Multinational enterprises’ internationalization and adoption of sustainable development goals

Abstract

Purpose Using a sample of 1,517 multinational enterprises (MNEs) from 25 countries, this study aims to examine whether firm’s level of internationalization has a deterministic role for their engagement with sustainable development goals (SDGs). Additionally, this study aims to investigate the country- and industry-specific moderation effects on the relationship. Design/methodology/approach This study employs negative binomial regression model along with the fixed effects for industry and time in the empirical estimation. Findings This study shows that MNEs’ internationalization is associated with their higher engagement in SDGs. This is owing to the pressures MNEs face from diverse stakeholders coupled with the need to build local legitimacy to overcome the liability of foreignness. The country-level results of this study suggest that this positive relation is stronger in countries with weak legal environment, countries with weak investor protection and in countries with higher SDG index scores. However, the industry-level results of this study indicate that the positive relation between MNEs internationalization and their SDG engagement are weaker in industries facing more competition and industries exposed to negative externalities. The results survive to controls for factors specific to firm and industry. Originality/value This study is one of the early studies which empirically examine the role of MNE internationalization and SDG engagement. Also, the findings of this study improve the understanding on country-specific and industry-specific challenges in implementing SDGs.