Nonlinear impact of ESG administrative embedding on corporate green total factor productivity: a neo-institutionalism perspective

Abstract

The purpose of this study is to examine the nonlinear impact of environmental, social and governance (ESG) administrative embedding on corporate green total factor productivity (GTFP). This study constructs ESG administrative embedding indices based on ESG cognitive embedding and ESG resource embedding and uses the EBM-GML method to estimate corporate GTFP. We empirically test the nonlinear relationship between ESG administrative embedding and corporate GTFP using methods such as fixed-effects models, mediation models and panel threshold models. The study finds that ESG administrative embedding has a significant “poor centering” effect on corporate GTFP, forming a U-shaped relationship and found that there is a disconnect between knowledge and action in the ESG administrative embedding process. Heterogeneity analysis indicates that this nonlinear impact is more pronounced in state-owned enterprises, heavily polluting industries and regions with low marketization levels. Mechanism analysis reveals that the ESG administrative embedding primarily influences corporate green development through shifts in green awareness and green investment behavior. Threshold effect tests reveal that moderate environmental regulations and fiscal interventions can enhance the positive impact of ESG administrative embedding on GTFP, while both excessively low and high ESG rating discrepancies hinder the realization of its green efficacy. Government should implement flexible ESG administrative embedding, matching policies to embedding stages, enterprise types and regional marketization levels. Moderate environmental regulation and fiscal intervention are needed, with unified ESG rating standards to reduce divergence. They should also boost synergy between administrative measures and market mechanisms and improve policy coordination to avoid over-intervention and resource misallocation. This study reveals that irrational ESG administrative embedding cannot effectively drive corporate green transformation, while rational and threshold-compliant administrative embedding helps enterprises balance economic benefits and environmental responsibilities, which provides strong support for China to achieve its dual carbon goals and advance high-quality economic and social development. This study extends the scope of ESG to the governmental perspective, constructs an ESG administrative embedding index and uses the “institutional pressure–organizational response” analytical framework of neo-institutionalism theory to reveal a U-shaped relationship between ESG administrative embedding and corporate GTFP. This study provides important evidence for elucidating the governance logic of Chinese-style ESG and evaluating the effectiveness of government administrative interventions in promoting ESG. It makes a significant contribution to the literature on ESG research and corporate sustainable development governance in nonWestern contexts.