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Will ESG disclosure affect the green innovation level of SMEs?

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  • Bao, Junsong
  • Yang, Liuyi

Abstract

This study explores the impact of environmental, social, and governance (ESG) disclosure on green innovation in SMEs, highlighting the moderating roles of digital transformation and executives’ green perception. Using a panel dataset and robust econometric techniques, the results indicate that ESG disclosure significantly fosters green innovation. Digital transformation amplifies this effect through technological integration, whereas executives’ green perception strengthens it via strategic alignment. Endogeneity corrections confirmed the robustness of the results. This study underscores the necessity of integrating structural enablers with managerial commitment to maximize ESG-driven innovation, offering practical insights for policymakers and business leaders.

Suggested Citation

  • Bao, Junsong & Yang, Liuyi, 2025. "Will ESG disclosure affect the green innovation level of SMEs?," Finance Research Letters, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325009158
    DOI: 10.1016/j.frl.2025.107656
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    Keywords

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    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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