<scp>ESG</scp> Initiatives and Firm Efficiency: The Moderating Role of Board Gender Diversity in the Pharmaceutical and Biotechnology Industry

ABSTRACT This study examines the relationship between environmental, social, and governance (ESG) initiatives and firm efficiency, which is assessed through two dimensions: innovation efficiency and eco‐efficiency. ESG performance is decomposed into its three pillars; namely, ESG, and board gender diversity is introduced as a moderating variable. Using social network analysis and panel data from pharmaceutical and biotechnology firms across America, Europe, and Asia from 2017 to 2023, this study explores interfirm linkages and governance dynamics within four subindustries. Findings reveal that the social pillar positively influences eco‐efficiency, indicating that firms emphasizing employee welfare, community engagement, and customer responsibility achieve a stronger economic‐environmental balance. Conversely, the governance pillar is negatively associated with eco‐efficiency, suggesting that higher compliance and monitoring costs may constrain operational sustainability. Although female directors play a vital role in shaping organizational outcomes, their moderating effect is significant only in the ESG‐innovation efficiency relationship, where they help mitigate the negative effects of ESG initiatives on innovation efficiency. However, board gender diversity does not moderate the relationship between ESG pillars and eco‐efficiency, implying its greater influence on strategic innovation than on operational outcomes. Overall, ESG initiatives and gender‐diverse boards are essential for fostering innovation, eco‐efficiency, and sustainable growth in the P&amp;B sectors.