1. Introduction
In the report of the 20th Party Congress, it is explicitly stated that “high-quality development is the primary task of building a modern socialist country in all aspects”. Enterprises are the primary agents of economic development and indisputably the central subjects of high-quality development. ESG emphasises the comprehensive evaluation of enterprises’ performance in three dimensions: environmental protection, social responsibility and internal governance. The enhancement of ESG performance can assist enterprises in developing competitive advantages and achieving sustainable development. It is therefore of theoretical and practical significance to explore the factors that facilitate corporate ESG strategies. In this context, scholars have continued to study the various factors affecting ESG performance, with a particular focus on those that can enhance corporate ESG performance.
In this context, numerous studies have confirmed the positive impact of corporate environmental, social and governance (ESG) performance. It has been found that good ESG performance can benefit firms in a number of ways: most directly, good ESG performance significantly improves firms’ financial performance and helps to reduce firms’ market risk [
1]. Firms with good ESG performance can gain a good reputation in the marketplace [
2], reduce the firms’ cost of equity capital and cost of debt [
3], alleviate corporate financing constraints [
4], circumvent management self-interested behaviours [
5], reduce inefficient investment behaviours [
6], enhance firms’ innovation performance [
7], promote firms to accelerate the green transformation process [
8], improve enterprise total factor productivity [
9] and other advantages. At present, then, how to inspire enterprises to achieve better results in ESG practice has become a hot topic in the research field, from the internal drivers of enterprises that are mainly involved in digital strategy [
10] to board characteristics [
11], internal control and executive experience [
12], etc.; in terms of external drivers, studies have focused on environmental regulation [
13], business environment [
14], public environmental concerns [
15], institutional shareholding [
16] and other antecedents involving multiple types of stakeholder subjects.
However, compared to formal systems, soft mechanisms centred on cultural constraints can create stable internal norms, especially in emerging countries where formal systems are not yet well developed and where cultural factors can play a potentially more important role [
17]. Cultural factors emphasise corporate self-discipline and self-awareness, manifested in the shift from reactive to proactive, as the optimal path to shaping ESG practices. For this reason, there are scholars who have studied the impact of corporate non-financial performance from a soft cultural perspective, and the excellent traditional Chinese culture represented by Confucianism can help to enhance the awareness of corporate social responsibility, increase the quality of environmental information disclosure [
18] and improve the ESG performance of enterprises. Red culture based on Chinese scenarios can significantly enhance green innovation [
19]. In recent years, with the maturity of text analytics and machine learning methods, some scholars have begun to use corporate text mining to measure the unique cultural characteristics of firms [
20] and have found that a corporate culture orientated towards “innovation, integrity, quality, respect and teamwork” promotes firms’ ESG performance. Furthermore, similar studies have found that a culture of “integrity” is a driver of corporate ESG performance [
21].
Although existing research has explored traditional outstanding culture in depth, the cultural–emotional genes of corporate nationalism have not received sufficient attention in terms of cultural types. As a matter of fact, the unique corporate culture formed by enterprises’ emphasis on nationalistic culture is an extremely important type of corporate culture. The culture of enterprise nationalism stresses the responsibilities and obligations of enterprises to the state and the nation, advocating that enterprises actively fulfil their social responsibilities and safeguard the interests of the state and the honour of the nation while pursuing their own economic interests. Such cultural values play an important role in the strategic decisions and daily operations of enterprises. The high correlation between corporate nationalistic culture and corporate ESG can be reflected in many management practices. For example, Huawei has internalised nationalistic sentiments into its corporate spiritual culture, and the Basic Law of Huawei states “Huawei takes the responsibility of serving the country with industry and developing the country with science and education, and contributes to the communities in which it operates with the development of the company. We will make unremitting efforts for the prosperity of the great motherland, the revitalisation of the Chinese nation, and the happiness of ourselves and our families”. Since its inception, Fuyao has always been committed to making positive contributions to its customers, businesses, industries, employees and society through its continuous progress and development, with the vision of “making glass for the Chinese people”.
