Firm ESG Performance and Supply-Chain Total-Factor Productivity

Feng Yang, Tingwei Chen, Zongbin Zhang and Kan Yao ()
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Feng Yang: School of Business, Liaocheng University, Liaocheng 252059, China
Tingwei Chen: School of Economics, Shandong Normal University, Jinan 250358, China
Zongbin Zhang: School of Economics, Shandong Normal University, Jinan 250358, China
Kan Yao: The Center For Economic Research, Shandong University, Jinan 250100, China

Sustainability, 2024, vol. 16, issue 20, 1-19

Abstract: Promoting firms’ green evolution and achieving sustainable, high-quality development have become crucial for firms’ sustainability. This study uses data from publicly listed automotive manufacturing firms from 2009 to 2022 to examine the impact of target firms’ environmental, social, and governance (ESG) performance on total-factor productivity (TFP) at upstream and downstream firms from a supply-chain perspective. By employing a two-way, fixed-effects model, mediation analysis, and a moderation model, the study provides comprehensive insights. The findings reveal the following: (1) The ESG performance of target firms in automotive manufacturing significantly improves the TFP of downstream customers, and this conclusion is robust even when using instrumental variable methods, additional control variables, and rigorous robustness tests. (2) Mechanism analysis indicates that the ESG performance of target firms alleviates the financing constraints of their customers, thereby positively impacting the customers’ TFP. Additionally, the study finds that the monopolistic power of the target firm negatively moderates the relationship between its ESG performance and the TFP of its customers. These empirical findings enhance the understanding of supply-chain spillover effects and provide a new theoretical foundation for improving firms’ ESG performance.

Keywords: ESG performance; total-factor productivity; financing constraints; monopolistic advantage (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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