MANAGING HUMANS AND ALGORITHMS: THE INTERSECTION OF ESG, GREEN HRM PRACTICES, AND AI IN DRIVING FIRM PERFORMANCE

Abstract

This study examines how ESG performance influences Green HRM practices and financial performance among non-financial firms in Malaysia, with AI serving as a mediating mechanism. Using a panel dataset of 120 non-financial Malaysian firms over the period 2015– 2024, the study adopts the GMM estimator, an advanced econometric method, to resolve potentially endogenous and dynamic panel biases.The study uses a panel dataset of 120 non-financial Malaysian companies from 2015 to 2024. To address potential endogeneity and dynamic panel bias, the study uses the Generalized Method of Moments (GMM) estimator. The results show that ESG performance has a statistically significant positive impact on the company's financial performance and the adoption of Green HRM. In addition, the adoption of AI technology has a significant impact on these interactions, enabling companies that use AI to turn their ESG commitments into effective Green HRM strategies and better financial results. Positive, statistically significant coefficients support all proposed correlations. This shows how important it is to combine ESG, AI, and sustainable HR practices in emerging markets. The study contributes to the literature by elucidating AI's mediating role in the ESG-performance nexus. It offers practical insights for policymakers and corporate leaders seeking to foster sustainable, technology-enabled business models in Malaysia.