Geopolitical Risk and Ownership Decision in Green Overseas Investment: Dual Moderation of Corporate Green Technology Capability and Host Green Governance

Abstract

In pursuit of green, low-carbon, and sustainable development, Belt and Road Initiative (BRI) countries urgently require overseas investment in green projects. However, these investments face significant geopolitical risk (GPR) challenges. This study thoroughly investigates how GPR influences the foreign ownership decisions of Chinese enterprises investing in green projects in BRI countries. It further examines the dual moderating effects of corporate green technology capability and host green governance on this relationship. Empirical analysis was conducted using the fractional logit model, analyzing green overseas investment data from Chinese listed companies spanning from 2013 to 2022. The findings revealed the following: (1) high GPR leads Chinese enterprises to opt for low-ownership entry modes in their BRI green investments; (2) the negative impact of GPR on foreign ownership decisions can be offset by improving enterprises’ green technology capability; and (3) in BRI countries with advanced green governance, the negative impact of GPR on the foreign ownership-level decisions of Chinese enterprises is mitigated, and the moderating effect of corporate green technology capability is magnified. This study offers vital insights for multinational enterprises (MNEs) formulating their foreign entry ownership strategies for green overseas investments based on enterprise characteristics and host country conditions to effectively mitigate the impacts of GPR. Similarly, it offers important implications for host countries on attracting more green investments by enhancing their green governance levels to counteract GPR.