ESG as a Strategic Intangible Asset: Toward Competitive Barriers through Lower Financing Costs and Enhanced Brand Power
Xiaohui Chen, Ramón Arilla, Samuel Ribeiro-Navarrete
Keywords:
ESG performance, strategic intangible assets, cost of capital, brand competitiveness, core competence, sustainable development
Abstract:
As traditional competitive advantages such as scale efficiency and technological superiority become increasingly fragile, firms are under pressure to identify new, sustainable bases of competitiveness. Environmental, social, and governance performance has emerged as a critical strategic resource shaping firms’ competitiveness. This study develops an integrated theoretical framework grounded in the resource-based view and signaling theory, positing ESG as a strategic intangible asset that influences competitiveness through two primary, interconnected channels: financing conditions and brand equity. Using a panel dataset of Chinese listed firms and employing fixed-effects models, mediation tests, and interaction analysis, this study empirically examines the dual pathways through which ESG performance influences competitiveness. Strong ESG performance improves firms’ financing conditions by reducing risk exposure and enhancing information transparency, thereby lowering financing costs and easing resource constraints. Meanwhile, ESG performance significantly enhances brand competitiveness by generating positive media coverage and improving corporate reputation, which deepens stakeholder identification and market legitimacy. Importantly, the two channels interact in a mutually reinforcing manner. Brand competitiveness amplifies the effect of ESG on financing conditions, while improved financing conditions enable sustained investment in ESG and brand development. These findings suggest that ESG performance fosters a virtuous cycle between capital markets and product markets, reinforcing firms’ sustainable competitive advantage. Revealing how ESG can potentially build competitive barriers through a dynamic system of interconnected financial and reputational mechanisms, directly contributes to the competitiveness literature.
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 ESG as a Strategic Intangible Asset: Toward Competitive Barriers through Lower Financing Costs and Enhanced Brand Power [PDF file] [Filesize: 625.3 KB]
 10.7441/joc.2026.03.03
Chen, X., Arilla, R., & Ribeiro-Navarrete, S. (2026). ESG as a Strategic Intangible Asset: Toward Competitive Barriers through Lower Financing Costs and Enhanced Brand Power. Journal of Competitiveness, 16(3), 63–91. https://doi.org/10.7441/joc.2026.03.03
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