This is an evolutionary narrative review that examines the way in which the global innovation paradigm will evolve in the period between 2015 and 2025 and the way in which the correlation between the Environmental, Social, and Governance performance and the result of innovation transformation. We synthesize state-led economy empirical evidence on the basis of 27 peer-reviewed articles, emerging markets, and developed economy empirical evidence. The review sets up transmission mechanisms where the ESG performance enhances the ability of innovation: alleviation of financing constraint by reducing the cost of capital, agency cost by reducing the cost, the stakeholder legitimacy by maximizing the stakeholder legitimacy, and digital integration to increase spillovers. The asymmetries of the benefits of supply chain innovations can also be seen through the analysis of having down stream firms enjoying the gains and the upstream suppliers suffering losses without corresponding returns. The synthesis documents a negative U-shaped relationship among the green innovation and public attention. Geographic analysis reveals that a large proportion of studies consider the Chinese institutional settings which raises the question of generalizability of the theories. The analysis integrates the frameworks and Research directions of Resource-Based View and Institutional Theory in the study of the limitations in the methodology.
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