The Dynamics of ESG Peer Pressure and Corporate Resilience: Examining Through Firm-Perceived EPU and Governance Efficiency Perspectives

Abstract

This study explores how environmental, social, and governance (ESG) performance-based peer pressure influences corporate resilience, with a focus on the moderating effects of firm-perceived economic policy uncertainty (FEPU) and governance efficiency (GE). Integrating stakeholder theory, resource dependence theory, and social norm theory, we analyze panel data from Chinese A-share listed firms on the Shanghai and Shenzhen Stock Exchanges (2010–2022). Results indicate that ESG peer pressure significantly negatively shapes corporate resilience, which is mainly originated from less resilient firms where environmental and social peer pressure are primary drivers, with FEPU amplifying its adverse effects and GE attenuating them. Moreover, Covid-19 sensitivity analysis reveals a temporal shift in the relationship between ESG peer pressure (ESGP) and corporate resilience in China. Heterogeneity analysis reveals that firm-specific attributes—including firm size, corporate sustainability levels, industry sector (non-manufacturing), environmental classification (non-heavy polluting), ownership structure (state-owned enterprises), and geographic location (central/western regions)—critically determine firms' susceptibility to ESG peer pressure. By elucidating the dynamic interplay between ESG peer pressure, external policy uncertainty, and internal governance mechanisms, this study advances theoretical discourse on competitive and regulatory drivers of corporate behavior. These findings offer actionable insights for policymakers seeking to incentivize sustainability, managers navigating competitive and regulatory landscapes, and investors evaluating ESG risks in uncertain economic contexts.