Role Reversal! Financial Performance as an Antecedent of ESG: The Moderating Effect of Total Quality Management

Shifting from short-term profit maximizing strategies to more sustainable long-term ones, the corporate world has been exerting extra effort adopt environmental, social, and governance (ESG) performances. However, loop question remains unsolved: is ESG financially-driven or financial performance (FIN) ESG-driven? Building on slack resources theory bridging three management literatures, this analysis relies a six-year panel dataset of multinational organizations different industries. A distributed lag regression model proposed empirically investigate impact FIN test moderator effect total quality (TQM). The findings reveal stimulus between free cash flow (FCF) scores. While interaction TQM FCF negative ESG, Tobin’s Q reveals positive relationship with ESG. This study sheds further insights for both research practice towards operationalization sustainability management.