The Internationalization–Environmental Performance Relationship: Does it Differ between MNEs in Advanced and Less Advanced Economies?

Abstract The environmental performance (EP) of multinational enterprises (MNEs) has attracted increasing attention amid rising concerns over environmental problems such as climate change. However, questions remain about the relationship between the internationalization of MNEs and their EP. In this paper, we show that the relationship varies depending on the home country's economic development level. For MNEs from an advanced economy, there is a U‐shaped relationship between the level of internationalization and EP of MNEs such that there is a negative relationship at low levels of internationalization but a positive relationship at high levels of internationalization. For MNEs from a less advanced economy, there is an inverted U‐shaped relationship such that there is a positive relationship at low levels of internationalization but a negative relationship at high levels of internationalization.