Host-country climate risk and the expansion of emerging market firms: a strategic tripod application

Sihong Wu, Di Fan, Christine Soo

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

Climate risk is a pressing global concern that affects multinational enterprises in manifold ways. Yet this has received less attention in international management literature. To address the gap, this study examines the impact of climate risk on the expansion and performance of emerging multinational enterprises (EMNEs) and tests the moderating effects of industry and institutional factors on the relationships. Using a dataset comprising the international acquisitions initiated by MNEs from emerging markets in 1998–2018, we find that host-country climate risk negatively affects the firms’ expansionary entries and is detrimental to firm performance. In addition, we find that firms from high-polluting industries are likely to show greater environmental awareness and increase their commitment to climate-risk countries. At the country level, our results show that home-host country political ties reduce the negative impact of climate risk on firms’ expansion and performance. The findings contribute to the literature on environmental management in an international business context and offer important practical implications for managers and government agencies.

Original languageEnglish
Pages (from-to)204-237
Number of pages34
JournalAustralasian Journal of Environmental Management
Volume31
Issue number2
Early online date10 May 2024
DOIs
Publication statusPublished - 2024

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