ESG Engagement, Corporate Reputation, and Performance in Emerging Markets: Evidence from Jordan

Abstract

This research explored how Environmental, Social, and Governance (ESG) engagement affects the performance of Jordanian small and medium-sized enterprises (SMEs). The study, drawing on theories like the Resource-Based View, found that ESG engagement significantly boosts firm performance, both directly and indirectly. The indirect link works through an improved corporate reputation, which acts as a mediator. Essentially, when SMEs engage in ESG, their reputation improves, which in turn enhances their performance. However, the study's results did not show that CEO ethical leadership had a statistically significant moderating effect on this relationship, suggesting its influence in this specific context is limited. The findings highlight that integrating ESG into business strategy can help SMEs build social trust and strengthen stakeholder relationships, contributing to sustainable development in emerging economies.