Edinburgh Napier University

  EMNEs pursuing for innovation performance via internationalization could be affected by the environmental regulation within a global sustainable development context. Building on the institution-based view, we study how external environmental regulations of the home country impact on the innovation performance of EMNE via internationalization. We also examine the moderation roles of OFDI entry mode choice and state ownership background of the EMNEs in this framework. Using a sample of 2313 FDI activities by Chinese EMNEs during the period of 2000-2018, we find that the environmental regulations of the home country is positively related to the innovation performance of the EMNEs via internationalization. Compared with greenfields, the entry mode of acquisition strengthens the positive relativeness between the environmental regulations and innovation performance of EMNEs. This tendency is more significant in the developed host countries compared with the
developing ones. In addition, it is found that compared with state-owned EMNEs, the effects of environmental regulation on the innovation performance are more significant in non-state-owned firms. Our research sheds light in the IB research areas in understanding between the institution and innovation performance of MNEs by identifying unique roles of environmental regulations of the home countries and the state ownership background of the EMNEs during the internationalization process.