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Cultural Pathways to Sustainability: How Organizational Cultures Shape Firms' ESG Performance

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Corporate Social Responsibility and Environmental Management

Published online on

Abstract

["Corporate Social Responsibility and Environmental Management, EarlyView. ", "\nABSTRACT\nUnderstanding how organizational culture shapes firms' environmental, social, and governance (ESG) performance is essential for advancing effective sustainability management. Culture reflects shared values and norms that shape how firms enact ESG principles. Drawing on the competing values framework and Stakeholder Theory, we argue that organizational cultural orientations guide how organizations interpret and prioritize stakeholder expectations, thereby shaping performance across ESG domains. Using a unique multi‐source dataset of 468 Fortune 500 firms (2015–2023), integrating over 500 K Glassdoor reviews with external ESG ratings, we find that distinct cultural profiles foster different ESG outcomes. Environmental performance improves under hierarchical cultures when supported by financial resources, whereas market cultures are associated with negative environmental outcomes. Social performance is strengthened by adhocracy and hierarchy cultures, and governance performance improves under adhocracy and market cultures. The findings highlight the importance of balanced cultural orientations for attaining superior ESG outcomes.\n"]