ESG performance and total factor productivity of enterprises: the role of digitization

Yini Geng, Zhiqiang Zheng, Xuemei Yuan and Ana Isabel Jiménez-Zarco

Research in International Business and Finance, 2025, vol. 77, issue PA

Abstract: After the pandemic, the global economy faces uncertainties like climate change, the Russia-Ukraine conflict, and rising international trade tensions. These factors significantly threaten the stability of the global economy. Against this backdrop, achieving high-quality economic growth has become an urgent issue. Enhancing Total Factor Productivity (TFP) is essential to achieving this objective. The criteria of Environmental, Social, and Governance (ESG) are gaining wider acknowledgment as pivotal indicators of a corporation's capacity for sustainable development. We analyze the effect of ESG performance on TFP, and the role played by digitization. The study's revelations underscore that a robust ESG performance imparts a significantly affirmative influence on TFP, an effect which is notably more distinct within state-owned enterprises, those characterized by a high degree of technological intensity, and companies operating in less marketized environments. Furthermore, digitization positively moderates the effect of ESG on alleviating financing constraints, thereby enhancing TFP. Based on the above conclusions, we provide policy suggestions aimed at strengthening ESG governance and fostering sustainable, high-quality economic growth.

Keywords: ESG performance; Financing constraints; TFP; Digitization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pa:s027553192500176x

DOI: 10.1016/j.ribaf.2025.102920

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