Unpacking the Relationship Between Market Competition and Environmental, Social, and Governance ( ESG ) Performance: A Systematic Review
This study conducts a systematic literature review to assess the complex relationship between market competition and Environmental, Social, and Governance (ESG) performance. Using the PRISMA framework, 45 peer‐reviewed articles (2002–2025) are analyzed through the TCCM (Theory–Context–Characteristic–Methodology) framework. The findings show that the impact of competition on ESG is conditional rather than uniform. Competition can enhance ESG through differentiation, innovation, and legitimacy, but can also constrain it through cost pressures and managerial short‐termism. Market competition further acts as a contextual moderator, shaping how individual characteristics, firm characteristics, governance, and institutional environments influence ESG outcomes. These results suggest that ESG should be understood as a strategic response to competitive and institutional conditions, rather than a standardized one‐size‐fits‐all approach or compliance‐driven activity.