Corporate culture and ESG performance: Empirical evidence from China

With the rising awareness of green and sustainable development, corporate environmental, social, and governance (ESG) performance has become an essential topic in academia. Existing studies have focused on the driving role of formal institutions on corporate ESG performance while ignoring the motivational role of informal institutions such as culture. Based on the data of Chinese A-share listed companies from 2009 to 2021, this study adopts textual analysis to quantify corporate culture and discusses the impact of corporate culture on ESG performance and its internal mechanism. We find that corporate culture significantly enhances ESG performance. Mechanism test indicates that corporate culture can promote green innovation and improve information transparency through resource and information effect, enhancing ESG performance. We further demonstrate differences in the impact of corporate culture dimensions on ESG performance, with innovation culture and quality culture being the most prominent. In addition, there is heterogeneity in the impact of corporate culture on ESG performance. In the context of non-state-owned property rights, low market attention, and high economic policy uncertainty, the impact of corporate culture on ESG performance is more significant. This paper enriches the related research on ESG performance drivers from the informal system perspective and provides decision-making references for enterprises to promote ESG practices and achieve sustainable development.