Abstract Despite increasing climate risks, manufacturing and service firms in developing economies are often slow to adopt green technologies, limiting their long-term structural resilience. This study examines the distinct roles of Physical Climate Shock (Shock), export status (Sales), and managerial quality (Skills) in shaping corporate green action. Utilizing World Bank Enterprise Surveys (2023) for four ASEAN economies (Cambodia, Indonesia, the Philippines, and Vietnam), we apply Lewbel’s (2012) instrumental variables method and propensity score matching (PSM) to address endogeneity and selection bias. The models control for digital readiness to account for the twin-transition and use a continuous green index for robustness. Results reveal a clear structural hierarchy: internal managerial capability (Skills) is a stronger driver of green adaptation than direct exposure to climate damage (Shock). Regarding market pressures, we identify static GVC compliance: exporters demonstrate a higher initial baseline of green compliance but do not respond more strongly to climate shocks than domestic firms do. Furthermore, once managerial capabilities are controlled for, self-reported financial constraints become statistically insignificant. This suggests that limited access to credit primarily reflects underlying managerial gaps rather than functioning as an independent barrier to green action. Overall, the study calls for reorienting industrial and climate policies in the region. Rather than relying primarily on financial subsidies, interventions should prioritize strengthening managerial practices and enabling functional GVC upgrading to better navigate the dual demands of SDG 9 (industry and innovation) and SDG 13 (climate action).
Nguyễn et al. (2026) studied this question.