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Corporate Social Responsibility and ESG as Institutional Innovations for Sustainable Finance: Complexity and Competitive Mediation in the Insurance Sector in Developing Economies

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  • Edosa Getachew Taera

    (School of Economic & Regional Sciences, Hungarian University of Agriculture and Life Sciences, Pater Karoly Street-1, 2100 Gödöllő, Hungary
    Department of Banking & Finance, Wallaga University, Nekemte P.O. Box 395, Ethiopia)

  • Maria Fekete Farkas

    (School of Economic & Regional Sciences, Hungarian University of Agriculture and Life Sciences, Pater Karoly Street-1, 2100 Gödöllő, Hungary)

  • Zoltán Bujdosó

    (Department of Sustainable Tourism, Hungarian University of Agriculture and Life Sciences, Mátrai Street 36, 3200 Gyöngyös, Hungary)

  • Zoltán Lakner

    (Institute of Agricultural and Food Economics, Hungarian University of Agriculture and Life Sciences, Pater Karoly Street-1, 2100 Gödöllő, Hungary)

Abstract

This study examines how corporate social responsibility (CSR) influences sustainable finance outcomes (SFO) in the Ethiopian Insurance industry through environmental, social, and governance (ESG) practices and institutional challenges (IC). Using covariance-based structural equation modelling (CB-SEM) with data collected from a primary survey, the results show that CSR has both a direct and an indirect positive effect on SFO through ESG. However, the adoption of ESG practices also tends to increase institutional challenges, which in turn negatively influences SFO. This interaction produces a competitive partial mediation effect. The serial mediation path CSR–ESG–IC–SFO is found to be negative, suggesting that enabling and constraining forces operate simultaneously. From a theoretical point of view, the study combines stakeholder, legitimacy, and institutional theories to explain this competitive mediation within a less-studied Sub-Saharan African (SSA) frontier market. On the practical side, the findings highlight the importance of establishing ESG disclosure standards, investing in capacity building, and strengthening governance systems to reduce institutional frictions and make CSR a stronger driver of sustainable finance.

Suggested Citation

  • Edosa Getachew Taera & Maria Fekete Farkas & Zoltán Bujdosó & Zoltán Lakner, 2026. "Corporate Social Responsibility and ESG as Institutional Innovations for Sustainable Finance: Complexity and Competitive Mediation in the Insurance Sector in Developing Economies," World, MDPI, vol. 7(1), pages 1-24, January.
  • Handle: RePEc:gam:jworld:v:7:y:2026:i:1:p:16-:d:1844189
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