National culture and firm-level carbon emissions: a global perspective

Abstract

Purpose This study aims to examine the association between national culture and corporate carbon emissions. Specifically, the research explores how firm-level carbon emissions are associated with Hofstede’s four cultural dimensions: power distance, individualism/collectivism, masculinity/femininity and uncertainty avoidance. Design/methodology/approach The study examines 36,945 firm-year observations across 39 countries and uses panel regressions to assess the association between firm-level carbon emissions and national culture. This research also uses instrumental variable regression to address the potential endogeneity issues. Alternative proxies for culture are used to test the sensitivity of the findings. Findings The findings of this study reveal that power distance and uncertainty avoidance are negatively while individualism and masculinity are positively associated with corporate carbon emissions. The results are robust to the instrumental regressions and alternative measures of culture. Practical implications For policymakers, this research highlights the importance of national culture in assessing the efficacy of potential emissions reduction policies, identifying the possible challenges posed by the cultural differences of the targeted groups and designing policy adjustments accordingly. The local culture in which the branches of multinational corporations operate should be considered when the management implements emissions reduction policies for the business units in diverse cultural settings. Social implications Aligning emissions reduction policies with regional cultural dimensions has the potential to enhance the effectiveness of corporate and national emissions reduction policies, which can contribute to mitigating global climate change adversities. Originality/value This study provides insights into firm-level carbon emissions and Hofstede’s four cultural dimensions in a global setting.