The Effects of Institutional Distance and Headquarters’ Financial Performance on the Generation of Environmental Standards in Multinational Companies Aguilera Caracuel, Javier Aragón Correa, Juan Alberto Hurtado Torres, Nuria Esther Rugman, Alan M. Natural environment Multinational company Environmental standardization Environmental institutional distance between countries Financial performance This research has been partially funded by grants from the Spanish Ministry of Education and Science (project ECO2010-20483 and programme FPU), and the Andalusia Regional Government (Excellence Research Projects P08-SEJ-0457 and P10-SEJ-6765). We want to thank members of group ISDE of the University of Granada and Henley Business School (University of Reading) for their insightful comments. This article combines institutional and resources’ arguments to show that the institutional distance between the home and the host country, and the headquarters’ financial performance have a relevant impact on the environmental standardization decision in multinational companies. Using a sample of 135 multinational companies in three different industries with headquarters and subsidiaries based in the USA, Canada, Mexico, France, and Spain, we find that a high environmental institutional distance between headquarters’ and subsidiaries’ countries deters the standardization of environmental practices. On the other hand, high-profit headquarters are willing to standardize their environmental practices, rather than taking advantage of countries with lax environmental protection to undertake more pollution-intensive activities. Finally, we show that headquarters’ financial performance also imposes a moderating effect on the relationship between environmental institutional distance between countries and environmental standardization within the multinational company. 2024-03-06T08:14:16Z 2024-03-06T08:14:16Z 2011 journal article Published version: Aguilera-Caracuel, J., Aragón-Correa, J.A., Hurtado-Torres, N.E. et al. The Effects of Institutional Distance and Headquarters’ Financial Performance on the Generation of Environmental Standards in Multinational Companies. J Bus Ethics 105, 461–474 (2012). https://doi.org/10.1007/s10551-011-0978-7 https://hdl.handle.net/10481/89819 10.1007/s10551-011-0978-7 eng http://creativecommons.org/licenses/by-nc-nd/4.0/ open access Attribution-NonCommercial-NoDerivatives 4.0 Internacional Springer Nature