Exploring ESG configurations for higher financial performance by qualitative comparative analysis: Evidence from listed manufacturing firm governance

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Abstract

The significance of environmental, social, and governance (ESG) performance has increased substantially as organizations seek to maximize long-term value creation through the alignment of shareholder objectives with broader stakeholder interests, enhanced organizational legitimacy, risk mitigation, reputational advancement, and stakeholder trust. Despite its nascent stage in Vietnam, ESG practices demonstrate potential for enhancing corporate financial performance. This research examines the impact of ESG configurations — defined as the interrelationships among the three ESG pillars rather than isolated effects — on the financial performance of Vietnamese listed manufacturing firms through the application of fuzzy-set qualitative comparative analysis (fsQCA) (Liu et al., 2022; Ragin, 2008b). The empirical evidence indicates improvement in ESG performance among listed manufacturing firms from 2017 to 2021. Moreover, the analysis identifies three distinct causal configurations associated with high financial performance, with the social pillar emerging as a fundamental component of these configurations. These empirical findings provide strategic implications for Vietnamese manufacturing firms seeking to optimize their ESG practices and financial outcomes, underscoring the necessity of implementing a comprehensive ESG framework with particular emphasis on social factors as critical determinants of financial success in this sector.

Keywords: Financial Performance, ESG, fsQCA, Manufacturing Firms, Vietnam

Authors’ individual contribution: Conceptualization — T.K.O.N.; Methodology — T.K.O.N.; Formal Analysis — T.K.O.N.; Writing — Original Draft — T.L.H.N.; Writing — Review & Editing — T.K.O.N.; Supervision — T.K.O.N.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M41, M48

Received: 08.08.2024
Revised: 16.11.2024; 11.12.2024; 28.06.2025
Accepted: 25.07.2025
Published online: 30.07.2025

How to cite this paper: Nguyen, T. K. O., & Nguyen, T. L. H. (2025). Exploring ESG configurations for higher financial performance by qualitative comparative analysis: Evidence from listed manufacturing firm governance. Journal of Governance & Regulation, 14(3), 81–92. https://doi.org/10.22495/jgrv14i3art8