Does It Pay for Cities to Be Green? An Investigation of FDI Inflows and Environmental Sustainability

Journal of International Business Policy, 2019, 2(1), 62-85, DOI: 10.1057/s42214-018-00017-2 [open access]

Posted: 15 Oct 2019

See all articles by Niccolò Pisani

Niccolò Pisani

IMD

Ans Kolk

University of Amsterdam Business School

Václav Ocelík

University of Amsterdam Business School

Ganling Wu

University of Amsterdam Business School

Date Written: October 5, 2019

Abstract

Recent years have seen growing interest in a leading role for cities in addressing major environmental sustainability challenges including cleaner air and water. While geographers have long studied urban governance responses, international business (IB) scholars have embraced city-level analyses only in the past decade, primarily to examine multinationals’ location strategies. Thus far, IB has not studied cities’ environmental sustainability in relation to foreign direct investment (FDI) inflows. Our paper does so by analyzing whether it ‘pays’ to be green for cities in attracting FDI inflows, using a comprehensive sample of Chinese cities of different sizes over a 7-year period comprising 918 city-year observations. A fixed-effects panel data estimation shows that it indeed pays for cities to be green, specifically considering air quality and waste water treatment, two key locational factors exposing different mechanisms. Implications for green urban and business policies and for IB research are discussed.

Keywords: foreign direct investment, FDI, multinationals, international business, sustainability, green cities, urbanization, urban, environment, green, cities

JEL Classification: E02, E23, F23, F63, F64, F68, H23, H32, H71, L23, L53, M14, M16, O32, O53, P28

Suggested Citation

Pisani, Niccolò and Kolk, Ans and Ocelík, Václav and Wu, Ganling, Does It Pay for Cities to Be Green? An Investigation of FDI Inflows and Environmental Sustainability (October 5, 2019). Journal of International Business Policy, 2019, 2(1), 62-85, DOI: 10.1057/s42214-018-00017-2 [open access], Available at SSRN: https://ssrn.com/abstract=3464894

Niccolò Pisani

IMD ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

HOME PAGE: http://www.imd.org/faculty/professors/pisani-niccolo/

Ans Kolk (Contact Author)

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4289 (Phone)
+31 20 525 5281 (Fax)

HOME PAGE: http://www.anskolk.eu

Václav Ocelík

University of Amsterdam Business School ( email )

Ganling Wu

University of Amsterdam Business School ( email )

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