Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation

The growing attention to sustainability has generated increasing interest in its relevant determi-nants and a possible relationship with economic growth's main drivers. Our paper contributes to this literature by proposing an empirical analysis of most innovative companies listed worldwide to test the innovation's role, proxied by the interaction between R&D intensity and mar-ket-to-book ratio, on economic sustainability in a panel framework (909 worldwide firms over the 2013-17 time-span). Our results suggest this interaction turns out to influence economic sustaina-bility positively. Moreover, we show the presence of causalities among the different pillars of sustainability: the higher environmental (or social or corporate governance) sustainability, the higher economic sustainability, although the impact of social issues is stronger than ones related to the environmental or corporate governance. More specific results emerge when an industrial composition is taken into consideration.

The growing attention to sustainability has generated increasing interest in its relevant determi-nants and a possible relationship with economic growth's main drivers. Our paper contributes - in three ways - to this literature by proposing an empirical analysis of most innovative companies listed worldwide (909 firms over the 2013-17 time-span): firstly, market-perceived innovation - proxied by the interaction between R&D intensity and the market-to-book ratio - has a positive impact on economic sustainability; secondly, when the three ESG pillars are considered, the social one turns out to have the highest effect on economic sustainability; thirdly, results are confirmed even when we control for context-specific conditions.