ESG-driven innovation strategy and firm performance

Goretti Cabaleiro-Cerviño () and Pedro Mendi ()
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Goretti Cabaleiro-Cerviño: Universidad de Navarra
Pedro Mendi: Universidad de Navarra

Eurasian Business Review, 2024, vol. 14, issue 1, No 5, 137-185

Abstract: Abstract This paper investigates the impact of aligning an innovation strategy with Environmental, Social, and Governance (ESG) practices on innovation and non-innovation performance variables. Drawing on principles from Stakeholder Theory and Social Network Theory of Innovation, the research hypothesizes that ESG-driven firms will outperform firms that are not ESG-driven in terms of future innovation outcomes, labor productivity, exporting and survival rates. Using the Technological Innovation Panel (PITEC) database, a panel of Spanish companies, the study compares the performance of two groups of innovative firms: firms that declare that at least one of the ESG goals are relevant for their innovation activities (ESG-driven companies) and matched firms that regard all three ESG goals as not important (non-ESG companies). Our findings reveal that ESG-driven companies exhibit a better future innovation performance and that, in terms of labor productivity, exporting, and survival their performance is never inferior than that of innovative firms that are not ESG-driven.

Keywords: ESG; Innovation performance; Stakeholder theory; Social network theory of innovation; Open innovation; Competitive advantage; Survival rate; Exporting; Labor productivity (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40821-024-00254-x

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