IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i3p1168-d729408.html
   My bibliography  Save this article

Relationship between Sustainable Management Activities and Financial Performance: Mediating Effects of Non-Financial Performance and Moderating Effects of Institutional Environment

Author

Listed:
  • Yuhan Liu

    (College of Business Administration, Konkuk University, Seoul 05029, Korea)

  • Choo Yeon Kim

    (College of Business Administration, Konkuk University, Seoul 05029, Korea)

  • Eun Hwa Lee

    (College of Business Administration, Konkuk University, Seoul 05029, Korea)

  • Jae Wook Yoo

    (College of Business Administration, Konkuk University, Seoul 05029, Korea)

Abstract

The importance of corporate responsibility for society and environments is emphasized by increasing influence of firms on various stakeholders. Firms strengthen environmental, social, and governance (ESG) activities, which are critical elements for sustainable management. However, there are inconsistent findings on the relationship between ESG activities and firms’ financial performance in prior studies because of the lack of full consideration of internal mechanisms and external conditions. To overcome this limitation, this study investigates the mediating effect of non-financial performance and the moderating effect of the institutional environment on the relationship between firms’ ESG activities and their financial performance in a unified moderated mediation model. Samples for empirical analyses were collected by a survey from 304 small and medium-sized Chinese manufacturers. The results of a mediation analysis reveal that each ESG activity has a positive effect on firms’ financial performance, and the impact of ESG activities on financial performance is completely mediated by non-financial performance. The results of a moderated mediation analysis further indicate that the mediating effect varies depending on the level of institutional pressure from the government, consumers, and competitors. The study suggests the need for interdisciplinary research in sustainable management and institutional theory and emphasizes the importance of sustainable management for performance improvement in a changing environment.

Suggested Citation

  • Yuhan Liu & Choo Yeon Kim & Eun Hwa Lee & Jae Wook Yoo, 2022. "Relationship between Sustainable Management Activities and Financial Performance: Mediating Effects of Non-Financial Performance and Moderating Effects of Institutional Environment," Sustainability, MDPI, vol. 14(3), pages 1-26, January.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:3:p:1168-:d:729408
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/3/1168/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/3/1168/
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vincent K. Chong & Isabel Z. Wang & Gary S. Monroe & Liam Strike & Feida (Frank) Zhang, 2023. "The effect of non‐financial performance measures, organisational politics and political skill on job performance: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2557-2595, June.
    2. Chien-Hsiang Huang & Chih-Wen Ting & Tai-Wei Chang & Yue-Shi Lee & Show-Jane Yen, 2023. "The Impact of Ethical Leadership on Financial Performance: The Mediating Role of Environmentally Proactive Strategy and the Moderating Role of Institutional Pressure," Sustainability, MDPI, vol. 15(13), pages 1-12, July.
    3. Fernandez, Viviana, 2022. "Environmental management: Implications for business performance, innovation, and financing," Technological Forecasting and Social Change, Elsevier, vol. 182(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:3:p:1168-:d:729408. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.