Like parent, like child: MNCs’ CSR and their foreign subsidiaries’ environmental footprint

Abstract

This study examines how MNCs’ foreign subsidiaries respond to internal demands from the parent and external demands from the host and home institutions to determine their environmental footprint. Using a sample of subsidiaries of U.S. MNCs operating in China, we find that subsidiary environmental footprint is negatively related to parent environmental performance. We also find that the impact of parent environmental performance on subsidiary environmental footprint is weakened by the levels of legal system development, collectivism, and political system development in regions where MNC subsidiaries operate and is heightened by the strength of social capital and stringency of environmental regulations in regions where MNC headquarters are located. Our findings have implications for executives of MNCs and policymakers.