Innovation represents one of the most important drivers in the business context. Drawing upon the research on corporate social responsibility (CSR), shared value, and innovation, this paper aims to analyze the relationship between Environmental, Social, and Governance (ESG, a form of CSR) sustainability policies and corporate financial performance (CFP) by investigating the mediating role of Innovation (i.e., investment in research and development, R&D). Our sample comprises 148 European companies belonging to the Euro Stoxx index in the period 2009–2014. For high-innovation companies (HICs), we find positive relationships between some Social (S) issues and CFP and weaker linkages between Environmental (E) indicators and CFP. In contrast, Governance (G) issues (i.e., issues related to board structure and board function) negatively influence CFP. In contrast, for medium-innovation companies (MICs), these relationships are absent and low-innovation companies (LICs) show negative relationships. Adopting reporting frameworks or guidelines affects CFP only in HIC. We introduce an original interpretative model, which identifies innovation (R&D) as the main driver in corporate sustainability, particularly in light of Social issues related to the production of a good or service. In terms of managerial implications, we identify three key factors for effectively embedding ESG in organizations' policies: investment in product innovation, compliance with environmental regulations, and corporate choices on brands and channels of external communication.

Doni, F., Fiameni, M. (2024). Can innovation affect the relationship between Environmental, Social, and Governance issues and financial performance? Empirical evidence from the STOXX200 index. BUSINESS STRATEGY AND THE ENVIRONMENT, 33(2 (February 2024)), 546-574 [10.1002/bse.3500].

Can innovation affect the relationship between Environmental, Social, and Governance issues and financial performance? Empirical evidence from the STOXX200 index

Doni, Federica
Primo
;
Fiameni, Marco
Ultimo
2024

Abstract

Innovation represents one of the most important drivers in the business context. Drawing upon the research on corporate social responsibility (CSR), shared value, and innovation, this paper aims to analyze the relationship between Environmental, Social, and Governance (ESG, a form of CSR) sustainability policies and corporate financial performance (CFP) by investigating the mediating role of Innovation (i.e., investment in research and development, R&D). Our sample comprises 148 European companies belonging to the Euro Stoxx index in the period 2009–2014. For high-innovation companies (HICs), we find positive relationships between some Social (S) issues and CFP and weaker linkages between Environmental (E) indicators and CFP. In contrast, Governance (G) issues (i.e., issues related to board structure and board function) negatively influence CFP. In contrast, for medium-innovation companies (MICs), these relationships are absent and low-innovation companies (LICs) show negative relationships. Adopting reporting frameworks or guidelines affects CFP only in HIC. We introduce an original interpretative model, which identifies innovation (R&D) as the main driver in corporate sustainability, particularly in light of Social issues related to the production of a good or service. In terms of managerial implications, we identify three key factors for effectively embedding ESG in organizations' policies: investment in product innovation, compliance with environmental regulations, and corporate choices on brands and channels of external communication.
Articolo in rivista - Articolo scientifico
corporate financial performance (CFP); corporate social responsibility (CSR); Environmental, Social, and Governance (ESG); innovation; research and development (R&D); shared value;
English
8-lug-2023
2024
33
2 (February 2024)
546
574
open
Doni, F., Fiameni, M. (2024). Can innovation affect the relationship between Environmental, Social, and Governance issues and financial performance? Empirical evidence from the STOXX200 index. BUSINESS STRATEGY AND THE ENVIRONMENT, 33(2 (February 2024)), 546-574 [10.1002/bse.3500].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/429738
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