Connectivity before scale: Governance depth and ESG risk in multinational enterprises

• ESG risk in MNEs depends on the alignment between international scale and internal governance depth. • Organizational connectivity captures governance depth beyond structural measures of internationalization. • Higher organizational connectivity is systematically associated with lower ESG risk across MNEs. • International expansion increases ESG risk when governance depth fails to keep pace with scale. • An SDG-aligned connectivity index offers a diagnostic tool for detecting governance-scale misalignment. Globalization has expanded the scale of multinational enterprises (MNEs) without guaranteeing resilience to environmental, social, and governance (ESG) risk. We argue that sustainability outcomes depend less on geographic reach and more on organizational connectivity, defined as the governance depth that reduces information asymmetries, monitoring costs, and coordination frictions across dispersed operations. We develop a multidimensional, SDG-aligned organizational connectivity index (OCI) and examine its association with ESG risk using data on 200 large non-financial MNEs, complemented by a balanced subsample of 104 firms across ten GICS sectors. Higher organizational connectivity is consistently associated with lower ESG risk exposure, net of internationalization, firm size, sector, and region. By contrast, international scale shows weak and unstable associations once we account for governance depth. A parsimonious misalignment index comparing connectivity and scale further shows that governance-scale decoupling predicts higher ESG risk. The results remain robust across alternative specifications, fixed-effects models, influence diagnostics, non-linear checks, and bounded-outcome sensitivity tests. The findings reframe globalization as a challenge of internal governance alignment rather than expansion alone, emphasizing connectivity before scale. The study advances finance- and governance-based international business research by identifying governance depth as a structural mechanism that conditions the sustainability consequences of international expansion.