The Impact of ESG Performance on Trade Credit: The Role of Operations and Supply Chain Management Factors

Environmental, social, and governance (ESG) practices have increasingly garnered attention on a global scale, highlighting the importance of understanding the potential consequences of ESG performance. The objective of this study is to examine the impact of a firm's ESG performance on the behaviors of suppliers, with a particular emphasis on the trade credit provided by these suppliers. Furthermore, this research also analyzes operations and supply chain management (OSCM) factors such as operational efficiency (OE), supplier concentration (SC), and R&D intensity (R&D), which may serve to moderate this relationship. To achieve these goals, we perform a secondary data analysis encompassing 2,046 listed companies in Chinese manufacturing industries from 2018 to 2023 and find that the performance of corporations in terms of ESG displays an inverted U-shaped correlation with trade credit. Moreover, OE and R&D intensity steepen the inverted U-shape and shift the turning point to the left, while SC flattens the inverted U-shape and also shifts the turning point to the left. These findings suggest that ESG has important logistics and supply chain consequences because it shapes suppliers' willingness to provide the short-term financing that helps stabilize procurement, production, and delivery activities. In light of these findings, we provide a noteworthy contribution to the existing literature on buyer–supplier relationships and logistics fulfilment presenting important implications for both researchers and practitioners in the domain of OSCM.