Strategic alliances and corporate ESG performance

Corporate strategic alliances play a vital role in promoting factor flows and resource sharing, thereby enabling firms to gain a competitive advantage. Using alliance data from Chinese A-share listed firms from 2009 to 2022, we find that engagement in strategic alliances enhances corporate ESG performance. We attribute these outcomes to the resource-enriching effect and the monitoring effect. Following the formation of strategic alliances, we observe a substantial reduction in firms' financial constraints and managerial myopia, as well as an enhancement in firm innovation and external attention. Moreover, the effect is more pronounced when strategic alliances are formed between strong entities. Additionally, the strategic alliance has a more positive effect on ESG performance when partners are non-enterprise organizations, or the type is an equity strategic alliance. Finally, our test shows that enhancing corporate ESG performance resulting from strategic alliances can reduce stock volatility and elevate firm value. Overall, our findings enrich the literature on the economic consequences of strategic alliances and the drivers of corporate ESG, offering novel insights for companies to overcome their resource constraints and enhance ESG performance.