Internationalization and ESG Performance of EMNCs:Evidence from China

Abstract

In recent years, the environment, social, and governance （ESG） framework has been a widely discussed issue in both the real business environment and academia. As a concept of the close association of corporate social responsibility（CSR）, ESG is supposed to help resolve the liability of foreignness in the internationalization process, particularly for emerging market multinational corporations （EMNCs）. Thus, on the basis of organizational learning theory, this paper assumes that EMNCs’ ESG performance may proactively improve as their degree of internationalization increases. The relationship between internationalization and ESG performance is investigated by using the data of 2003 observations of Chinese A-share listed EMNCs from the period of 2015 to 2022. With the degree of internationalization from geographical and financial dimensions taken into consideration, the empirical result shows a significantly positive effect of internationalization on ESG performance, which applies to the two dimensions of internationalization. Furthermore, this effect is tested by using the group of EMNCs entering developed and emerging markets. Findings show that the positive effect of internationalization on ESG performance may be effective only for EMNCs entering advanced markets.