Who Owns, Who Cares? Ownership Structure and Environmental Performance of MNE Subsidiaries in Asia‐Pacific Countries

Drawing on legitimacy theory and stakeholder management, this study examines how ownership structure shapes the environmental performance of multinational enterprise (MNE) subsidiaries and how parent firm innovation capability moderates these relationships. We argue that subsidiary environmental performance reflects an interactive governance outcome: ownership structure shapes which legitimacy demands managers prioritize, while parent firm innovation capability determines the subsidiary's ability to respond to those demands. Using 1262 firm‐year observations from foreign affiliates of MNEs operating in the Asia‐Pacific region, we find that subsidiaries with greater long‐term investor ownership exhibit stronger environmental performance, whereas those with greater institutional investor ownership exhibit weaker environmental performance. We also find that parent firm innovation capability positively moderates both relationships by strengthening the positive effect of long‐term investor ownership and attenuating the negative effect of institutional investor ownership. These findings demonstrate that the environmental performance of MNE subsidiaries depends on the interaction between subsidiary‐level ownership incentives and parent‐level capabilities.