Impact of Environmental, Social, and Governance on Innovation in Chinese Listed Firms

Renhong Wu, Jinbao Li, Yunhai Dai, Xiangdong Shen and Md. Alamgir Hossain ()
Additional contact information
Renhong Wu: School of Management, Kyung Hee University, Seoul 02447, Republic of Korea
Jinbao Li: Department of Economics and Finance, Daqing Normal University, Daqing 163111, China
Yunhai Dai: Korea-China Business Studies, Namseoul University, Cheonan 31020, Republic of Korea
Xiangdong Shen: Business School, Changshu Institute of Technology, Changshu 215500, China
Md. Alamgir Hossain: Department of Management, Hajee Mohammad Danesh Science and Technology University, Dinajpur 5200, Bangladesh

Sustainability, 2024, vol. 16, issue 17, 1-24

Abstract: As awareness of sustainable development has increased, the corporate advantages of ESG (environmental, social, and governance) have attracted widespread attention from investors, and research has demonstrated that ESG has a sustained impact on long-term business operations. At this new stage of market development, the relationship between ESG rating performance and corporate innovation is worthy of in-depth study. The effect of corporate ESG rating performance on innovation based on stakeholder theory was tested using data from Chinese A-share listed companies from 2009 to 2021. The results show that ESG rating performance can significantly improve corporate innovative output and R&D (research and development) investment. This promotional effect is more significant in large enterprises, state-owned enterprises, and companies in the eastern region of China. ESG rating performance promotes corporate innovation by improving firm financial performance and expanding internationalization. In addition, ESG rating performance not only increases the quantity of innovative output, but also helps to improve the quality of R&D investment. ESG strategy, standardized and mandatory disclosure of information pertaining to ESG, improved quality of information disclosed, and promotion of corporate innovation are all necessary to help enterprises develop in this new era.

Keywords: ESG; corporate innovation; R&D; financial performance; innovation efficiency; internationalization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/17/7482/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/17/7482/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:17:p:7482-:d:1466898

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().