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Does it pay for cities to be green? An investigation of FDI inflows and environmental sustainability

Niccolò Pisani (), Ans Kolk (), Václav Ocelík () and Ganling Wu ()
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Niccolò Pisani: University of Amsterdam Business School
Ans Kolk: University of Amsterdam Business School
Václav Ocelík: University of Amsterdam Business School
Ganling Wu: University of Amsterdam Business School

Journal of International Business Policy, 2019, vol. 2, issue 1, 62-85

Abstract: Abstract Recent years have seen growing interest in a leading role for cities in addressing major environmental sustainability challenges including cleaner air and water. While geographers have long studied urban governance responses, international business (IB) scholars have embraced city-level analyses only in the past decade, primarily to examine multinationals’ location strategies. Thus far, IB has not studied cities’ environmental sustainability in relation to foreign direct investment (FDI) inflows. Our paper does so by analyzing whether it ‘pays’ to be green for cities in attracting FDI inflows, using a comprehensive sample of Chinese cities of different sizes over a 7-year period comprising 918 city-year observations. A fixed-effects panel data estimation shows that it indeed pays for cities to be green, specifically considering air quality and waste water treatment, two key locational factors exposing different mechanisms. Implications for green urban and business policies and for IB research are discussed.

Keywords: foreign direct investment; sustainability; environment; cities; urban; China (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1057/s42214-018-00017-2

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