Corporate governance, environmental sustainability performance, and normative isomorphic force of national culture

Peng, Xuhui; Zhang, Ruru

Corporate governance, environmental sustainability performance, and normative isomorphic force of national culture

2022

Peng, Xuhui | Zhang, Ruru

With the increasing concern regarding climate change, academics and practitioners are devoting attention to corporate environmental sustainability development. However, corporate environmental responsibility as an outcome of corporate governance (CG) practice is also constrained by national culture as an institutional factor, and research on the relationship between CG and environmental sustainability performance (ESP) with consideration for national culture remains scarce. Therefore, this study investigates the ESP data of Forbes’ listed multinational corporations (MNCs) through content analysis and applies STATA software with stepwise regression models to empirically test the relationship between CG and MNCs’ ESP and the moderating effects of national culture on this relationship. The results show that board independence and board size positively affect MNCs’ ESP, and the relationship between board independence and MNCs’ ESP is negatively moderated by masculinity and uncertainty avoidance. Our results emphasize the importance of CG in environmental decision-making by board management supervision enhancement and explain how national culture affects ESP because of its influence on CG. Our study explains the agency effect of board composition on MNCs’ environmental sustainability development and the influence of national culture, which establishes a link between CG, ESP, and national culture. Moreover, policymakers and MNCs’ suggestions for enhancing ESP through CG measures, while considering national culture, are also provided.

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