Sustainability ‘Best Practice’ Spillovers

Current research has made significant progress in exploring the sustainability efforts made by domestic and foreign firms, respectively, but paid insufficient attention to the interaction of these firms in the form of sustainability practice spillovers. This paper aims to fill this gap by discussing the spillovers of ‘best practices’ of corporate environmental sustainability (CES) from multinational enterprises (MNEs) that have made increasing investment in green production in recent decades to local forms in host developing countries where environmental protection is relatively weak. In line with internalization theory, we contend that MNEs have to internalize CES ‘best practices’ in their affiliates across the globe, and such practices can spill over to local firms in host developing countries with poorer CES practices. The level of development of press freedom in the host developing country conditions the CES practice spillovers. This study tests hypotheses against firm-level data from a large-scale survey and finds robust evidence to support our argument. This study takes a quantitative approach to unveil the existence and boundary conditions of CES practice spillovers and suggests that policymakers need to facilitate the spillovers of such practices and that scholars need to further advance research in this area.