Browse > Article
http://dx.doi.org/10.11627/jksie.2022.45.3.186

An Empirical Study on the Relationship between Corporate ESG Activities, Green Innovation and Corporate Performance: Focused on the Chinese Manufacturing Companies  

Zeng, Zhuoqi (Graduate School of Management, Hanyang University)
Oh, Minjeong (Global Elite Division, Yonsei University)
Choi, Sungyong (School of Business, Hanyang University)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.45, no.3, 2022 , pp. 186-196 More about this Journal
Abstract
In recent years, ESG activities (Environment, Social and Governance) have been paid more and more attention by enterprises and their stakeholders in various countries. China is the largest developing country in the world. The ESG performance of Chinese listed enterprises helps to understand the shortcomings of their sustainable development ability and further enhance the firm value. Moreover, the interaction effect between green innovation investment and ESG activities is of great significance for enterprises to balance the resource allocation between the two factors in the future. Taking listed Chinese manufacturing companies from 2011 to 2020 as an example, this study investigates the influence of ESG activities on financial performance and non-financial performance, and tests the moderating role of green innovation. Our results show that: (1) ESG performance has a negative impact on financial performance; (2) ESG performance has a positive impact on non-financial performance; (3) Green innovation can positively adjust the negative impact of environmental activities on financial performance. However, it will enhance the negative impact of governance activities on financial performance. The interaction effect between green innovation and social activities on corporate financial performance is a substitution effect; (4) With the improvement of green innovation level, the positive impact of ESG overall performance and environmental performance on corporate reputation will also be suppressed.
Keywords
Corporate ESG Activities; Green Innovation; Corporate Performance; Corporate Reputation;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
연도 인용수 순위
1 Sen, S., Bhattacharya, C.B., and Korschun, D., The Role of Corporate Social Responsibility in Strengthening Multiple Stakeholder Relationships: A Field Experiment, Journal of the Academy of Marketing Science, 2006, Vol. 34, No. 2, pp. 158-166.   DOI
2 Gloabal Sustainable Investment Alliance, Global Sustainable Investment Review 2020: http://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf.
3 Hahn, T., Figge, F., Pinkse, J., and Preuss, L., A Paradox Perspective on Corporate Sustainability: Descriptive, Instrumental, and Normative Aspects, Journal of Business Ethics, 2018, Vol. 148, pp. 235-248.   DOI
4 Jensen, M.C., Value Maximization, Stakeholder Theory, and the Corporate Objective Function, Business Ethics Quarterly, 2002, Vol. 12, No. 2, pp. 235-256.   DOI
5 Jones, T.M., Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics, 1998.
6 Kunapatarawong, R. and Martinez-Ros, E., Towards green growth: How does green innovation affect employment? Research Policy, 2016, Vol. 45, No. 6, pp. 1218-1232.   DOI
7 Lopez, M.V., Garcia, A., and Rodriguez, L., Sustainable development and corporate performance: A study based on the Dow Jones Sustainability Index, Journal of Business Ethics, 2007, Vol. 75, No. 3, pp. 285-300.   DOI
8 Malik, M., Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature, Journal of Business Ethics, 2015, Vol. 127, No. 2, p. 419.   DOI
9 Marquis, C. and Qian, C., Corporate Social Responsibility Reporting in China: Symbol or Substance? Organization Science, 2014, Vol. 25, No. 1, p. 127.   DOI
10 Min, J.H., Kim, B., and Ha, S., The Impact of Firms' Environmental, Social, and Governancial Factors for Sustainability on Their Stock Returns and Values, Journal of the Korean Operations Research and Management Science Society, 2014, Vol. 39, No. 4, pp. 33-48.   DOI
11 Tamayo-Torres, I., Gutierrez-Gutierrez, L., and Ruiz-Moreno, A., Boosting sustainability and financial performance: the role of supply chain controversies, International Journal of Production Research, 2019, Vol. 57, No. 11, pp. 3719-3734.   DOI
12 Zhao, M., CSR-Based Political Legitimacy Strategy: Managing the State by Doing Good in China and Russia, Journal of Business Ethics, 2012, Vol. 111, No. 4, p. 439.   DOI
13 Aouadi, A. and Marsat, S., Do ESG Controversies Matter for Firm Value? Evidence from International Data, Journal of Business Ethics, 2018, Vol. 151, No. 4, pp. 1027-1047.   DOI
14 Reverte, C., Gomez-Melero, E., and Cegarra-Navarro, J.G., The influence of corporate social responsibility practices on organizational performance: evidence from Eco-Responsible Spanish firms, Journal of Cleaner Production, 2016, Vol. 112, Part 4, pp. 2870-2884.   DOI
15 Velte, P., Does ESG performance have an impact on financial performance?:Evidence from Germany, 2017.
16 Yin, J., Institutional Drivers for Corporate Social Responsibility in an Emerging Economy: A Mixed-Method Study of Chinese Business Executives, Business and Society, 2017, Vol. 56, No. 5, p. 672.   DOI
17 Yoon, B., Lee, J.H., and Byun, R., Does ESG performance enhance firm value? Evidence from Korea. Sustainability (Switzerland), 2018, Vol. 10, No. 10.
