ABSTRACT Through the theory of legitimacy and the theoretical perspective of New Institutional Economics, the purpose of this paper is to analyze the effect of economic freedom over the relationship between Environmental, Social, Governance (ESG) practices and profitability. The sample was finance companies located in the Americas, between 2017 and 2020, using the Refinitiv Eikon® database. The analysis used data modeling in a hierarchical panel. Results demonstrate that ESG practices have a positive and significant impact on profitability. Individually, only the social variable showed a positive and significant relationship over profitability. As for the moderating effect of economic freedom, it was shown that economic freedom enhances the relationship between an ESG index and profitability, and only enhances the relationship between corporate governance and profitability when analyzed individually. Furthermore, findings imply that a country’s institutional quality has an important influence on ESG practices and profitability. Economics Environmental Social (ESG Americas 201 2020 Eikon database panel Individually individually Furthermore countrys country s 20 202 2

RESUMO Por meio da teoria da legitimidade e da vertente Nova Economia Institucional, o objetivo deste estudo é investigar o efeito da liberdade econômica na relação entre as práticas Environmental, Social, Governance (ESG) e a rentabilidade. A amostra da pesquisa corresponde às empresas do setor de finanças localizadas na América, entre 2017 e 2020, utilizando informações da base de dados Refinitiv Eikon®. A análise utilizou modelagem de dados em um painel hierárquico. Os resultados demonstram que as práticas ESG têm um impacto positivo e significativo sobre a rentabilidade. Individualmente, apenas a variável referente ao pilar social apresentou relação positiva e significativa sobre a rentabilidade. Quanto ao efeito moderador da liberdade econômica, mostrou-se que ela potencializa a relação entre índice ESG e rentabilidade, e somente potencializa a relação entre governança corporativa e rentabilidade quando analisadas individualmente. Além disso, os resultados implicam que a qualidade institucional de um país tem uma influência importante nas práticas ESG e na rentabilidade. Institucional Environmental Social (ESG América 201 2020 Eikon Eikon® hierárquico Individualmente mostrouse mostrou se individualmente disso 20 202 2

Abstract Purpose To analyze the effect of national and global value chains on environmental innovation and research and development in the context of Brazilian companies listed on the Ibovespa. Theoretical framework Value chain and open innovation. Design/methodology/approach This is descriptive, documentary research that uses a quantitative approach, through the analysis of secondary data extracted from Refinitiv Eikon. The research population consisted of 70 non-financial companies listed on the Ibovespa between the years 2016 and 2020. Findings The global value chain affects environmental innovation and research and development (R&D) in a positive and significant way, revealing that companies with more evidence in their reports on formalizations with suppliers and customers show improvements in their environmental products with ecological designs and carry out more R&D spending. Those companies that have, in addition to national connections, connections with companies from other countries are more likely to have greater capacity for innovation. Practical & social implications of research The research helps in understanding how organizations can improve their value chain, considering geographic aspects and interorganizational relationships, providing more assertively innovative resources. Originality/value Although a national value chain does not influence any increase in environmental innovation, it does impact higher R&D spending. As eco-innovation involves voluntary disclosure, it is inferred that companies that are limited to maintaining relationships in Brazil do not receive the same institutional pressure, when compared to companies with a global value chain, since the latter are connected with firms in countries with greater enforcement mechanisms regarding sustainable practices. Designmethodologyapproach Design methodology approach descriptive Eikon 7 nonfinancial non financial 201 2020 RD R D (R&D way spending resources Originalityvalue Originality ecoinnovation eco disclosure pressure practices 20 202 2