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How does ESG performance promote corporate green innovation?

Author

Listed:
  • Han Long

    (Xi’an Jiaotong University)

  • Gen-Fu Feng

    (Xi’an Jiaotong University)

  • Chun-Ping Chang

    (Shih Chien University)

Abstract

How to enhance competitive advantage and turn green commitment into practice is a problem that corporates must face under sustainable development. This research examines the impact of environmental, social, and governance (ESG) performance on corporate green innovation and the role digital transformation plays in it. We use a panel fixed effects model for empirical analysis based on sample data of 1070 Chinese-listed corporates from 2011 to 2020. The empirical results show that better ESG performance leads to more acquisition of green innovation by corporates. This effect is more significant under the promotion of digital transformation. The role of ESG performance and digital transformation is markedly heterogeneous across different types of corporates. Among private corporates, technology-based corporates, and ecological corporates, the improvement of green innovation by ESG performance is more apparent, and the promotion effect of digital transformation is more significant. Our findings suggest that creating conditions for corporate ESG performance improvement and digital transformation at the macro level and enhancing corporates’ subjective willingness for sustainable development and digitalization at the micro level will enable them to develop their green innovation capabilities by leaps and bounds.

Suggested Citation

  • Han Long & Gen-Fu Feng & Chun-Ping Chang, 2023. "How does ESG performance promote corporate green innovation?," Economic Change and Restructuring, Springer, vol. 56(4), pages 2889-2913, August.
    • Handle: RePEc:kap:ecopln:v:56:y:2023:i:4:d:10.1007_s10644-023-09536-2
    DOI: 10.1007/s10644-023-09536-2
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    Cited by:

    1. Kun Wang & Bing Chen & Yuhong Li, 2024. "Technological, process or managerial innovation? How does digital transformation affect green innovation in industrial enterprises?," Economic Change and Restructuring, Springer, vol. 57(1), pages 1-32, February.
    2. Zhang, Dongyang & Wang, Cao & Miao, Shan & Deng, Lei, 2024. "The impact of firm's ESG performance on the skill premium: Evidence from China's green finance reform pilot zone," International Review of Financial Analysis, Elsevier, vol. 93(C).
    3. Yiming Xu & Naiping Zhu, 2024. "The Effect of Environmental, Social, and Governance (ESG) Performance on Corporate Financial Performance in China: Based on the Perspective of Innovation and Financial Constraints," Sustainability, MDPI, vol. 16(8), pages 1-21, April.
    4. Haibo Sun & Tonghuan Bai & Youqing Fan & Zhonglu Liu, 2024. "Environmental, social, and governance performance and enterprise sustainable green innovation: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3633-3650, July.
    5. Tan, Xiujie & Liu, Gufeng & Cheng, Si, 2024. "How does ESG performance affect green transformation of resource-based enterprises: Evidence from Chinese listed enterprises," Resources Policy, Elsevier, vol. 89(C).
    6. Minjie Li & Mengjun Meng & Yihui Chen, 2024. "The impact of the digital economy on green innovation: the moderating role of fiscal decentralization," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-33, April.

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    More about this item

    Keywords

    Environmental; social; and governance; Green innovation; Digital transformation;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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