Abstract
This study explores the effects of performance feedback-the discrepancy between aspiration and actual performance-regarding ESG metrics and how they relate to firms’ internal (R&D) and external (acquisition) search behaviors. According to the behavior theory of the firm (BTOF), firms evaluate their performance based on their aspiration levels, and choose their subsequent behavior according to the discrepancy between their actual performance and aspiration. ESG metrics performance has become a prominent pillar in firm evaluation in recent years, and their effects on firm behavior as well as interaction with financial performances have gone largely unstudied. With a sample of 254 publicly listed firms from U.S. materials and energy industry from 2017 to 2021, we find that as the firm ESG performance rises above its aspiration level, it engages in both internal and external search activities. However, firms’ financial performance negatively moderates the relationship between positive ESG performance feedback and internal and external search activities. Results and future research directions on the effects of ESG on firms’ strategic responses are further discussed at the end of the manuscript.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
