ESG, Corporate R&D Investment, and Financial Performance: Evidence from China's Typical Heavy Pollution Industries


  • Xuandong Zhang
  • Jae-Eul Jung



R&D investment; ESG; financial performance; typical industries List.


Given the critical function corporations serve in economic progression, a burgeoning body of evidence underscores the necessity for the amalgamation of Environmental, Social, and Governance (ESG) performance with research and development (R&D) expenditures to bolster corporate proficiency and value. Consequently, strategizing the harmonious application of R&D expenditure and ESG performance emerges as a topic of significant import. This research delves into the isolated repercussions of R&D investments and ESG, in addition to their cumulative impact on financial performance, utilizing data amassed from representative industries with high pollution output, traded in Shenzhen and Shanghai's stock markets. The findings reveal an inconsequential direct correlation between ESG and short-term financial performance. Nevertheless, both R&D investment and ESG possess the capacity to directly shape a corporation's prospective market value. This study enriches existing literature regarding the influence of R&D investment and ESG on future corporate market value. The symbiotic influence of R&D investment and ESG offers insights germane to decision-making processes within the ambit of sustainable development, thereby facilitating the balanced evolution of China's economic, societal, and environmental spheres.


Download data is not yet available.


Acosta, M., Azagra-Caro, J. M., & Coronado, D. (2019). The impact of public support on firm propensity to engage in R&D: Spanish experience. Technological Forecasting and Social Change, 138, 279-291.

Al Rashed Muhammad, Sefelnasr Ahmed, Sherif Mohsen, Murad Ahmed, Alshamsi Dalal, Aliewi Amjad, Ebraheem Abdel Azim. Novel concept for water scarcity quantification considering nonconventional and virtual water resources in arid countries: Application in Gulf Cooperation Council countries[J]. Science of the Total Environment,2023,882.

Ali Qaisar, Parveen Shazia, Yaacob Hakimah, Zaini Zaki. The management of Industry 4.0 technologies and environmental assets for optimal performance of industrial firms in Malaysia. [J]. Environmental science and pollution research international,2022,29(35).

Arora, A., Fosfuri, A., & Gambardella, A. (2016). Markets for technology: The economics of innovation and corporate strategy. MIT Press.

Barge-Gil, A., López, A., & Muñoz, E. (2019). The impact of R&D subsidies on innovation: A study of Spanish firms. Research Policy, 48(9), 103788.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

Bătae, O. M., Dragomir, V. D., & Feleagă, L. (2020). Environmental, social, governance (ESG), and financial performance of European banks. Accounting and Management Information Systems, 19(3), 480-501.

Bianchi, C., Mingo, S., & Fernandez, V. (2019). Strategic management in Latin America: Challenges in a changing world. Journal of Business Research, 105, 306–309

Czarnitzki, D., & Delanote, J. (2020). The effect of R&D subsidies on private R&D: Evidence from Belgium. Journal of Business Venturing Insights, 13, e00160.

Dixit, A., Jakhar, S. K., & Kumar, P. (2022). Does lean and sustainable manufacturing lead to Industry 4.0 adoption: The mediating role of ambidextrous innovation capabilities. Technological Forecasting and Social Change, 175, 121328.

Duque‐Grisales, E., Aguilera‐Caracuel, J., Guerrero‐Villegas, J., & García‐Sánchez, E. (2020). Does green innovation affect the financial performance of Multilatinas? The moderating role of ISO 14001 and R&D investment. Business Strategy and the Environment, 29(8), 3286-3302.

Eccles, R. G., & Serafeim, G. (2013). The performance frontier. Harvard business review, 91(5), 50-60.

Fang, Z. (2023). Assessing the impact of renewable energy investment, green technology innovation, and industrialization on sustainable development: A case study of China. Renewable Energy, 205, 772-782.

Flammer, C. (2015). Does corporate social responsibility lead to superior financial performance? A regression discontinuity approach. Management Science, 61(11), 2549-2568.

Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8), 137-147.

Ghisetti, C., & Pontoni, F. (2015). Investigating policy and R&D effects on environmental innovation: A meta-analysis. Ecological Economics, 118,57–66.

Gutiérrez-Alvarez R.,Guerra K.,Haro P.. Profitability of Concentrated Solar-Biomass hybrid power plants: Dataset of the stochastic techno-economic assessment[J]. Data in Brief,2023,48.

He Mengning,Estébanez Raquel Pérez. Exploring the Relationship between R&D Investment and Business Performance—An Empirical Analysis of Chinese ICT SMEs[J]. Sustainability,2023,15(6).

Hottenrott, H., & Lopes-Bento, C. (2014). Quantity vs. quality: What drives patent performance?. The Journal of Industrial Economics, 62(3), 525-561.

Hughes, M., Martin, S. L., Morgan, R. E., & Robson, M. J. (2010). Realizing product-market advantage in high-technology international new ventures: The mediating role of ambidextrous innovation. Journal of International Marketing, 1-21.

Hwang Youna,Lee Seunghwan,Choi Kwangnam. The Impact of Public R&D Investment on Innovation and Financial Performance: Focusing on R&D Phases[J]. Journal of Korea Technology Innovation Society,2019,22(4).

Ioannou, I., & Serafeim, G. (2019). Corporate sustainability: a strategy?. Harvard Business School Accounting & Management Unit Working Paper, (19-065).

Jacobides, M. G., & Winter, S. G. (2005). The co-evolution of capabilities and transaction costs: Explaining the institutional structure of production. Strategic Management Journal, 26(5), 395-413.

Jin Xue,Geoffrey Qiping Shen,Xiaomei Deng,Adedayo Johnson Ogungbile,Xiaoling Chu. Evolution modeling of stakeholder performance on relationship management in the dynamic and complex environments of megaprojects[J]. Engineering Construction and Architectural Management,2023,30(4).

Ketata, I., Sofka, W., & Grimpe, C. (2015). The role of internal capabilities and firms' environment for sustainable innovation: Evidence for Germany. R&D Management, 45(1), 60–75.




How to Cite

Zhang, X., & Jung, J.-E. (2023). ESG, Corporate R&D Investment, and Financial Performance: Evidence from China’s Typical Heavy Pollution Industries. BCP Business & Management, 50, 325-338.