Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 51, No. 5, pp.1409-1432
ISSN: 1226-1874 (Print)
Print publication date 31 Oct 2022
Received 03 Aug 2022 Revised 30 Aug 2022 Accepted 14 Sep 2022
DOI: https://doi.org/10.17287/kmr.2022.51.5.1409

ESG 성과 피드백이 기업의 내부적과 외부적 탐색 행동에 미치는 영향

Tae Young Park ; Yong Suhk Pak
(First Author) Yonsei University johntaeyoungpark@yonsei.ac.kr
(Corresponding Author) Yonsei University, School of Business yspak@yonsei.ac.kr
The Effect of ESG Performance Feedback on the Internal and External Search Behaviors of Firms


Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study explores the effects of performance feedback—the discrepancy between aspiration and actual performance—regarding ESG metrics and how they relate to firms’ internal (R&D) and external (acquisition) search behaviors. According to the behavior theory of the firm (BTOF), firms evaluate their performance based on their aspiration levels, and choose their subsequent behavior according to the discrepancy between their actual performance and aspiration. ESG metrics performance has become a prominent pillar in firm evaluation in recent years, and their effects on firm behavior as well as interaction with financial performances have gone largely unstudied. With a sample of 254 publicly listed firms from U.S. materials and energy industry from 2017 to 2021, we find that as the firm ESG performance rises above its aspiration level, it engages in both internal and external search activities. However, firms’ financial performance negatively moderates the relationship between positive ESG performance feedback and internal and external search activities. Results and future research directions on the effects of ESG on firms’ strategic responses are further discussed at the end of the manuscript.

Keywords:

ESG, Performance feedback, Internal search, External search, Firm behavior

Acknowledgments

This work was supported by the ‘BK21 FOUR (Fostering Outstanding Universities for Research)’ in 2022

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∙ The author Tae Young Park is currently an international business Ph.D. candidate at Yonsei Graduate School of Business, South Korea. He completed his master’s degree under the same program as well. He graduated from Pepperdine University with a major in economics. He has also worked at Center for Social Value Enhancement Studies prior to enrolling in his Ph.D program. The author’s main research areas are ESG management, strategic management, cross-border M&As, and digitalization.

∙ The author Yong Suhk Pak is a professor of International Business at Yonsei University as well as the president of the Korean Academy of International Business until 2021. He obtained MBA from the University of Illinois, USA, and a doctorate in International Business from Rutgers University, the State University of New Jersey, USA. His research interests include international business, international HRM, global mindset, etc.