Full-text resources of CEJSH and other databases are now available in the new Library of Science.
Visit https://bibliotekanauki.pl

PL EN


2023 | 14 | 3 | 795-832

Article title

Does ESG performance bring to enterprises’ green innovation? Yes, evidence from 118 countries

Content

Title variants

Languages of publication

Abstracts

EN
Research background: The sustainable development and innovation economics theory and related literature place a lot of emphasis on the relationship between environment, society, and governance (ESG) and green innovation. Purpose of the article: The purpose of this paper is to understand what the factors are that influence green innovation and why there is a big disparity in green innovation capabilities between nations. In addition, this paper aims to investigate the impact of ESG performance of green innovation by using unbalanced panel data covering 118 sample countries during the period of 1999–2019. Methods: Panel fixed effect model; Instrumental variable (IV) method; First-differencing (FD) method; Kinky least-squares (KLS) approach. Findings & value added: ESG performance provides evidence for its positive and significant impact on such innovation. Among the ESG factors, governance seems to have the most important influence on green innovation. Moreover, the positive influence of ESG performance is more evident in higher income and wealthy nations. Furthermore, we also conclude that ESG performance can affect green innovation through FDI, human capital, financial development and trade openness. These conclusions hold up after a number of robustness tests and taking into account any potential endogenous issues. Overall, policymakers should pay close attention to the findings.

Year

Volume

14

Issue

3

Pages

795-832

Physical description

Dates

published
2023

Contributors

author
  • Changsha University of Science and Technology
author
  • Xi'an Jiaotong University
  • Shih Chien University

