Does “Doing Good” Facilitate “Going Global”? — ESG Performance, Corporate Reputation, and Corporate Internationalization

Against the dual backdrop of global value chain restructuring and rising de-globalization, emerging-market firms face pronounced liabilities of foreignness (LOF) when expanding overseas. Although traditional international business theories emphasize tangible firm-specific advantages such as capital, technology, and scale, the growing salience of Environmental, Social, and Governance (ESG) standards has made non-financial attributes particularly transparency, accountability, and sustainability - increasingly important for cross-border legitimacy. Drawing on signaling theory and the liability-of-foreignness perspective, this study examines whether and how Environmental, Social, and Governance (ESG) performance facilitates corporate internationalization. Using 37,059 firm-year observations for Chinese A-share listed firms from 2010 to 2024, we estimate firm and year fixed-effects models that exploit within-firm variation in ESG performance while absorbing time-invariant firm heterogeneity. The results show that stronger ESG performance significantly increases both the depth and breadth of corporate internationalization. Mediation analysis further indicates that corporate reputation partially transmits this effect, suggesting that credible ESG practices help firms accumulate moral capital and convert responsible conduct into reputational resources that reduce information asymmetry and institutional frictions in foreign markets. The findings remain robust to excluding the COVID-19 period, using lagged ESG performance, replacing the baseline ESG measure with Bloomberg ESG scores, and employing the logarithm of the number of overseas subsidiaries as an alternative measure of internationalization. They are also supported by instrumental-variable estimation and propensity-score matching. This study contributes to the ESG and international business literatures by conceptualizing ESG performance as a costly and credible cross-border signal and by identifying corporate reputation as an important mechanism through which emerging-market firms transform responsible practices into internationalization advantages.