Environmental, social, and governance (ESG) considerations have moved from peripheral rhetoric to the center of firm evaluation, yet our understanding of how firms translate ESG performance feedback into strategic organizational responses remains limited. Drawing on the behavioral theory of the firm (BTOF), we examine whether performance feedback in the noncore domain, namely, ESG performance, predicts substantive nonmarket action through environmental management system (EMS) adoption. Using a sample of listed US firms, we find that negative ESG performance discrepancies are associated with a higher likelihood of EMS adoption. In contrast, positive ESG performance discrepancies are associated with a lower likelihood of EMS adoption. We further show that board gender diversity moderates this feedback–response relationship by strengthening the negative association between positive ESG discrepancy and EMS adoption. However, board gender diversity weakens the positive relationship between negative ESG discrepancy and EMS adoption. Overall, our study extends BTOF to ESG performance feedback, contributes to EMS certification literature, and identifies board gender diversity as a governance‐related boundary condition.
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NEDUNURU et al. (2026) studied this question.
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