References

  • Ahmed, S. U., Ahmed, S. P., & Hasan, I. (2018). Why banks should consider ESG risk factors in bank lending? Banks and Bank Systems, 13(3), 71–80.
  • Bai, J. (2009). Panel data models with interactive fixed effects. Econometrica, 77(4), 1229–1279.
  • Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173.
  • Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634–647.
  • Bu, M. L., Qiao, Z. Z., & Liu, B. B. (2020). Voluntary environmental regulation and firm innovation in China. Economic Modelling, 89, 10–18.
  • Cai, Y., Pan, C. H., & Statman, M. (2016). Why do countries matter so much in corporate social performance? Journal of Corporate Finance, 41, 591–609.
  • Chen, J. K., Abbas, J., Najam, H., Liu, J. N., Abbas, J. (2022). Green technological innovation, green finance, and financial development and their role in green total factor productivity: Empirical insights from China. Journal of Cleaner Production, 382, 135131.
  • Clemens, M. A., Radelet, S., Bhavnani, R. R., & Bazzi, S. (2012). Counting chickens when they hatch: Timing and the effects of aid on growth. Economic Journal, 122(561), 590–617.
  • Cornell, B. (2020). ESG preferences, risk and return. European Financial Management, 27(1), 12–19.
  • Cole, D. A., & Maxwell, S. E. (2003). Testing mediational models with longitudinal data: Questions and tips in the use of structural equation modeling. Journal of Abnormal Psychology, 112(4), 558.
  • Di Giuli, A., & Kostovetsky, L. (2014). Are red or blue companies more likely to go green? Politics and corporate social responsibility. Journal Financial Economics, 111(1), 158–180.
  • Drempetic, S., Klein, C., & Zwergel, B. (2019). The influence of firm size on the ESG score: Corporate sustainability ratings under review. Journal of Business Ethics, 167, 333–360.
  • Driscoll, J. C., & Kraay, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549–560.
  • Du, K., Cheng, Y., & Yao, X. (2021). Environmental regulation, green technology innovation, and industrial structure upgrading: The road to the green transformation of Chinese cities. Energy Economics, 98, 105247.
  • Feng, Y., Wang, X., & Liang, Z. (2021). How does environmental information disclosure affect economic development and haze pollution in Chinese cities? The mediating role of green technology innovation. Science of The Total Environment, 775, 145811.
  • Fu, Q., Chen, Y. E., Jang, C. L., & Chang, C. P. (2020). The impact of international sanctions on environmental performance. Science of The Total Environment, 745, 141007.
  • Fu, Q., Gong, Q., Zhao, X. X., & Chang, C. P. (2022). The effects of international sanctions on green innovations. Technological and Economic Development of Economy, 29(1), 141–164.
  • Guloglu, B., Tekin, R. B., & Saridogan E. (2012). Economic determinants of technological progress in G7 countries: A re-examination. Economics Letters, 116(3), 604–608.
  • Hao, L. N., Umar, M., Khan, Z., & Ali, W. (2021). Green growth and low carbon emission in G7 countries: How critical the network of environmental taxes, renewable energy and human capital is? Science of The Total Environment, 752, 141853.
  • Hastalona, D., & Sadalia, I. (2021). Literature review ESG and sustainability finance. Budapest International Research and Critics Institute-Journal, 4(3), 3548–3557. doi: 10.33258/birci.v4i3.2122.
  • Hoang, K. (2022). Silent but deadly: Political corruption and voluntary ESG disclosure in the United States. Managerial and Decision Economics, 43(7), 2775–2793.
  • Hsu, C. C., Quang-Thanh, N., Chien, F., Li, L., & Mohsin, M. (2021). Evaluating green innovation and performance of financial development: Mediating concerns of environmental regulation. Environmental Science and Pollution Research, 28(40), 57386–57397.
  • Huang, S., Lu, J., Chau, K. Y., & Zheng, H. (2020). Influence of ambidextrous learning on eco-innovation performance of startups: Moderating effect of top management’s environmental awareness. Frontiers in Psychology, 11, 1976. doi: 10.3389/fpsyg.2020.01976.
  • Jha, A., & Cox, J. (2015). Corporate social responsibility and social capital. Journal of Banking Finance, 60, 252–270.
  • Kiviet, J. F. (2013). Identification and inference in a simultaneous equation under alternative information sets and sampling schemes. Econometrics Journal, 16(1), S24–S59.
  • Kiviet, J. F. (2023). Instrument-free inference under confined regressor endogeneity and mild regularity. Econometrics and Statistics, 25, 1–22.
  • Lewbel, A. (2012). Using heteroscedasticity to identify and estimate mismeasured and endogenous regressor models. Journal of Business & Economic Statistics, 30(1), 67–80.
  • Liang, H., & Renneboog, L. (2017). On the foundations of corporate social responsibility. Journal of Finance, 72(2), 853–910.
  • Liu, C. Y., Gao, X. Y., Ma, W. L., & Chen, X. T. (2020). Research on regional differences and influencing factors of green technology innovation efficiency of China’s high-tech industry. Journal of Computational and Applied Mathematics, 369, 112597.
  • Long, H., Feng, G. F., Gong, Q., & Chang, C. P. (2023). ESG performance and green innovation: An investigation based on quantile regression. Business Strategy and the Environment. Advance online publication.
  • Mooneeapen, O., Abhayawansa, S., & Khan, N. M. (2022). The influence of the country governance environment on corporate environmental, social and governance (ESG) performance. Sustainability Accounting Management and Policy Journal, 13(4), 953–985.
  • Shi, Y., & Yang, C. (2022). How does multidimensional R&D investment affect green innovation? Evidence from China. Frontiers in Psychology, 13, 947108.
  • Sobel, M. E. (1982). Asymptotic confidence intervals for indirect effects in structural equation models. Sociological Methodology, 13, 290–312.
  • Song, M., Tao, J., & Wang, S. (2015). FDI, technology spillovers and green innovation in China: Analysis based on data envelopment analysis. Annals of Operations Research, 228(1), 47–64.
  • Sun, H., Edziah, B. K., Sun, C., & Kporsu, A. K. (2019). Institutional quality, green innovation and energy efficiency. Energy Policy, 135, 111002.
  • Tan, Y., & Zhu, Z. (2022). The effect of ESG rating events on corporate green innovation in China: The mediating role of financial constraints and managers’ environmental awareness. Technology in Society, 68, 101906. doi: 10.1016/j.techsoc. 2022.101906.
  • Tang, K., Qiu, Y., & Zhou, D. (2020). Does command-and-control regulation promote green innovation performance? Evidence from China’s industrial enterprises. Science of the Total Environment, 712, 136362. doi: 10.1016/j.scitotenv.2019. 136362.
  • Van Beveren, I., & Vandenbussche, H. (2010). Product and process innovation and firms’ decision to export. Journal of economic policy reform, 13(1), 3–24.
  • Wang, Q. J., Feng, G. F., Chen, Y. E., Wen, J., & Chang, C. P. (2019). The impacts of government ideology on innovation: What are the main implications? Research Policy, 48(5), 1232–1247.
  • Wang, Q. J., Feng, G. F., Wang, H. J., & Chang, C. P. (2021). The impacts of democracy on innovation: Revisited evidence. Technovation, 108, 102333. doi: 10.1016/j.te chnovation.2021.102333.
  • Wang, Q. J., Wang, H. J., Feng, G. F., & Chang, C. P. (2023). Impact of digital transformation on performance of environment, social, and governance: Empirical evidence from China. Business Ethics, the Environment & Responsibility. Advance online publication.
  • Wen, J., Li, L., Zhao, X., Jiao, C., & Li, W. (2022). How government size expansion can affect green innovation-An empirical analysis of data on cross-country green patent filings. International Journal of Environmental Research and Public Health, 19(12), 7328.
  • Wen, J., Zhao, X. X., & Chang, C. P. (2021). The impact of extreme events on energy price risk. Energy Economics, 99, 105308.
  • Wu, B., & Flynn, A. (1995). Sustainable development in China: Seeking a balance between economic growth and environmental protection. Sustainable Development, 3(1), 1–8.
  • Zhang, F., Yang, Y. W., Ahmad, M., & Shao, J. J. (2022). Would the urban environmental legislation realize the Porter hypothesis? Empirical evidence based on panel data of Chinese prefecture cities. Frontiers in Environmental Science, 10, 944383.
  • Zheng, J., Khurram, M. U., & Chen, L. (2022). Can green innovation affect ESG ratings and financial performance? Evidence from Chinese GEM listed companies. Sustainability, 14, 8677.
  • Zheng, M., Feng, G. F., Wen, J., & Chang, C. P. (2020). The influence of FDI on domestic innovation: An investigation using structural breaks. Prague Economic Papers, 29(4), 403–423.

Document Type

Publication order reference

Identifiers

Biblioteka Nauki
19903268

YADDA identifier

bwmeta1.element.ojs-doi-10_24136_oc_2023_024
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.