IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v67y2008i1p55-65.html
   My bibliography  Save this article

Environmental regulation and MNEs location: Does CSR matter?

Author

Listed:
  • Dam, Lammertjan
  • Scholtens, Bert

Abstract

We investigate whether firms with relatively low environmental standards are more often located in countries that are poor, corrupt or have weak environmental regulations. We find new empirical evidence in favor of the Pollution Haven Hypothesis, which states that MNEs are transferring their dirty operations to countries with weak environmental regulation. Our findings suggest that these are not necessarily the poorest or most corrupt countries. We establish that MNEs with strong social responsibility avoid locating their operations in countries with weak environmental regulation.

Suggested Citation

  • Dam, Lammertjan & Scholtens, Bert, 2008. "Environmental regulation and MNEs location: Does CSR matter?," Ecological Economics, Elsevier, vol. 67(1), pages 55-65, August.
    • Handle: RePEc:eee:ecolec:v:67:y:2008:i:1:p:55-65
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921-8009(07)00535-6
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Geoffrey Heal, 2005. "Corporate Social Responsibility: An Economic and Financial Framework," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 387-409, July.
    2. Matthew A. Cole & Robert J. R. Elliott & Per G. Fredriksson, 2006. "Endogenous Pollution Havens: Does FDI Influence Environmental Regulations?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 157-178, March.
    3. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
    4. Talukdar, Debabrata & Meisner, Craig M., 2001. "Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries," World Development, Elsevier, vol. 29(5), pages 827-840, May.
    5. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, vol. 70(1), pages 1-23, February.
    6. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, March.
    7. Abagail McWilliams & Donald Siegel, 2000. "Corporate social responsibility and financial performance: correlation or misspecification?," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 603-609, May.
    8. Thorsten Beck & Asli Demirgüç‐Kunt & Vojislav Maksimovic, 2005. "Financial and Legal Constraints to Growth: Does Firm Size Matter?," Journal of Finance, American Finance Association, vol. 60(1), pages 137-177, February.
    9. Andy Lockett & Jeremy Moon & Wayne Visser, 2006. "Corporate Social Responsibility in Management Research: Focus, Nature, Salience and Sources of Influence," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 115-136, January.
    10. Damania, Richard & Fredriksson, Per G. & List, John A., 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 490-512, November.
    11. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    12. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
    13. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    14. Andrea Beltratti, 2005. "The Complementarity between Corporate Governance and Corporate Social Responsibility," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 373-386, July.
    15. Sorsa, Piritta*DEC, 1994. "Competitiveness and environmental standards : some exploratory results," Policy Research Working Paper Series 1249, The World Bank.
    16. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, September.
    17. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
    18. Laszlo Tihanyi & David A Griffith & Craig J Russell, 2005. "The effect of cultural distance on entry mode choice, international diversification, and MNE performance: a meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(3), pages 270-283, May.
    19. Martin Jänicke & Manfred Binder & Harald Mönch, 1997. "‘Dirty industries’: Patterns of change in industrial countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(4), pages 467-491, June.
    20. List, John A., 2001. "US county-level determinants of inbound FDI: evidence from a two-step modified count data model," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 953-973, May.
    21. Letchumanan, Raman & Kodama, Fumio, 2000. "Reconciling the conflict between the 'pollution-haven' hypothesis and an emerging trajectory of international technology transfer," Research Policy, Elsevier, vol. 29(1), pages 59-79, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dam, Lammertjan & Scholtens, Bert, 2012. "The curse of the haven: The impact of multinational enterprise on environmental regulation," Ecological Economics, Elsevier, vol. 78(C), pages 148-156.
    2. He, Jie, 2006. "Pollution haven hypothesis and environmental impacts of foreign direct investment: The case of industrial emission of sulfur dioxide (SO2) in Chinese provinces," Ecological Economics, Elsevier, vol. 60(1), pages 228-245, November.
    3. Edward Manderson & Richard Kneller, 2012. "Environmental Regulations, Outward FDI and Heterogeneous Firms: Are Countries Used as Pollution Havens?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 317-352, March.
    4. Imad Moosa, 2019. "The Environmental Effects of FDI: Evidence from MENA Countries," Working Papers 1321, Economic Research Forum, revised 21 Aug 2019.
    5. Ilker Akar, 2019. "The Pollution Haven Hypothesis and Foreign Trade - A Survey on the Relation with Environment," Economics Literature, WERI-World Economic Research Institute, vol. 1(1), pages 37-50, June.
    6. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
    7. Sylwia Bialek & Alfons J. Weichenrieder, 2021. "Do Stringent Environmental Policies Deter FDI? M&A versus Greenfield," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(3), pages 603-636, November.
    8. Grether, Jean-Marie & Mathys, Nicole A., 2013. "The pollution terms of trade and its five components," Journal of Development Economics, Elsevier, vol. 100(1), pages 19-31.
    9. Saussay, Aurélien & Zugravu-Soilita, Natalia, 2023. "International production chains and the pollution offshoring hypothesis: An empirical investigation," Resource and Energy Economics, Elsevier, vol. 73(C).
    10. Ayse M. Erdogan, 2014. "Foreign Direct Investment And Environmental Regulations: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 943-955, December.
    11. Shu-Chen Chang, 2015. "Threshold effect of foreign direct investment on environmental degradation," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 14(1), pages 75-102, December.
    12. Colin Kirkpatrick & Kenichi Shimamoto, 2008. "The effect of environmental regulation on the locational choice of Japanese foreign direct investment," Applied Economics, Taylor & Francis Journals, vol. 40(11), pages 1399-1409.
    13. Robert Elliott & Ying Zhou, 2013. "Environmental Regulation Induced Foreign Direct Investment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(1), pages 141-158, May.
    14. Jean-Marie Grether & Nicole Andréa Mathys & Jaime de Melo, 2015. "Unravelling the Worldwide Pollution Haven Effect," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 23, pages 581-612, World Scientific Publishing Co. Pte. Ltd..
    15. José-Antonio Monteiro & Madina Kukenova, 2008. "Does Lax Environmental Regulation Attract FDI When Accounting For "Third-Country" Effects?," IRENE Working Papers 08-01, IRENE Institute of Economic Research.
    16. Ben Kheder, Sonia & Zugravu, Natalia, 2012. "Environmental regulation and French firms location abroad: An economic geography model in an international comparative study," Ecological Economics, Elsevier, vol. 77(C), pages 48-61.
    17. Paul Missios & Halis Murat Yildiz & Ida Ferrara, 2009. "Foreign Direct Investment and the Choice of Environmental Policy," Working Papers 004, Ryerson University, Department of Economics.
    18. Yen Nguyen & Son Le & Nam Ngo & Huyen Nguyen, 2023. "Impacts of FDI and Environmental Pollution in ASEAN Countries: The Role of Institutions," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 242-250, September.
    19. He, Jie, 2010. "What is the role of openness for China's aggregate industrial SO2 emission?: A structural analysis based on the Divisia decomposition method," Ecological Economics, Elsevier, vol. 69(4), pages 868-886, February.
    20. Natalia Zugravu-Soilita, 2018. "The impact of trade in environmental goods on pollution: what are we learning from the transition economies’ experience?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 785-827, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:67:y:2008:i:1:p:55-65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.