ESG Practices and Corporate Efficiency in Global Manufacturing Multinational Firms: The Conditional Role of Board Size

ABSTRACT This study examines how environmental, social, and governance (ESG) practices influence sustainability efficiency and profitability efficiency in global manufacturing multinational firms and explores whether board size moderates these relationships. Using a sample of 71 firms from 2017 to 2021, including the COVID‐19 period, this study employs a dynamic network data envelopment analysis model to evaluate two stages of organizational value creation: sustainability efficiency and profitability efficiency. The findings reveal that ESG dimensions exert differentiated effects across these stages. Social practices are negatively associated with both sustainability efficiency and profitability efficiency, suggesting potential short‐term resource trade‐offs associated with social initiatives. By contrast, governance practices significantly enhance profitability efficiency, suggesting that governance‐related ESG practices support the conversion of organizational resources into financial outcomes. Most board size interaction effects are statistically insignificant, indicating that board size does not systematically condition ESG efficiency relationships. The moderating effect of board size is confined to the governance profitability relationship, where larger boards weaken the positive association. By distinguishing between sustainability efficiency and profitability efficiency, this study provides a deeper understanding of how ESG practices influence organizational value creation. The findings offer important implications for managers and policymakers seeking to balance sustainability objectives, governance effectiveness, and long‐term organizational performance.