Seminar（Dept. of Trade Economics）

Title: Unmasking the Indirect Pollution Haven Effect: How the Presence of MNEs Impacts Local Firms’ Environmental Performance

Speaker: Tao Bai (Lecturer in International Business at the Business School, The University of Queensland)

Time: 10:00-11:30am, November 8st, 2022 (Tuesday)

Venue: Online Meeting

Abstract：

Pollution haven studies have been focusing on the perspective of MNEs from stringently-regulated countries and investigating these MNEs’ pollution haven behaviors. While the literature has identified direct pollution haven channels the focal firms tend to adopt, there may be also indirect pollution haven effect for the non-focal firms, which has not been studied. Based on institutional arbitrage and pollution haven literature, we investigate how the presence of foreign firms leads to the deterioration of local firms’ environmental performance in China. Using a sample of Chinese listed firms with matched FDI source information for the years 2009-2015, we find that the presence of MNEs have a negative impact on local firms’ environmental performance. Such indirect pollution haven effect is stronger if foreign firms come from the home country with more stringent environmental standards, and also stronger if the foreign firms set up their subsidiaries along the two sides of value chain. Moreover, the indirect pollution haven effect is weaker if local firms have better financial performance. We also find the partial mediation effect of the number of industrial clusters on the relationship between the presence of MNEs and local firms’ environmental performance. These findings shed new light on pollution haven studies and suggest that previous work may underestimate the pollution haven by focusing on the direct effect while ignoring the indirect effect.

Keywords: pollution haven; environmental performance; FDI; value chain

Short biography：

Dr. Tao Bai is Lecturer in International Business at the Business School, The University of Queensland. He obtained a joint training PhD in International Business and Strategy from Tsinghua University and University of Cambridge. His research interests include multinational firm strategy, non-market strategy, and the intersection between these, with the focus on emerging market as a field of research and practice. He has published in Strategic Management Journal, Journal of World Business, Long Range Planning, Journal of Business Research, Management International Review, International Business Review, Asia Pacific Journal of Management and other international business and strategy journals.