Going global, going green: How outward FDI enhances corporate green innovation

Huahua Ge, Zaixin Chen, Pengfei Gao and Chenbo Wang

Finance Research Letters, 2025, vol. 82, issue C

Abstract: Green innovation is critical for firms pursuing sustainable growth amid intensifying environmental pressures. This study examines the impact of outward foreign direct investment (OFDI) on green innovation activities using panel data on Chinese listed firms from 2003 to 2022. We focus on two moderating mechanisms: reverse technology spillovers from host countries and the intensity of home-country environmental regulation. Results show that OFDI significantly enhances green patent activity, with stronger effects observed in firms exposed to advanced foreign R&D environments and stricter domestic regulatory conditions. Heterogeneity analysis further reveals that the OFDI effect is more pronounced in technology-intensive firms, low-pollution industries, and inland regions. These findings offer new evidence on how international expansion, when combined with supportive institutional and technological contexts, can promote environmental innovation in emerging markets.

Keywords: Outward foreign direct investment; Green innovation; Reverse technology spillover; Local environmental regulation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s154461232500813x

DOI: 10.1016/j.frl.2025.107554

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