Manufacturing Agglomeration and Corporate Environmental, Social, and Governance Performance

Abstract

Implementing environmental, social and governance (ESG) disclosure is critical for manufacturers’ sustainable development and high-quality growth. Amid manufacturing agglomeration, firms’ spatial concentration reshapes value creation and risk exposure, affecting ESG performance. Using 2010–2023 data from Chinese A-share listed manufacturers, this study empirically examines agglomeration’s impact on corporate ESG performance, based on heterogeneous firm and stakeholder theories. Results show agglomeration significantly improves ESG performance, via enhanced productivity (internal) and greater compliance pressure (external). Further analysis finds ESG performance mitigates adverse selection in agglomeration ecosystems, while cluster peer effects strengthen long-term ESG engagement, aligning with stakeholders’ demands for transparency and accountability. This enriches manufacturing agglomeration-ESG literature, guiding policymakers and firms in integrating sustainability into clustered development.