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With the global consensus on the need for sustainability practices, green governance has attracted increasing attention from international business (IB) scholars and multinational enterprise (MNE) managers. In this study, we propose a more fine-grained framework of the green governance context along two dimensions: foreign direct investment (FDI) policy and environmental regulation. Then, we examine the framework using cluster analysis. On the basis of a multiple-case study comprising 11 Chinese MNEs in pollution-intensive industries operating in four different green governance contexts, we conclude that (1) the green governance context is a significant factor in MNEs’ global location choices and is an important driving force behind MNEs’ response patterns; (2) environmental capabilities enable MNEs to surmount a host country’s environmental entry barrier and facilitate wider global business deployment; (3) technological capabilities increase MNEs’ competitive edge and allow them to better harness a host country’s growth opportunities; (4) there are four types of green governance response patterns, and the details of the proposed classification structure and its validation are presented; and (5) both strict environmental regulation and friendly FDI policy can positively influence MNEs’ adoption of more active response patterns, and greater availability of environmental and technological capabilities does not affect MNEs’ environmental commitment. This study contributes to the international strategy-capability-environment alignment of emerging economies’ multinational enterprises (EMNEs) in different green governance contexts.
Lin et al. (Fri,) studied this question.