Does ESG Impact Firms’ Sustainability Performance? The Mediating Effect of Innovation Performance

Shukang Zhou (), Md. Harun Ur Rashid, Shah Asadullah Mohd. Zobair, Farid Ahammad Sobhani and Abu Bakkar Siddik
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Shukang Zhou: School of Economics and Management, Zhongyuan University of Technology, Zhengzhou 451191, China
Md. Harun Ur Rashid: Department of Economics & Banking, International Islamic University Chittagong, Chattogram 4318, Bangladesh
Shah Asadullah Mohd. Zobair: Department of Economics & Banking, International Islamic University Chittagong, Chattogram 4318, Bangladesh
Farid Ahammad Sobhani: School of Business and Economics, United International University, Dhaka 1212, Bangladesh

Sustainability, 2023, vol. 15, issue 6, 1-21

Abstract: In this age of global warming, academics and policymakers are increasingly concerned about firm environmental sustainability success. Therefore, this study aims to investigate whether Environmental, Social and Governance (ESG) performance impacts sustainability performance through the mediating effect of firm innovation. To this end, Structural Equation Modeling (SEM) was deployed to analyze data collected from the employees of manufacturing industries in Bangladesh. The results revealed that ESG performance significantly enhances the innovation and sustainability performance of manufacturing industries, indicating that the higher the ESG performance of a firm, the greater its innovation and sustainability performance. Furthermore, the results confirmed that firm innovation performance fully mediates the relationship between ESG initiatives and sustainability performance. The findings of this study provide policymakers and industry authorities with valuable insight into the role of ESG and innovation performance in improving sustainability performance. Specifically, the study sheds knowledge on how firm ESG initiatives and innovation performance impact sustainability performance in the manufacturing sector of an emerging economy such as Bangladesh.

Keywords: sustainability performance; environmental; Social and Governance (ESG) performance; innovation performance; mediating effect; manufacturing firms (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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