The Moderating Role of Host Investment Environments on the Relationship between Enterprises’ OFDI and Green Innovation: Evidence from China

Li Ji and Jiaqi Mou ()
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Li Ji: School of Accounting, Southwestern University of Finance and Economics, Chengdu 611130, China
Jiaqi Mou: School of Accounting, Southwestern University of Finance and Economics, Chengdu 611130, China

Sustainability, 2023, vol. 15, issue 2, 1-25

Abstract: This study investigates whether and how outward foreign direct investment (OFDI) affects green innovation using a sample of Chinese A-share listed companies from 2006 to 2020. We find that OFDI significantly promotes green innovation, not only for gaining legitimacy, but also to mitigate liabilities of foreignness and cultivate competitiveness. The result is robust for endogeneity and among other robustness tests. Moreover, host economic development, environmental regulation, and national governance positively moderate the relationship between OFDI and green innovation, indicating that the heterogeneity of host investment environments effectively affects OFDI enterprises’ motivation to make green innovation. Further analysis shows that OFDI promotes green innovation more significantly in state-owned and less-overseas-experienced enterprises, heavy pollution industries, and areas with strict environmental regulations in the home country. This study introduces the heterogenous host investment environments into the relationship between OFDI and green innovation, and examines its moderating role, which reveals the mechanism of OFDI affecting green innovation. This study also provides a valuable reference for guiding enterprises’ internationalization and resisting overseas investment risks.

Keywords: outward foreign direct investment (OFDI); green innovation; host investment environments; heterogeneity; liabilities of foreignness; legitimacy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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