ESG and substantive green innovation in enterprises------the moderating effect of managerial myopia

With the ongoing advancement of carbon peaking and carbon neutrality initiatives, enterprises, as micro-economic entities, can leverage ESG (Environmental, social, and governance) ratings to identify challenges in carbon emission management, thereby facilitating their transition to low-carbon development through informal regulatory mechanisms. However, the recent trend of prioritizing quantity over quality in green innovation has increasingly impeded substantive green innovation. Drawing on the upper echelons theory and the concept of managerial myopia, this study empirically examines the moderating role of managerial myopia in the relationship between ESG performance and substantive green innovation, using a sample of A-share listed companies in China from 2012 to 2022. The findings reveal that: (1) ESG ratings promote substantive green innovation through both supervisory (financing constraints alleviation) and incentive (green awareness enhancement) channels; (2) Managerial myopia directly suppresses green innovation, especially substantive types; (3) Managerial myopia negatively moderates the ESG–substantive green innovation relationship, attenuating ESG’s positive effect; (4) A quality–quantity trade-off exists, as myopic managers shift innovation from substantive to strategic activities under ESG pressure; (5) This negative moderating effect is stronger in state-owned enterprises and patent-intensive industries.