Mitigating Involutionary Competition Through Corporate ESG Adoption: Evidence from the Consumer Electronics Manufacturing Industry

This study investigates whether and how corporate commitment to environmental, social and governance (ESG) performance can mitigate involutionary competition in China’s consumer electronics manufacturing industry. By constructing a quantifiable index of involutionary competition intensity and matching it with corporation-level ESG scores, we document a statistically significant negative association between ESG performance and the degree of involutionary competition. Mechanism analysis reveals that ESG mitigates involutionary competition through two primary channels: (1) differentiation strategies that reduce price-based competition and product homogeneity, and (2) market-order regulation that curbs opportunistic behaviour and raises R&D efficiency. A modest price increase is shown to be revenue-enhancing; moreover, random-forest simulations indicate that counter-involutionary competition efforts amplify the market-share gains from cooperative R&D expenditures, accelerating post-adjustment revenue growth. This transition generates simultaneous increases in corporate profits and corporation value, breaking the previous price ceiling and establishing a sustainable development loop. The findings provide actionable insights for shifting the industry from low-level rivalry to sustainable value creation.