Enhancing Production Efficiency: The Role of <scp>ESG</scp> Performance in Arab Manufacturing Companies

ABSTRACT Research examines the influence of ESG performance on Arab countries' manufacturing production companies. This quantitative design is supported by data on listed manufacturing companies in six Arab countries: United Arab Emirates, Kuwait, Bahrain, Oman, Saudi Arabia, and Qatar. Data from 2008 to 2024, with MSCI ESG ratings and other financial databases consulted in presenting the relation of ESG performance to production efficiency. These statistical analyses of regression models use Stata 18.0 software with the purpose of giving empirical support to hypotheses. Results from the research display that higher ESG performance has an effect on production efficiency through green innovation and reduced financing constraints among others. Notably, such relations are further enhanced in settings with a stronger level of market competition and with increased scrutiny by analysts’ focus, which underlines the contingent nature of external governance mechanisms. These results have proved that enhanced production efficiency associated with ESG performance has a positive impact on the output of state‐owned businesses and is not related to environmentally sensitive industries simply because their ESG efforts promote these efficiencies.