In view of the theoretical significance and practical value, this paper incorporates the informal system of nationalist culture into the theoretical framework of factors influencing corporate ESG performance, trying to fill the research gap on the influence of corporate nationalistic culture on corporate ESG performance among the factors of the informal system, and thus poses the following questions: What is the influence of corporate nationalistic culture on corporate ESG performance? What is the mechanism of influence between the two? Can the informal system be a complementary alternative to the formal system? What is the heterogeneity of the impact of nationalistic culture on corporate ESG performance in specific contexts? In order to answer the above research questions, this paper empirically examines the relationship between corporate nationalistic culture and corporate ESG performance based on data from Chinese listed companies from 2011 to 2022, explores two potential channel mechanisms, namely, attention allocation and internal governance, and explores the moderating effect of formal governance mechanisms in the relationship between the two, while also examining the influence of situational factors, including corporate financing constraints and corporate life cycle, on ESG performance and the heterogeneous effects of corporate nationalistic culture on promoting corporate ESG performance. The possible incremental contributions of this paper may be the following three aspects: (1) constructing a logical framework of “informal system-firm ESG performance”, revealing the impact of nationalistic culture on firms’ non-financial performance, expanding the theoretical factors driving ESG performance from the perspective of micro-firm culture and promoting the development of a “culture and firm behaviour” approach. It expands the theoretical factors driving ESG performance from the perspective of micro-corporate culture and promotes the breadth of research on the integration of “culture and corporate behaviour”; (2) an in-depth exploration of the role of nationalistic culture in enhancing corporate ESG performance. From the two paths of “attention allocation effect” and “internal governance effect” exerted by democratic culture, it is verified that increasing attention to the ecological environment and alleviating the internal agency problem are the main mechanisms through which nationalistic culture affects corporate ESG performance. This provides micro-level empirical evidence for a deeper understanding of how nationalist culture affects corporate ESG performance; (3) this study also introduces three internal and external formal institutions as moderating variables, which helps to understand the heterogeneity of the relationship between corporate nationalist culture and ESG performance from the perspective of internal and external monitoring. On this basis, this paper examines the cross-sectional effects of corporate life cycle and financing constraints, providing practical insights and guidance for the construction and promotion of corporate culture.
2. Theoretical Analysis and Research Hypotheses
The connotation of corporate nationalist culture refers to the identification with and confidence in traditional Chinese culture, emphasising the inheritance of the national image and core values and promoting corporate social responsibility and employee cohesion in order to achieve the unified goal of national rejuvenation and corporate development [
22]. This culture tends to emphasise the respect and inheritance of traditional Chinese culture and its fit with the national image and core values, as well as the sense of corporate social responsibility and mission. This cultural atmosphere emphasises the close connection and mutual influence between the enterprise and the country and the nation, prompting the enterprise to reflect its respect for and inheritance of the country’s cultural traditions and values in its business activities. The concept of this culture is deeply rooted in the core values of enterprises, prompting enterprises not only to pay attention to their own economic benefits but also to closely link their development with the prosperity of the country and the revival of the nation. As an informal system, nationalistic culture is also a common norm and value system formed within the enterprise, which may be able to promote the ESG performance of the enterprise. The basic idea of the theoretical deduction of this study is that organisational theory suggests that the environmental organisational culture in which a firm is embedded has a direct impact on the values of its members [
23]. The higher echelon theory, on the other hand, links executive values and decision-making behaviour. Thus, this study argues that the nationalistic culture promoted by the firm is specified through the path of action of influencing the values of managers, which in turn affects their behavioural decisions about the firm.
First, corporate nationalist culture can directly affect managers’ attention allocation and enhance corporate ESG performance. Managers’ attention allocation, i.e., the focus of executives’ attention in strategic decision making and daily management, reflects their values [
24]. Corporate nationalist culture emphasises the primacy of national interest and social responsibility, and firms that espouse nationalist culture will be more proactive in responding to national strategies. High-quality development, as the primary task of comprehensively building a modern socialist country, emphasises green development with ecological priority. As far as micro-enterprises are concerned, corporate ecological responsibility is an important manifestation of corporate social responsibility [
25], and under the influence of a democratic culture, executives will actively respond to the concept of green development and promote the goal of the “dual-carbon” strategy in order to realise the high-quality development of the enterprise. As a result, management will increase their attention to the ecological environment, which directly affects the allocation of resources and strategic decisions in environmental, social and governance aspects, prioritising and investing more resources in sustainable development practices, thus enhancing corporate ESG performance [
26]. Promoting the culture of corporate nationalism makes enterprises construct a development concept that is consistent with the government’s value orientation and increases the allocation of corporate management’s attention to the ecological environment, and the allocation of management’s attention determines the enterprise’s resource investment and managerial support [
26], which helps to enhance the process of practising the enterprise’s ESG concept and comprehensively improves the enterprise’s ESG performance.
