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ESG performance and innovation quality

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  • Li, Yanqiong
  • Li, Sihao

Abstract

Using a sample of Chinese A-share listed firms from 2009 to 2020, we examine the impact of a firm's environmental, social and governance (ESG) performance on its innovation quality. Our findings suggest that better ESG performance contributes to higher innovation quality. This conclusion remains unchanged after a series of robustness tests. Additional analysis shows that when a firm has a good internal control or a high risk-tolerance, the impact of ESG performance on innovation quality is more pronounced. Finally, we find that better ESG performance also brings higher patent value to a firm. Our results provide policy guidance on promoting ESG and high-quality innovation of firms.

Suggested Citation

  • Li, Yanqiong & Li, Sihao, 2024. "ESG performance and innovation quality," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1361-1373.
    • Handle: RePEc:eee:reveco:v:92:y:2024:i:c:p:1361-1373
    DOI: 10.1016/j.iref.2024.02.063
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    References listed on IDEAS

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    Cited by:

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    3. Liu, Xia & Zhang, Cong, 2025. "The nonlinear impact of trade policy uncertainty on corporate ESG performance," International Review of Economics & Finance, Elsevier, vol. 103(C).
    4. Wenhua Yuan & Tiantian Cui & Xunuo Chen & Weixiao Lu, 2026. "The impact of ESG performance on OFDI mode choice: the role of total factor productivity," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 13(1), pages 1-18, December.
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    6. Liu, Yeshen & Song, Kaixi & Xu, Longhui & Song, Zhe, 2026. "ESG and firms’ exploitative versus exploratory innovation: Evidence from a large language model approach," Research in International Business and Finance, Elsevier, vol. 83(C).
    7. Rachael Maree Hunter & Rachael Frost & Sarah Kalwarowsky & Louise Marston & Shengning Pan & Cristina Avgerinou & Andrew Clegg & Claudia Cooper & Vari M. Drennan & Benjamin Gardner & Claire Goodman & P, 2025. "Funding Health Promotion Activities to Reduce Avoidable Hospital Admissions in Frail Older Adults (HomeHealth): Further Challenges to the “Cost-Effective but Unaffordable” Paradox," Applied Health Economics and Health Policy, Springer, vol. 23(6), pages 1099-1113, November.
    8. Iñigo Martin-Melero & Maria Luisa Medrano-Garcia & Felipe Hernandez-Perlines & Raul Gomez-Martinez, 2026. "ESG and reputation in Ibero–America: Evidence from corporate rankings," International Entrepreneurship and Management Journal, Springer, vol. 22(1), pages 1-63, March.
    9. Salwa Saleh Almasabi & Varun Chotia & Priyanka Malik & Valentina Cillo & Del Giudice Manlio, 2026. "Empowering ESG through digital capabilities: a strategic model for entrepreneurial performance and corporate governance transformation," International Entrepreneurship and Management Journal, Springer, vol. 22(2), pages 1-41, June.
    10. Du, Anna Min & Sun, Zhennan & Li, Zhongyuan & Boateng, Agyenim, 2025. "Green business performance and innovation willingness: Exploring the impact of ecosystem-oriented business models," International Review of Financial Analysis, Elsevier, vol. 105(C).
    11. Li Ren & Yanping Cheng, 2024. "The Impact and Mechanism of ESG Performance on Corporate Continuous Innovation: Evidence from China," Sustainability, MDPI, vol. 16(17), pages 1-22, September.
    12. Xinran Liu & Taihua Yan & Wen Gao & Ming Zhang, 2025. "ESG Rating and Corporate Motivation for Green Technology Innovation: New Insights From Multidimensional External Attention," SAGE Open, , vol. 15(3), pages 21582440251, September.
    13. Meng Li & Yang Xu, 2025. "The Impact of Computing Infrastructure Construction on Innovation in Manufacturing Enterprises: Evidence from a Quasi-Natural Experiment Based on the Establishment of China’s National Supercomputing Centers," Sustainability, MDPI, vol. 17(19), pages 1-23, October.
    14. Liu, Li & Hu, Wenxiu & Wang, Fangyun & Yang, Li, 2025. "Does employing academic executives enhance R&D cost stickiness? Evidence from Chinese listed companies," Economic Modelling, Elsevier, vol. 145(C).
    15. Yang, Bai & Huang, Jingfeng & Chen, Yinzhong, 2025. "The relationship between ESG ratings and digital technological innovation in manufacturing: Insights via dual machine learning models," Finance Research Letters, Elsevier, vol. 71(C).
    16. Chen, Che & Chen, Song & Wu, Dingwen, 2025. "The impact of ESG performance on R&D investment stability: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 99(C).
    17. Huang, Chongle & Hao, Simin & Ma, Limei, 2025. "The impact of ESG advantages on the economic development of neighboring regions," Energy Economics, Elsevier, vol. 145(C).
    18. Yuan Zheng & Mazni Abdullah & Nurliana Md Rahin, 2025. "Environmental, Social, and Governance (ESG) Performance and New Quality Productivity in China: The Mediating Role of Patient Capital," SAGE Open, , vol. 15(4), pages 21582440251, November.
    19. Lun, Miaoxing & Fu, Yumei & Chen, Wenchuan & Liu, Zijian, 2025. "The accountability system for operation and investment and the sustainable development of state-owned enterprises: Evidence from ESG performance," Finance Research Letters, Elsevier, vol. 85(PE).
    20. Ni, Mingjie, 2025. "ESG disclosure and corporate human capital upgrading in China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 49-64.

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