Innovation, Governance, and ESG: Impacts on the Economic-Financial Performance in Organizations

Abstract

In emerging economies, integrating innovation, governance, and ESG criteria poses a strategic challenge, necessitating analyses that align these dimensions. This study, using data from 3483 observations of companies listed on B3 (2015-2022), examined the effects of these factors on economic-financial performance, alongside ESG’s role in mitigating CEO duality and promoting female board representation. Employing the Generalized Method of Moments (GMM), results revealed complex relationships: innovation positively impacted performance, solidifying its role as a competitive driver. CEO duality exhibited progressively negative effects, highlighting risks of power concentration. Female representation yielded ambiguous impacts, suggesting reliance on inclusion policies. ESG practices, though linked to operational costs and greenwashing in isolation, enhanced positive outcomes when combined with diversified boards, underscoring governance-sustainability synergies. Theoretically, the study integrated Stakeholder and Agency Theories, indicating ESG amplifies benefits in collaborative contexts but fails to offset governance gaps. Practically, it recommends balanced governance structures, separation of leadership roles, and gender diversity investments as strategic complements to ESG. Thus, the research underscores the relevance of multifaceted approaches for sustainable performance in emerging markets, offering insights into mitigating risks while leveraging innovation and governance synergies.