To go green or not: the impact of competition intensity and global institutional diversity on multinational enterprises’ investments in dynamic green capabilities

What is it about?

Our paper explores how global pressures influence multinational companies (MNEs) to invest in green practices. We focus on Dynamic Green Capabilities (DGCs), which help companies adapt and evolve to be more environmentally friendly. We investigate why some MNEs are more committed to these green practices than others. We found that two main types of pressures affect MNEs: competition intensity and global institutional diversity. Companies facing strong competition and operating in diverse institutional environments are more likely to see the economic benefits of going green. However, making green decisions can be challenging due to risks and the need for immediate returns. MNEs that overcome these challenges and effectively invest in DGCs gain a competitive advantage and demonstrate better environmental performance. Our research highlights the importance of understanding how global stakeholders pressure companies to invest in green practices. By addressing these pressures, MNEs can successfully navigate their green transformation journey. This study offers new insights into how companies can balance environmental responsibility with economic performance, contributing to a more sustainable future.

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