This study aims to examine the relationship between sustainability performance and ESG capabilities of Korean manufacturing small and medium-sized enterprises (SMEs), and to identify the key factors influencing sustainability performance. To this end, firm capabilities were classified into general capabilities (technological capability and marketing capability) and ESG-related capabilities. The effects of each capability on financial performance and sustainability performance, as well as the effect of financial performance on sustainability performance, were analyzed in an integrated framework.
The results of the analysis are as follows. First, ESG-related capabilities were found to be independent determinants that influence sustainability performance, rather than merely measurement indicators of sustainability. During the survey process, respondents clearly distinguished between sustainability performance and ESG capabilities across different dimensions, and the statistical analyses produced differentiated results by ESG dimension.
Second, both general firm capabilities and ESG-related capabilities were shown to have significant effects on financial performance and sustainability performance. Specifically, technological capability and marketing capability—representing general firm capabilities—had significant positive effects on sustainability performance. Among ESG-related capabilities, social responsiveness capability and governance responsiveness capability were found to positively influence sustainability performance.
Third, financial performance was found to have a significant positive effect on sustainability performance. This result suggests that financial performance serves as an appropriate antecedent factor influencing sustainability performance.