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The Moderating Role of Technological Innovation on Environment, Social, and Governance (ESG) Performance and Firm Value: Evidence from Developing and Least-Developed Countries

Author

Listed:
  • Yusheng Kong

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Andrew Agyemang

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Noha Alessa

    (Department of Accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Maxwell Kongkuah

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

Abstract

Recently, there has been growing recognition of the significance of environmental, social, and governance (ESG) factors in assessing a company’s performance and worth. Previous research has failed to take into account the significant impact of technological innovation in their empirical investigations. This study fills the gap by investigating the moderating impact of technological innovation on ESG performance and company value in developing and least-developed countries. The study utilized secondary data from 78 pharmaceutical companies from 2009 to 2022. For the investigation, we used the pooled mean group (PMG) and generalized methods of moments (GMM) estimators. The findings reveal that environmental and social performance influence firms’ value; however, governance performance does not influence firms’ value. Additionally, technological innovation acts as a catalyst, strengthening the favorable influence of ESG performance on firm value. The findings affirm the need to incorporate technological innovation, as it enables pharmaceutical firms to implement more efficient and sustainable practices.

Suggested Citation

  • Yusheng Kong & Andrew Agyemang & Noha Alessa & Maxwell Kongkuah, 2023. "The Moderating Role of Technological Innovation on Environment, Social, and Governance (ESG) Performance and Firm Value: Evidence from Developing and Least-Developed Countries," Sustainability, MDPI, vol. 15(19), pages 1-16, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:19:p:14240-:d:1248254
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    2. Dragana Ostic & Ummar Faruk Saeed & Angelina Kissiwaa Twum & Rahmatu Chibsah, 2025. "Transition Toward a Sustainable Circular Economy: A Perspective on Green Innovation and Governance Policy Using a Novel MMQR Approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5719-5741, August.
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    5. Gawęda, Adrian, 2025. "Does environmental, social, and governance performance elevate firm value? International evidence," Finance Research Letters, Elsevier, vol. 73(C).
    6. Wu Ning & Ummar Faruk Saeed & Angelina Kissiwaa Twum & Abednego Osei, 2024. "Can ESG disclosures promote firms going concern? Evidence from BRICS countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3792-3803, September.
    7. Zhonghuan Luo & Yujia Li & Luu Thi Nguyen & Irfan Jo & Jing Zhao, 2024. "The Moderating Role of Country Governance in the Link between ESG and Financial Performance: A Study of Listed Companies in 58 Countries," Sustainability, MDPI, vol. 16(13), pages 1-18, June.
    8. Ummar Faruk Saeed & Wu Ning & Andrew Osei Agyemang, 2025. "Advancing Sustainable Development Goal 15: The Role of Corporate Governance Structures and Environmental Regulations in Emerging Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(3), pages 3403-3426, June.
    9. Dejun Zhou & Ummar Faruk Saeed & Andrew Osei Agyemang, 2024. "Assessing the Role of Sustainability Disclosure on Firms’ Financial Performance: Evidence from the Energy Sector of Belt and Road Initiative Countries," Sustainability, MDPI, vol. 16(2), pages 1-21, January.
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    11. Jawad Abbas & Stefano Bresciani & Ghulam Subhani & Paola Bernardi, 2025. "Nexus of ambidexterity and frugal innovation for enhanced ESG performance of entrepreneurial firms. The role of organizational capabilities," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-23, December.
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    14. Chun Cai & Saddam A. Hazaea & Mohammed Hael & Ebrahim Mohammed Al-Matari & Adeeb Alhebri & Abdulmajeed Mawhan H. Alfadhli, 2024. "Mapping the Landscape of the Literature on Environmental, Social, Governance Disclosure and Firm Value: A Bibliometric Analysis and Systematic Review," Sustainability, MDPI, vol. 16(10), pages 1-34, May.
    15. Ying Bai & Zerui Wang & Qi Huang & Haoming Ding, 2025. "The Impact of ESG Performance on Corporate Value in Listed Sports Companies: The Mediating Role of Intangible Assets and Moderating Role of Policy Environment," Sustainability, MDPI, vol. 17(6), pages 1-15, March.

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