ESG Practices, Perceived Warmth/Competence, and Organizational Commitment: The Case of Bio & Pharmaceutical Companies in Korea

Abstract

Purpose The purpose of this paper is to examine (1) the effect of environment, social, and governance practices on employee organizational commitment, and (2) the mediating role of employee perceived warmth and competence. Design/Methodology/Approach - Data were collected from 108 employees of 74 bio and pharmaceutical companies in South Korea. Confirmatory factor analysis, path analysis, and a bootstrapping technique in structural equation model was performed to test the hypothesis. Findings - The paper found that perceived image of a company had a mediating effect on the relationship between a company’s environment/governance practices and its employees’ organizational commitment. Specifically, in relation to organizational commitment, environment practices were mediated by perceived competence, and governance practices were mediated by perceived warmth. Research Implications - This is one of the first studies to show how corporate environment, social, and governance practices can influence internal stakeholder perceptions and attitudes toward an organization. In particular, we showed in detail how environment, social, and governance practices affect employee perceptions of the company and ultimately improve their organizational commitment. While previous studies mostly focused on investigating the integrated effect of environment, social, and governance practices on corporate financial performance, this study verified how discriminatory characteristics of each practices have different effects on employee perceptions and attitudes.