The Nexus Between Digitalization Capability and Corporate ESG Performance: The Moderating Role of Institutional Pressures for Sustainability

The Nexus Between Digitalization Capability and Corporate ESG Performance: The Moderating Role of Institutional Pressures for Sustainability

Purpose - This study aims to understand the multifaceted relationship between digitalization capability, institutional pressures for sustainability, and ESG (i.e., environmental, social, and governance) performance by using a resource-based view and institutional theory as a comprehensive theoretical lens. Design/Methodology - This study examines the impact of digitalization capability on environmental, social, and governance performance, and examines the moderating effect of three dimensions of institutional pressures (i.e., regulatory, normative, and mimetic pressure). Based on survey data from 343 listed firms in South Korea, the hypothesis is verified using the PLS structural equation model. Findings - The empirical results reveal a positive impact on digitalization capability and ESG performance, and mimetic pressure among institutional pressures has a significant negative moderating effect on digitalization capability and ESG performance. Our findings show that higher digitalization capability can drive ESG performance, suggesting that institutional pressures for sustainability can influence corporate ESG practices. Originality/value - This study examines whether digitalization capability can be a pathway to connect in terms of ESG performance, and investigates the moderating role of institutional pressures for sustainability between digitalization capability and ESG performance. We consider the inf luence of institutional theory within the realm of the resource-based view as well as suggest practical implications for firms facing no choice but to pursue ESG management.