The Role of ESG in Driving Firm Profitability Implications for Stakeholder, Resource-Based View, and Triple Bottom Line Theories in Emerging Markets
Authors
Article Sidebar
Main Article Content
Abstract
Purpose- This study examines how Environmental, Social, and Governance (ESG) practices influence firm profitability and extend key strategic theories like the Stakeholder Theory, Resource-Based View (RBV), and the Triple Bottom Line (TBL) within Zambia’s food sector.
Design/Methodology- Using a mixed-methods approach, the study analysed panel data from 2014 to 2024 for listed food companies in Zambia. Fixed effects regression with lagged ESG variables was applied to address endogeneity. Qualitative content analysis of corporate sustainability and governance reports complemented the quantitative findings.
Findings- The regression model explains 55.6% of the variation in firm profitability, as indicated by the adjusted R². Among the ESG components, governance practices exhibited a statistically significant positive influence on profitability (coefficient = 23.39, p = 0.015). In contrast, environmental initiatives showed a significant short-term negative effect (coefficient = –32.60, p < 0.001), while social factors did not demonstrate a statistically significant impact.
Practical Implications- Firms in emerging markets should embed ESG into core strategy, supported by robust governance. Policymakers must strengthen regulatory frameworks to facilitate sustainable business practices. Future studies are encouraged to further investigate ESG dynamics in resource-constrained settings.
Originality/Value – This study contributes to ESG literature in emerging markets by integrating theoretical perspectives with empirical evidence, offering nuanced insights into how ESG performance shapes profitability and strategic outcomes.
Article Details
Copyright (c) 2025 Mubanga Lackson Chipimo, Prof. John Bwalya, Prof. Joseph Katongo Kanyanga
This work is licensed under a Creative Commons Attribution 4.0 International License.
The data that support the findings of this study are available from the corresponding author, upon reasonable request
Alsayegh, M.F., Rahman, R.A., & Homayoun, S. (2020). Corporate economic, environmental, and social sustainability performance transformation through ESG disclosure. Sustainability, 12(9), 3910. https://doi.org/10.3390/su12093910 DOI: https://doi.org/10.3390/su12093910
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review. https://doi.org/10.1016/j.bir.2022.11.006 DOI: https://doi.org/10.1016/j.bir.2022.11.006
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108 DOI: https://doi.org/10.1177/014920639101700108
Bouguerra, A., Wood, G., & Morand, P. (2022). Linking entrepreneurial orientation to environmental collaboration: A perspective on the interplay of institutional pressures and resource alignment. British Journal of Management, 33(2), 301–317. https://doi.org/10.1111/1467-8551.12485 DOI: https://doi.org/10.1111/1467-8551.12485
Cantele, S., & Zardini, A. (2024). Measuring corporate sustainability in its multidimensionality: A formative approach to sustainability performance. Business Strategy and the Environment, 33(1), 101–120. https://doi.org/10.1002/bse.2842 DOI: https://doi.org/10.1002/bse.3872
Chen, K. (2024). The strategic integration of ESG principles in corporate innovation: Theoretical foundations, mechanisms, and practical challenges. International Journal of Novel Research in Marketing Management and Economics, 11(2), 138–148. https://doi.org/10.5281/zenodo.13589231
Chen, S., Song, Y., & Gao, P. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: Analysing the impact of ESG on financial performance. Journal of Environmental Management, 345, 118829. https://doi.org/10.1016/j.jenvman.2023.118829 DOI: https://doi.org/10.1016/j.jenvman.2023.118829
Dangelico, R.M., Pujari, D., & Pontrandolfo, P. (2017). Green product innovation in manufacturing firms: A sustainability-oriented dynamic capabilities perspective. Business Strategy and the Environment, 26(4), 490–506. https://doi.org/10.1002/bse.1932 DOI: https://doi.org/10.1002/bse.1932
DiMaggio, P.J., & Powell, W.W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101 DOI: https://doi.org/10.2307/2095101
Donaldson, T., & Preston, L.E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. https://doi.org/10.2307/258887 DOI: https://doi.org/10.2307/258887
Duong, H.L., Tran, P.T., Nguyen, T.P., & Bui, D.T. (2024). The relationship between social sustainability practices and performance outcomes in supply chains: A meta-analysis approach. Sustainability, 16(5), 250–269. https://doi.org/10.3390/su16050250
Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st-century business. Oxford: Capstone Publishing. DOI: https://doi.org/10.1002/tqem.3310080106
Freeman, R.E. (1984). Strategic management: A stakeholder approach. Boston: Pitman Publishing.
