The impact of research and development internationalisation on environmental, social and governance: Evidence from emerging market multinational enterprises

Abstract

People are increasingly aware of the extent to which enterprises either improve or harm social welfare, with a growing trend to use environmental, social and governance (ESG) indicators to evaluate and describe efforts in this area. However, most research has neglected multinational enterprises, especially the significant impact of the radical and leapfrogging internationalisation of emerging market multinational enterprises (EMNEs) on sustainable development. This study discusses ESG in the context of the research and development (R&D) internationalisation of EMNEs and uses microdata from Chinese listed manufacturing enterprises from 2010 to 2020. Employing a propensity score matching (PSM) method and difference‐in‐differences (DID) estimation, this study empirically tests the effect of R&D internationalisation on the ESG performance of Chinese enterprises and their boundary conditions. This study finds that R&D internationalisation positively impacts enterprises' ESG performance through two pathways: improving green innovation and the quality of information disclosure. Furthermore, the study confirms the heterogeneous effects of institutional factors. Institutional deficits between home and host countries, along with the nature of private equity in enterprises, effectively enhance the value of the internationalisation of R&D for EMNEs on ESG performance. This study expands the exploration of the antecedents of ESG in the context of internationalisation, enriches the research on the impact effect and boundary conditions of EMNEs' R&D internationalisation and provides practical insights for EMNEs to enhance their ESG through R&D internationalisation.