Toggle Main Menu Toggle Search

Open Access padlockePrints

Is there a relationship between environmental performance and outward FDI? A study of Chinese MNEs

Lookup NU author(s): Professor Stephen ChenORCiD



This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).


Purpose. This paper aims to examine the question, “How do firm-level, home-country and host-country environmental performance (EP) affect the outward foreign direct investment (OFDI) of Chinese multinational enterprises (MNEs)?”Design/methodology/approachThe authors examine the relationships between EP and OFDI propensity and between EP and OFDI intensity using a sample of 359 Chinese firms in industries with a significant environmental footprint between 2009 and 2019 (2,002 firm-year observations) and a Heckman two-stage model.FindingsThis study shows that the propensity for OFDI by Chinese MNEs is significantly and positively related to the firm’s prior EP and the country-level EP of China. However, the amount of FDI invested is significantly and positively related to the firm’s prior EP and negatively related to the EP of the host country.Research limitations/implicationsThe findings suggest that FDI in a country by an MNE is determined by a combination of firm-level EP, home-country EP and host-country EP. This study finds that the decision to undertake FDI (propensity) and the decision about how much to invest (intensity) are determined by different factors. The propensity for FDI is determined by the home-country EP and firm-level EP. However, the intensity of FDI is determined by a combination of the host country EP and firm-level EP. A limitation is that this study only examines MNEs in China, so the findings may not apply to other countries.Originality/valueThis paper shows that MNEs’ EP is positively related to the propensity and intensity of their OFDI decisions. However, this paper shows that the home-country and host-country EP may also play an important role in determining the propensity or intensity of OFDI.

Publication metadata

Author(s): Zhang J, Chen S, Tan H

Publication type: Article

Publication status: Published

Journal: Multinational Business Review

Year: 2024

Volume: 32

Issue: 1

Pages: 1-19

Print publication date: 18/04/2024

Online publication date: 26/07/2023

Acceptance date: 19/06/2023

Date deposited: 03/08/2023

ISSN (print): 1525-383X

ISSN (electronic): 2054-1686

Publisher: Emerald Publishing Limited


DOI: 10.1108/MBR-09-2022-0147

ePrints DOI: 10.57711/86k3-f496


Altmetrics provided by Altmetric