How does ESG performance impact corporate outward foreign direct investment?

In recent decades, environmental, social, and governance (ESG) factors have received increasing attention in the literature of corporate internationalization. While prior studies have extensively examined how ESG initiatives implemented in the host country enhance corporate international performance, less attention has been paid to the facilitating role of previously accumulated ESG performance in the internationalization process. Drawing on a sample of 2083 unique publicly listed Chinese firms from 2010 to 2019, we explore whether and how ESG performance promotes corporate outward foreign direct investment (OFDI). Our findings indicate a positive association between corporate ESG performance and both the propensity and scale of OFDI. We also identify financial constraints and corporate reputation as two mechanisms through which ESG performance influences OFDI. Our additional analysis suggests that the reputation‐strengthening mechanism of ESG performance is more pronounced for family firms, whereas no significant difference is observed between family and nonfamily firms in terms of the financial mechanism. These findings have important implications for managers and policymakers seeking to promote sustainable development and internationalization.

• Publication year

  2024

• Venue

  Journal of International Financial Management & Accounting

• Publication date

  2024-02-14

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1111/jifm.12204
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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