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Sensegiving, ESG, and Firm Value: Mitigating Interpretive Uncertainty in South Korea

Year: 2025

Type: article

Abstract: ABSTRACT As environmental, social, and governance (ESG) becomes central to corporate strategy, firms must navigate the tension between meeting stakeholder expectations and avoiding overinvestment. This study examines how interpretive uncertainty—arising from stakeholders' divergent cognitive frames—produces a nonlinear relationship between ESG performance and firm value. Using panel data from Korean listed firms, we demonstrate an inverted U–shaped relationship, with higher ESG investment eroding returns. To explain this effect and its mitigation, we integrate sensegiving theory and cultural context into ESG research. We argue that firms can reduce interpretive uncertainty through strategic sensegiving activities, thereby mitigating the diminishing returns for high ESG performance in empathy‐laden cultural contexts by shaping the amount and richness of ESG‐related information. Specifically, we show that advertising intensity and philanthropic giving positively moderate the inverted U–shaped relationship, allowing firms to sustain the benefits of higher ESG scores. By linking interpretive uncertainty and sensegiving, this study offers a nuanced perspective on managing ESG performance and firm value.

Source: Business Strategy and the Environment

DOI: 10.1002/bse.70394

Authors: Yanghee Kim, Chuljin Park, Yeonji Seo, Taewoo Roh

Institutions: Sungkonghoe University, UNSW Sydney, The University of Sydney, Paris School of Business, Hanyang University

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $4,480

OpenAlex ID: W4416667365

FWCI: 3.579

Cites: 95

Cited by: 4

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