A full belly counsels well: More stabilisation with more responsibility

Area of Science:

• Economics
• Business Administration
• Sustainability Science

Background:

• Corporate Environmental, Social, and Governance (ESG) performance is increasingly critical for sustainable development.
• Supply chain stability is a key factor influencing corporate operations and sustainability.
• Understanding the link between supply chain stability and ESG performance is vital for stakeholders.

Purpose of the Study:

• To investigate the impact of supply chain stability on corporate ESG performance.
• To explore the underlying mechanisms through which supply chain stability affects ESG performance.
• To identify firm characteristics that moderate this relationship.

Main Methods:

• Utilizing data from Chinese A-share listed companies (2009-2022).
• Employing various econometric techniques including instrumental variables, systematic GMM, PSM, omitted variables tests, and Double Machine Learning (DML).
• Analyzing the mediating roles of corporate risk-taking, agency costs, and financing constraints.

Main Results:

• Supply chain stability positively impacts corporate ESG performance.
• This effect is robust across multiple rigorous testing methodologies.
• Mechanisms include reduced corporate risk-taking, lower agency costs, and decreased financing constraints.
• The positive effect is more pronounced in large firms, those with high audit supervision, firms in western regions, and non-technology-intensive firms.

Conclusions:

• Improving supply chain stability enhances corporate ESG performance.
• Supply chain stability contributes to sustainable economic development and corporate governance.
• External stakeholders play a crucial role in monitoring and improving ESG performance through stable supply chains.