Digital transformation has become an increasingly important strategy for firms seeking to
enhance competitiveness and create long-term value. At the same time, Environmental, Social,
and Governance (ESG) performance has gained significant attention from investors and
stakeholders as an indicator of corporate sustainability. This study aims to examine the effect
of digital transformation on firm value, the effect of digital transformation on ESG
performance, the effect of ESG performance on firm value, and the mediating role of ESG
performance in the relationship between digital transformation and firm value.
This study employs a quantitative research approach using panel data regression analysis. The
sample consists of 51 food value chain companies, including Food Producers and Fisheries,
Food and Beverage manufacturers, and Food Retailers listed on the Indonesia Stock Exchange
during the period 2019–2024, resulting in 306 firm-year observations. Digital transformation
is measured using a keyword-based disclosure index, ESG performance is measured using ESG
disclosure scores, and firm value is measured using Tobin’s Q. The study also includes firm
size and leverage as control variables. Model selection was conducted using the Chow Test,
Hausman Test, and Lagrange Multiplier Test.
The results show that digital transformation has a significant negative effect on firm value.
However, digital transformation does not have a significant effect on ESG performance.
Furthermore, ESG performance does not significantly affect firm value. The mediation analysis
based on the Baron and Kenny approach indicates that ESG performance does not mediate the
relationship between digital transformation and firm value. These findings suggest that while
digital transformation significantly influences firm value, the impact may reflect the short-term
costs and adjustment challenges associated with digital investments. In addition, ESG
performance has not yet become a significant determinant of firm value within the Indonesian
food value chain sector.
This study contributes to the literature on digital transformation, ESG performance, and firm
value by providing empirical evidence from the Indonesian food value chain industry. The
findings also offer practical implications for managers regarding the implementation of digital
transformation and sustainability initiatives in emerging markets.