Corporate sustainability performance and innovation: evidence from China

This study examines the relationship between a company’s sustainable development goal (SDG) performance and its innovation capabilities in China, using SDG rating data from Robeco for the period 2012–2023. The empirical results show that improved SDG performance is associated with lower innovation levels, as resources are diverted from R&D to sustainability initiatives. This adverse effect is less pronounced in companies with more directors from overseas backgrounds, a higher ownership ratio of actual controllers, and a greater influence of Chinese Confucian culture. These findings have practical implications for firms to optimize resource allocation and resolve potential conflicts between sustainable development and innovation.