol. 52(10).
    12. Siew Peng Lee, 2023. "Board monitoring effectiveness and corporate sustainability performance: do legal system and CEO non-duality matter?," Review of Managerial Science, Springer, vol. 17(4), pages 1243-1267, May.
    13. Yoonkyo Cho, 2022. "ESG and Firm Performance: Focusing on the Environmental Strategy," Sustainability, MDPI, vol. 14(13), pages 1-19, June.
    14. Juan Pineiro-Chousa & Noelia Romero-Castro & Marcos Vizcaíno-González, 2019. "Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis," Sustainability, MDPI, vol. 11(4), pages 1-31, February.
    15. Maria Vincenza Ciasullo & Raffaella Montera & Nicola Cucari & Francesco Polese, 2020. "How an international ambidexterity strategy can address the paradox perspective on corporate sustainability: Evidence from Chinese emerging market multinationals," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2110-2129, July.
    16. Rajeev K. Goel & Michael A. Nelson, 2022. "Employment effects of R&D and process innovation: evidence from small and medium-sized firms in emerging markets," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 97-123, March.
    17. Tat Dat Bui & Mohd Helmi Ali & Feng Ming Tsai & Mohammad Iranmanesh & Ming-Lang Tseng & Ming K Lim, 2020. "Challenges and Trends in Sustainable Corporate Finance: A Bibliometric Systematic Review," JRFM, MDPI, vol. 13(11), pages 1-26, October.
    18. Fabio Montobbio & Jacopo Staccioli & Maria Enrica Virgillito & Marco Vivarelli, 2021. "Labour-saving automation and occupational exposure: a text-similarity measure," DISCE - Quaderni del Dipartimento di Politica Economica dipe0021, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    19. María Jesús Muñoz‐Torres & María Ángeles Fernández‐Izquierdo & Juana M. Rivera‐Lirio & Elena Escrig‐Olmedo, 2019. "Can environmental, social, and governance rating agencies favor business models that promote a more sustainable development?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 439-452, March.
    20. Johannes Kolb, 2019. "Do investment banks create value for their clients? Empirical evidence from European acquisitions," European Financial Management, European Financial Management Association, vol. 25(1), pages 80-115, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:4:p:2270-:d:751314. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.