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ESG-driven innovation strategy and firm performance

Author

Listed:
  • Goretti Cabaleiro-Cerviño

    (Universidad de Navarra)

  • Pedro Mendi

    (Universidad de Navarra)

Abstract

This paper investigates the impact of aligning an innovation strategy with Environmental, Social, and Governance (ESG) practices on innovation and non-innovation performance variables. Drawing on principles from Stakeholder Theory and Social Network Theory of Innovation, the research hypothesizes that ESG-driven firms will outperform firms that are not ESG-driven in terms of future innovation outcomes, labor productivity, exporting and survival rates. Using the Technological Innovation Panel (PITEC) database, a panel of Spanish companies, the study compares the performance of two groups of innovative firms: firms that declare that at least one of the ESG goals are relevant for their innovation activities (ESG-driven companies) and matched firms that regard all three ESG goals as not important (non-ESG companies). Our findings reveal that ESG-driven companies exhibit a better future innovation performance and that, in terms of labor productivity, exporting, and survival their performance is never inferior than that of innovative firms that are not ESG-driven.

Suggested Citation

  • Goretti Cabaleiro-Cerviño & Pedro Mendi, 2024. "ESG-driven innovation strategy and firm performance," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 137-185, March.
    • Handle: RePEc:spr:eurasi:v:14:y:2024:i:1:d:10.1007_s40821-024-00254-x
    DOI: 10.1007/s40821-024-00254-x
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