The influence of state ownership on environmental proactivity: An institutional perspective of international firms

Abstract

AbstractThe influence of state ownership on a firm's environmental strategy is still unclear due to the varied relationships across different international institutional contexts in the firm's home and host country. Applying mixed effect regression models to a sample of 2997 observations of 298 firms from the MSCI World Index for the period 2007–2018, this paper analyzes the different effects of key institutional factors on this relationship. While a state‐owned firm from a state with a high home country environmental profile will have a more positive effect on a firm's environmental proactivity, internationalization will weaken it, since the firm will encounter higher complexity when translating its green actions into a more global institutional context. In addition, when internationalization involves a very different host country environmental profile, the greater institutional distance seems to modify the influence of state ownership on environmental proactivity. Our results provide key theoretical and practical implications for managers in relation to state‐owned firms' global environmental strategies.