Impact of Digital Transformation on ESG Management and Corporate Performance: Focusing on the Empirical Comparison between Korea and China

Abstract

With the development of digital technology, tasks such as carbon neutrality have emerged as global issues because of the climate crisis. Digital transformation (DT) and environmental, social, and corporate governance (ESG) management have already become strategic requirements on the agenda of corporate management, but theories and empirical research on how to affect corporate performance through digital transformation and ESG management are lacking. This study examined the intrinsic mechanism of DT to corporate performance based on the theory of a resource-based view (RBV). In addition, the theoretical framework of ESG management as mediating variables was constructed. The ‘Partial Least Squares Structural Equation Model (PLS-SEM)’ was used to verify the hypotheses derived from the literature. Empirical analysis was conducted on companies interested in DT and ESG management in Korea and China. DT positively affected ESG management and corporate performance (e.g., non-financial and financial performance). On the other hand, an examination of the relationship between ESG management and corporate performance revealed differences between the results from Korea and China. The strategic implications for corporate DT and ESG management are suggested. In particular, this study also contributes to the academic aspect by providing new explanations for applying resource-based view theory and the relationship between DT, ESG management, and corporate performance.