Second, corporate nationalist culture can contribute to corporate ESG performance by mitigating agency problems within the firm. This is manifested in the alleviation of two types of agency problems. (1) According to principal-agent theory, in the absence of effective monitoring and incentive mechanisms, management tends to avoid investments that are beneficial in the long term but slow in the short term, choosing instead projects with stable short-term returns, and this kind of risk avoidance will undoubtedly constrain the enterprise’s ability to achieve sustainable development, which will in turn lead to a decline in ESG performance. Corporate culture reflects the common goals and shared values of the corporate collective [
23]. Nationalistic culture, as a corporate culture oriented to “national sentiment” and “social responsibility”, has a profound impact on management’s behavioural norms and values. Under the influence of this culture, the cognition, beliefs and behavioural patterns of the management have undergone subtle changes, and managers tend to show higher moral standards and a sense of responsibility. Such changes broaden decision-making horizons, constrain managers’ opportunistic behaviours and encourage them to pay more attention to the long-term development goals of the enterprise [
27], reducing the conflict between personal interests and the long-term development goals of the enterprise. This not only helps to alleviate the first type of agency problem of the enterprise but also makes managers focus more on the sustainable development strategy of the enterprise, which is reflected in the ESG performance of the enterprise. (2) Corporate nationalistic culture also has a significant mitigating effect on the second type of agency problems. As a unique cultural form and corporate atmosphere within the enterprise, nationalistic culture can form an altruistic corporate atmosphere of “focusing on long-term interests and overall interests”, which can help correct the self-interested motivation of managers as self-interested “rational economic beings”, thus restraining self-interested factors from under-investment in ESG or pseudo-ESG behaviours that undermine ESG performance.
Based on the above theoretical analyses, this paper proposes the following hypotheses:
H1: Corporate nationalist culture helps to enhance corporate ESG performance.
6. Heterogeneity Analysis
The above studies show that corporate nationalism culture can indeed contribute to corporate ESG performance. Further, the question that tends to provoke thinking is as follows: is the relationship between corporate nationalism culture and corporate ESG performance affected by firms’ corporate characteristics and development stages? Next, this paper examines the heterogeneous effects of corporate nationalism culture on the corporate ESG performance of listed companies by focusing on two perspectives: corporate financing constraints and life cycle. Group tests of heterogeneity are conducted for both aspects to uncover the existence of impact variability.
6.1. Heterogeneity Analysis of Financing Constraints
This paper argues that the positive effect of corporate nationalist culture on ESG is also largely dependent on the internal financial abundance of the firm, which, according to resource dependence theory, is largely dependent on the firm’s ability to acquire and manage resources for its behaviour and performance. Similarly, ESG strategy inputs are also dependent on financial resources. First, financial abundance gives management greater freedom and decision-making space to promote nationalistic culture and ESG practices, avoiding business decisions that run counter to corporate culture due to short-term financial pressures and reducing the intrinsic drive for corporate ESG. Second, low financing constraints enhance management’s sense of psychological security, making it more willing to take long-term-oriented decisions and actions, which is compatible with the concepts of long-termism and social responsibility in nationalist culture, and thus more favourably promotes ESG performance improvement.
To verify this theoretical conjecture, this paper chooses SA to quantify the intensity of financing constraints at the firm level and defines a subsample of firms with high and low financing constraints based on the median firm. Columns (1) and (2) of
Table 10 show that the effect of corporate nationalistic culture on corporate ESG performance is significantly positive at the 1% level in the sample with low financing constraints, while both are significantly positive at the 10% level in the sample with high financing constraints, which suggests that the positive effect of corporate nationalistic culture on corporate ESG performance is more pronounced in the sample of firms with lower financing constraints. This suggests that the strength of financing constraints can have a heterogeneous effect on the ESG promotion utility of corporate nationalist culture.
6.2. Heterogeneity Analysis of the Impact of the Enterprise Life Cycle
Enterprise life cycle theory holds that enterprises face different challenges and opportunities at different life cycle stages, and likewise, at different life cycle stages, enterprises have different needs for cultural adaptability. By strengthening the nationalistic culture, the environmental responsibility, social responsibility and governance level of the enterprise can be improved, so that the enterprise can quickly win market attention and enhance the enterprise’s market reputation, and the enhancement of the enterprise’s reputation will bring the enterprise multifaceted strategic resources to make up for the limitations of the enterprise’s resources and capabilities in the growth period. For enterprises in the mature stage, they have already established a relatively solid market position and a mature internal management system, and at this stage, they usually focus on compliance and market mechanisms, and the impact of culture on ESG performance may be masked by the established systems and structures. Finally, in the recessionary period when companies are facing the challenges of shrinking markets and resource shortages, companies in this stage may rely more on strengthening internal “soft power” construction, which can help them re-establish competitive advantages in the marketplace by reinforcing the predominance of nationalistic culture and spirit in corporate culture, stimulating employees’ sense of responsibility and spirit of innovation and promoting corporate ESG practices.
This article refers to the division method of enterprise life cycle and conducts a heterogeneity analysis on enterprises in different life cycles [
33]. The results in columns (3) to (5) of
Table 10 show that the regression coefficient of corporate nationalism culture in the growth stage group is 0.726 and passes the statistical significance test of 1%; the regression coefficient of the maturity stage group is 0.091 but does not reach statistical significance; and the regression coefficient of corporate nationalism culture in the decline stage group is 0.581 but with a small
t-value (
t value is 2.49). This suggests that corporate nationalism culture has a stronger enhancing effect on the ESG performance of firms in the growth period, which is consistent with theoretical expectations.