Adoption or Implementation? How does ESG Decoupling Affect the Technological Innovation of Korean Auto Parts Firms?

Purpose - Drawing on the knowledge-based view and the new institutionalism, this study identifies the impact of ESG decoupling - the gap between environmental, social, and governance (ESG)-related institutions and their implementation - on the technological innovation of auto parts firms. In recent years, the global business environment has focused on sustainability and ESG. In particular, the automobile industry has been undergoing rapid technological innovation from traditional internal combustion engine cars to smart cars such as eco-friendly and connected cars. Therefore, this study aims to empirically analyze whether the gap between the adoption and implementation of ESG-related institutions by auto parts firms affects technological innovation in the rapid paradigm of the automobile industry. Design/Methodology - This study considers the relationship between ESG decoupling and technological innovation, which is the difference between the gap in the adoption and implementation of ESG. This study surveyed 201 Korean auto parts firms and tested to research hypotheses. Findings - Our main findings can be summarized as follows: Environmental (E) decoupling and Governance (G) decoupling are found to have a significant negative impact on technological innovation. However, Social (S) decoupling has a significant positive effect on technological innovation. Originality/value - This study focuses on the rapidly changing characteristics of the automobile industry. In particular, this study is differentiated from previous studies in that it examines new paradigms such as ESG and technological innovation. Analysis of the relationship between adoption and execution using ESG for auto parts firms and technological innovation will be used as basic data to improve the competitiveness of auto parts firms.