Internationalization and corporate sustainability expenditure: The role of institutional support and foreign knowledge acquisition

Abstract

AbstractThis study extends the literature on international business and sustainability by examining the impact of internationalization on corporate sustainability expenditures, and the conditions under which this relationship is enhanced or attenuated. Based on insights from institutional and firm resource theories, we examine the moderating effects of institutional support and foreign knowledge acquisition capability on the hypothesized relationship. Survey data were collected from 260 small and medium‐sized enterprises (SMEs) in Ghana, a developing sub‐Saharan African country, and analyzed using ordinary least squares (OLS) regression. The results indicate that increased internationalization levels are positively and significantly linked to corporate sustainability expenditure. In addition, the results of the moderation analyses reveal that the positive effect of internationalization on sustainability expenditure is stronger at high levels of institutional support for firms with high foreign knowledge acquisition capability. This study offers new perspectives and directions for improving SMEs' internationalization and sustainability practices through an integrated strategy that enhances the quality of domestic institutional environments by policymakers, augmented by managers' proactive efforts to develop their firms' foreign market learning capabilities. The limitations of this study and their implications for further research are discussed.