Extending the literature on the environmental strategy of MNEs

Abstract

Purpose – The purpose of this paper is to explain the different international environmental strategies that multinational enterprises (MNEs) can adopt. Design/methodology/approach – This study updates the traditional country-specific advantages/firm-specific advantages (FSA/CSA) framework. In order to do so, the concepts of environmental institutional distance between countries and MNEs’ availability of slack resources are used. Findings – First, a low environmental institutional distance between headquarters’ and subsidiaries’ countries contributes to creating environmental standards within the company. Second, MNEs with high availability of slack resources are willing to standardize their environmental practices. However, those MNEs that have a high availability of slack resources but have units based in high-distance countries prefer to generate valuable and advanced environmental management practices only in specific countries. Finally, those MNEs with a low level of slack resources and with units based in low-distance countries only comply with national environmental institutional requirements, becoming isomorphic with other local firms. Research limitations/implications – Although previous findings suggest that MNEs are increasingly standardizing their environmental practices, this generalization can be applied to those MNEs with units based in low-distance countries that have a high availability of slack resources, which lead them to create valuable non-location-bound, green, firm-specific advantages (FSAs). Originality/value – This paper sheds light on the way in which MNEs’ activities affect the natural environment. Since MNEs are key actors in terms of economic and environmental development, they can promote social and environmental values in society, and at the same time encourage other organizations and institutions to adopt a socially responsible attitude.