Green gifts from abroad? FDI and firms' green management

To accelerate the pace of green transformation, a country relies heavily on the environmental performance of its firms. In this paper, we investigate whether firms with foreign ownership are more likely to adopt green management practices that help these firms to monitor and reduce their environmental impacts. Using firm-level data for 31 countries in Eastern Europe, Central Asia and North Africa, we show that foreign ownership increases the likelihood of adopting green management practices. In addition, we reveal that the magnitude of the relationship depends on host and home country characteristics -- holding only for firms 1) in high- and upper-middle-income countries and 2) in countries that receive the bulk of their foreign direct investment (FDI) from countries with relatively good environmental performance.

Kiel Institute Experts