The Impact Of ESG Performance On The Internationalization Of Enterprises

With increasing external uncertainties such as global warming,COVID-19 and economic downturn,as well as prominent problems such as weak environmental awareness and lack of social responsibility in overseas business activities,Chinese enterprises are facing great challenges in "going global".As a new concept and indicator of sustainable development integrating environmental protection,social responsibility and corporate governance,ESG has attracted the attention and research of the academic and practical circles in the context of current economic and social development.On the one hand,the research significance of this paper aims to broaden the academic research of ESG in the field of international business and bring new incremental contributions to the factors affecting the international operation of enterprises.On the other hand,it aims to vigorously develop ESG to help Chinese enterprises go to the world with high standards.Only by continuously improving environmental performance,social responsibility and corporate governance can Chinese enterprises face the world with high standards and demonstrate the strength of a great country.There are three main research questions in this paper:(1)The influence of ESG performance on enterprises’ international operation.(2)The moderating effect of financing constraints on the relationship between ESG performance and enterprise internationalization.(3)The heterogeneity of the region where the enterprise is located,the property of equity and the characteristics of the industry makes the difference of the effect of ESG performance on the international operation of the enterprise.Combined with the literature of scholars,the paper focuses on the following four theories: sustainable development theory,stakeholder theory,principal-agent theory,and legitimacy theory.After sufficient literature review and theoretical analysis,the research hypothesis of this paper is formed and empirical research is carried out on the basis of this theory to confirm the theoretical hypothesis.Taking the A-share listed companies in China’s Shanghai and Shenzhen Stock Exchanges from 2015 to 2021 as the research sample,this paper selects the international operation level of the enterprise as the explained variable,ESG score under the ESG rating system of Syn Tao Green Finance as the explanatory variable and the number of board of directors,company size,asset-liability ratio,return on total assets,cash flow ratio and company listing years as the control variables.A fixed effect model is established to test the influence of ESG performance on international business.The empirical results show that the performance of ESG significantly promotes the internationalization of enterprises.In economic terms,a1% increase in ESG performance increases the share of overseas revenue by an average of about 2.3%.In order to alleviate the endogenous problem caused by inverse bidirectional causality,this paper uses the lag period of endogenous variable ESG as the instrumental variable,and adopts the two-stage regression method to obtain the estimation results consistent with the main hypothesis.In addition,the results of this paper are still valid after a series of robustness tests,such as replacing the enterprise international business indicators,changing the sample time interval,and grouping tests.Then this paper further explores the mechanism of the influence of ESG performance on the relationship between enterprises’ international operations,chooses financing constraint WW index as the moderating variable,and centralizes the explanatory variable ESG and the moderating variable financing constraint WW to construct the cross-product terms of both,and brings them into the model regression.It is concluded that financing constraint plays a negative moderating role.That is financing constraints weaken the promotion effect of ESG performance on enterprises’ international operation.Then from the three aspects of regional characteristics,equity nature and industry characteristics,this paper conducted the heterogeneity test by grouping regression and the significance test of inter-group coefficient difference.The results show that there are differences among all groups,among which the promotion of ESG performance of enterprises in eastern and central regions is significantly stronger than that of enterprises in western regions.The improvement of ESG performance in state-owned enterprises is stronger than that in non-state-owned enterprises,and the improvement of ESG performance in non-heavy polluting enterprises is stronger than that in heavy polluting enterprises.To sum up,the research results of this paper show that:(1)The improvement of ESG performance can significantly improve the international management level of enterprises.(2)The mechanism test results show that financing constraints will weaken the enhancement effect of ESG performance on enterprises’ international operation;In the case of high financing constraints,the promotion effect of improving ESG performance on internationalization is less than that in the case of low financing constraints.(3)The differences in individual characteristics of enterprises,such as region,ownership nature and industry nature,will indeed affect the differences in the degree or effect of ESG performance on enterprises’ international operation.From the perspective of regions,the ESG performance of enterprises in eastern and central regions is better than that of enterprises in western regions.From the perspective of ownership nature,ESG performance of state-owned enterprises is better than that of non-state-owned enterprises in promoting international management.From the perspective of the industry characteristics of the enterprises,the ESG performance of non-heavy polluting enterprises is better than that of heavy polluting enterprises in promoting international operation.Finally,the paper puts forward 4 suggestions based on the research results:(1)Strengthen policy support for ESG development and continue to promote the improvement of listed companies’ ESG.(2)To integrate external supervision requirements into the ESG evaluation system of Chinese enterprises.(3)Expand financing channels and improve the financing ability of enterprises.(4)Develop differentiated ESG compliance requirements and incentive measures for enterprises of different nature.