Giannopoulos, G., Kihle Fagernes, R.V., Elmarzouky, M., & Afzal Hossain, K.A.B.M. (2022). The ESG disclosure and the financial performance of Norwegian listed firms. Journal of Risk and Financial Management, 15(6), 237. https://doi.org/10.3390/jrfm15060237 DOI: https://doi.org/10.3390/jrfm15060237
Hart, S.L., & Dowell, G. (2011). Invited editorial: A natural-resource-based view of the firm: Fifteen years after. Journal of Management, 37(5), 1464–1479. https://doi.org/10.1177/0149206310390219 DOI: https://doi.org/10.1177/0149206310390219
Lee, C., Zhang, T., & Zhou, Z. (2024). The interplay of institutional pressures, digitalization capability, and ESG performance in manufacturing firms. Business Strategy and the Environment, 33(2), 289–303. https://doi.org/10.1002/bse.2846 DOI: https://doi.org/10.1002/bse.3755
López-Pérez, M.E., Melero, I., & Sese, F.J. (2018). Does specific CSR training for managers impact shareholder value? Corporate Social Responsibility and Environmental Management, 25(6), 1103–1114. https://doi.org/10.1002/csr.1525 DOI: https://doi.org/10.1002/csr.1525
Majid, M.F., Meraj, M., & Mubarik, M.S. (2022). In the pursuit of environmental sustainability: The role of environmental accounting. Sustainability, 14, 6526. https://doi.org/10.3390/su14116526 DOI: https://doi.org/10.3390/su14116526
Roberson, Q.M. (2019). Diversity in the workplace: A review, synthesis, and future research agenda. Annual Review of Organizational Psychology and Organizational Behavior, 6(1), 69–92. https://doi.org/10.1146/annurev-orgpsych-012218-015243 DOI: https://doi.org/10.1146/annurev-orgpsych-012218-015243
Teece, D.J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z DOI: https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
Triguero, A., Moreno-Mondejar, L., & Davia, M.A. (2019). Eco-innovation by small and medium-sized firms in Europe: From end-of-pipe to cleaner technologies. Innovation and Development, 9(1), 123–140. https://doi.org/10.1080/2157930X.2017.1377424
Velte, P. (2021). Environmental performance, carbon performance and earnings management: Empirical evidence for the European capital market. Corporate Social Responsibility and Environmental Management, 28(1), 42–53. DOI: https://doi.org/10.1002/csr.2030
Wang, Y., Huang, Z., Tang, S., & Xie, C. (2023). Do Environmental Regulations Improve ESG Performance? Evidence from the Moderating Role of Retail Investor Attention. Sustainability, 15(15), 11818. https://doi.org/10.3390/su151511818 DOI: https://doi.org/10.3390/su151511818
Westerholz, H.K., & Höhler, J. (2022). Corporate social responsibility reporting in the food industry—Comparison of co‐operatives and investor‐owned dairies. Corporate Social Responsibility and Environmental Management, 29(1), 211–222. DOI: https://doi.org/10.1002/csr.2197
Xu, X., Zeng, S., & Tam, C.M. (2019). The impact of green innovation on corporate competitive advantage in manufacturing firms: The moderating role of environmental regulation. Sustainability, 11(8), 2315. https://doi.org/10.3390/su11082315 DOI: https://doi.org/10.3390/su11082315
Zhao, C., Guo, Y., Yuan, J., Wu, M., Li, D., Zhou, Y., & Kang, J. (2018). ESG and corporate financial performance: Empirical evidence from China’s listed power generation companies. Sustainability, 10(8), 2607. https://doi.org/10.3390/su10082607 DOI: https://doi.org/10.3390/su10082607