Are environmentally responsible firms less vulnerable when investing abroad? The role of reputation

Remi Bazillier, Sophie Hatte and Julien Vauday

Journal of Comparative Economics, 2017, vol. 45, issue 3, 520-543

Abstract: Globalization allows multinational firms to locate strategically the polluting activities in lax countries. This paper revisits the empirical evidence by exploiting heterogeneity in firms’ environmental image. While locating in countries with weak environmental standards is likely to be detrimental for a firm’s image and reputation, investing in corporate environmental responsibility can help firms to convince consumers that they have good environmental practices, even when investing in the “dirty” countries. Exploiting an original database that records an index of environmental responsibility for large European firms, we find that the firms viewed as environment-friendly are more often than others located in countries with weak environmental regulations. We show that our findings are not likely to be driven by omitted variables bias, specific sectors nor particular countries. Interestingly, this relationship is observed only among the firms with a well-established reputation for environmental responsibility.

Keywords: Corporate social responsibility; Environment; Regulation; Multinationals; Reputation (search for similar items in EconPapers)
JEL-codes: D22 F23 M14 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Are environmentally responsible firms less vulnerable when investing abroad? The role of reputation (2017)
Working Paper: Are environmentally responsible firms less vulnerable when investing abroad? The role of reputation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:45:y:2017:i:3:p:520-543

DOI: 10.1016/j.jce.2016.12.005

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