Mitigating Involutionary Competition Through Corporate ESG Adoption: Evidence from the Consumer Electronics Manufacturing Industry

Menghan Shao, Yue Liu, Guanbing Zhao (), Haitao Sun and Peiyuan Zhao
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Menghan Shao: School of Finance and Economics, Jiangsu University, No. 301, Xuefu Road, Jingkou District, Zhenjiang 212013, China
Yue Liu: School of Finance and Economics, Jiangsu University, No. 301, Xuefu Road, Jingkou District, Zhenjiang 212013, China
Guanbing Zhao: School of Finance and Economics, Jiangsu University, No. 301, Xuefu Road, Jingkou District, Zhenjiang 212013, China
Haitao Sun: School of Finance and Economics, Jiangsu University, No. 301, Xuefu Road, Jingkou District, Zhenjiang 212013, China
Peiyuan Zhao: College of Arts and Sciences, The Ohio State University, Columbus, OH 43210, USA

Sustainability, 2025, vol. 17, issue 20, 1-37

Abstract: This study investigates whether and how corporate commitment to environmental, social and governance (ESG) performance can mitigate involutionary competition in China’s consumer electronics manufacturing industry. By constructing a quantifiable index of involutionary competition intensity and matching it with corporation-level ESG scores, we document a statistically significant negative association between ESG performance and the degree of involutionary competition. Mechanism analysis reveals that ESG mitigates involutionary competition through two primary channels: (1) differentiation strategies that reduce price-based competition and product homogeneity, and (2) market-order regulation that curbs opportunistic behaviour and raises R&D efficiency. A modest price increase is shown to be revenue-enhancing; moreover, random-forest simulations indicate that counter-involutionary competition efforts amplify the market-share gains from cooperative R&D expenditures, accelerating post-adjustment revenue growth. This transition generates simultaneous increases in corporate profits and corporation value, breaking the previous price ceiling and establishing a sustainable development loop. The findings provide actionable insights for shifting the industry from low-level rivalry to sustainable value creation.

Keywords: ESG; involutionary competition; consumer electronics manufacturing industry; corporate competition; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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