Corporate environmental investments: A cross-national study on managerial decision making

Abstract

What drives developing country managers to raise their environmental investments? Using theoretical arguments set forth by the Convergence and Divergence Hypotheses in industrial economics, this study develops a series of hypotheses about the effects of country, consumer pressure, community pressure, and resource availability on managers' environmental investment decisions. Using a random assignment factorial survey experiment (FSE) that combines vignettes and questionnaires, it compares responses from managers in developing countries (349 managers from Brazil, China, and India) and those from developed countries (377 managers from Germany and USA). Results suggest that, given the same situation, developing country managers raise their investments to a lesser extent in response to consumer pressures, when compared to developed country managers. When community pressure moderates consumer pressure, developing country managers make notably larger investments. Greater availability of resources does not affect developing country managers' investment level contrary to developed country managers.