18 Yuan, X., Li, Z., Xu, J., and Shang, L., ESG disclosure and corporate financial irregularities - Evidence from Chinese listed firms, Journal of Cleaner Production, 2022, p. 332.
19 Zhang, F., Qin, X., and Liu, L., The interaction effect between ESG and green innovation and its impact on firm value from the perspective of information disclosure, Sustainability (Switzerland), 2020, Vol. 12, No. 6.
20 Zhang, Q., Wu, W., and Loh, L., How do environmental, social and governance initiatives affect innovative performance for corporate sustainability? Sustainability (Switzerland), 2020, Vol. 12, No. 8.
21 Atan, R., Alam, M.M., Said, J., and Zamri, M., The impacts of environmental, social, and governance factors on firm performance: Panel study of Malaysian companies, Management of Environmental Quality: An International Journal, 2018, Vol. 29, No. 2, p. 182.
22 Clyde Eirikur, H. and Sandra, R., Firm Performance: The Interactions of Corporate Social Performance with Innovation and Industry Differentiation, Strategic Management Journal, 2008, Vol. 29, No. 7, p. 781.   DOI
23 Flanagan, D.J. and O'Shaughnessy, K.C., The Effect of Layoffs on Firm Reputation, Journal of Management, 2005, Vol. 31, No. 3, pp. 445-463.   DOI
24 Focke, F., Maug, E., and Niessen-Ruenzi, A., The impact of firm prestige on executive compensation, Journal of Financial Economics, 2017, Vol. 123, No. 2, pp. 313-336.   DOI
25 Jang, J.-I. and Choi, H.-S., The Relation between Corporate Social Responsibility and Financial Performance, Korean Journal of Business Administration, 2010, Vol. 23, No. 2, pp. 633-647.
26 Melo, T. and Garrido-Morgado, A., Corporate Reputation: A Combination of Social Responsibility and Industry, Corporate Social Responsibility & Environmental Management, 2012, Vol. 19, No. 1, pp. 11-31.   DOI
27 Rezende, L.D.A., Bansi, A.C., Alves, M.F.R., and Galina, S.V.R., Take your time: Examining when green innovation affects financial performance in multinationals, Journal of Cleaner Production, 2019, Vol. 233, pp. 993-1003.   DOI
28 Alliance, G.S.I., Global Sustainable Investment Review, 2020, 2021, Retrieved from http://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf.
29 Bing, T. and Li, M., Does CSR signal the firm value? Evidence from China, Sustainability (Switzerland), 2019, Vol. 11, No. 15.
30 Freeman, R. E., Strategic Management: A Stakeholder Perspective. Boston: Pitman, 1984.
31 Porter, M.E. and Kramer, M.R., Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review, 2006, Vol. 84, No. 12, pp. 78-90.
32 Kim, B. and Min, J.H., An Exploratory Study on the Lead-lag Relationship between Firms' ESG Efforts and Their Financial Performance, Journal of The Korean PRoduction and Operations Management Society, 2016, Vol. 27, No. 4, pp. 513-538.   DOI
33 Luo, X. and Bhattacharya, C.B., Corporate Social Responsibility, Customer Satisfaction, and Market Value, Journal of Marketing, 2006, Vol. 70, No. 4, pp. 1-18.
34 McWilliams, A. and Siegel, D., Corporate Social Responsibility and Financial Performance: Correlation or Misspecification? Strategic Management Journal, 2000, Vol. 21, No. 5, pp. 603-609.   DOI
35 Schnietz, K.E. and Epstein, M.J., Exploring the Financial Value of a Reputation for Corporate Social Responsibility During a Crisis, Corporate Reputation Review, 2005, Vol. 7, No. 4, pp. 327-345.   DOI
36 UN PRI. About the PRI[EB/OL]. https://www.unpri.org/about-the-pri, 2015.
37 Yin, J. and Zhang, Y., Institutional Dynamics and Corporate Social Responsibility (CSR) in an Emerging Country Context: Evidence from China, Journal of Business Ethics, 2012, Vol. 111, No. 2, p. 301.   DOI
38 Zhang, D., Rong, Z., and Ji, Q., Green innovation and firm performance: Evidence from listed companies in China, Resources, Conservation & Recycling, 2019, Vol. 144, pp. 48-55.   DOI
39 Duque-Grisales, E. and Aguilera-Caracuel, J., Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack, Journal of Business Ethics, 2021, Vol. 168, No. 2, pp. 315-334.   DOI
40 Chouaibi, S. and Chouaibi, J., Social and Ethical Practices and Firm Value: The Moderating Effect of Green Innovation: Evidence from International ESG Data, International Journal of Ethics and Systems, 2021, Vol. 37, No. 3, pp. 442-465.   DOI