Abstract
Amid the growing prominence of Environmental, Social, and Governance (ESG) factors in corporate strategy, this dissertation investigates how ESG can act as a strategic capability within organizations. By examining its influence on corporate valuation, internal stakeholder relationships, and post-acquisition performance, the research provides insights into how ESG performance can enhance value creation and create competitive advantage. The work presents an introductory theoretical framework followed by three empirical studies.The first study examines the relationship between corporate environmental performance and acquisition premia through the lens of the Resource-Based View (RBV) of the firm, proposing an inverted U-shaped relationship resulting from the balance between value-adding and value-reducing drivers. It advances the RBV by introducing a dynamic resource valuation perspective, highlighting the critical role of the acquirer-target relationship in valuing resources and capabilities. Based on an analysis of 100 global acquisition announcements between 2010 and 2019, the study confirms that optimal environmental engagement maximizes acquisition premia, moderated by the acquirer's environmental performance.
The second study investigates the impact of ESG performance levels and changes over time on employee satisfaction within S&P 500 corporations. Based on Glassdoor.com employee reviews from 2009 to 2017 and natural language processing techniques, the findings reveal that the level of ESG performance (i.e., ESG Tilt) positively correlates with employee satisfaction, mediated by perceptions of organizational justice. Taking a dynamic perspective, changes over time (i.e., ESG Momentum) show indicators of a positive impact on employee satisfaction, mediated by employee expectancy. This study contributes to a more refined understanding of the relationship between ESG and employees by taking both a static and dynamic perspective, mediating factors and by a novel operationalization of organizational justice perceptions and employee expectancy through NLP analysis.
The third study examines how differences in ESG performance between acquirers and targets affect post-acquisition ESG progress and financial outcomes. Using dynamic capability and resource-based view (RBV) theories, it analyzes 117 global acquisitions from 2009 to 2019. The results show that acquiring a target with weaker ESG performance slows the acquirer’s ESG progress due to a reallocation of capabilities and resources, while a target with stronger ESG performance accelerates it. Stakeholder engagement by the acquirer moderates these effects. The study also finds that ESG rating differences impact buy-and-hold abnormal stock returns (BHAR), mediated by changes in the acquirer’s ESG score post-transaction. This work develops a synthesis of dynamic capabilities and resource integration, illustrating a bidirectional mechanism that influences the acquirer's ESG advancements, and underscores the importance of stakeholder engagement in moderating post-acquisition performance.
Collectively, this dissertation enhances the understanding of ESG as a strategic capability that can create competitive advantages through operational, strategic, and financial outcomes. It highlights the importance of integrating sustainability into core business functions, particularly in the context of acquisitions and internal stakeholder engagement. The findings also offer valuable insights for corporations aiming to leverage ESG initiatives to enhance value creation, stakeholder relationships, and long-term sustainability performance.
| Date of Award | 1 Aug 2024 |
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| Original language | English |
| Awarding Institution |
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| Supervisor | Michael Etter (Supervisor) & Taco Reus (Supervisor) |