Publication and Work in Progress
Published at Strategic Management Journal
We examine whether and how foreign environmental standards influence global sourcing decisions. Taking a question-driven approach, we find a negative association between the stringency of a country's environmental standards and its share in US imports for 82 manufacturing industries across 77 countries between 2006 and 2016. This pollution haven effect holds not only for sourcing from owned foreign operations (offshore integration), but also for sourcing from unrelated third parties abroad (offshore outsourcing), and is stronger in industries with high toxic emissions and low technological intensity. These results are robust across alternative measures of environmental stringency and to using the Kyoto Agreement as an instrumental variable. These findings shed new light on how firms use global sourcing, and especially offshore outsourcing, to arbitrage across institutional environments.
Co-authors: Aseem Kaul, Heather Berry
Job market paper
WHERE WE ARE FROM MATTERS; ASSESSING THE IMPACT OF IMMIGRANTS ON
FIRM ENVIRONMENTAL PERFORMANCE
This study examines the impact of immigrant populations on firm environmental performance. Merging toxic emissions data from the EPA and immigration data from the US Census to leverage a longitudinal dataset of more than 11,000 manufacturing facilities, I document the negative influence of immigrant populations on a facility’s environmental performance and argue that a more heterogeneous society is less cohesive and capable of organizing effective sustainability pressures. However, the negative relationship becomes weaker as there are more immigrants from the same home country as a facility’s parent firm because co-nationality links create unique bonds between the facility and local immigrants. These results are robust to the use of an instrumental variable as well as a wide variety of alternative specifications and subsamples. These findings suggest that local community pressures may be limited in driving better environmental outcomes. firm sustainability become scarce as local constituents demand more attention on matters related to immigration; second, it also gets more costly to organize collective actions as local populations become more heterogeneous; and third, increasing immigrants would change the overall identity of local populations, and decision-makers within a firm may no longer identify them with the local populations, lowering their intrinsic incentive to pollute less. Results are consistent with proposed mechanisms and also robust to using an instrumental variable approach and alternative specifications.
We study the impact of corporate ownership and community conditions on firm environmental pollution. While the existing literature often thinks of environmental pollution as a unitary construct, we emphasize the distinction between toxic emissions, which have immediate but locally bounded impact, and greenhouse gas (GHG) emissions which have gradual but global impact, producing climate change. Using a facility-level panel of all manufacturing facilities in the US from 2010-2018, and leveraging within-facility changes in ownership status, we show that locally owned firms have lower levels of toxic emissions, but they are also less likely to report GHG emissions, and have higher levels of such emissions when they do report them, with these effects being stronger where the owner is not only headquartered locally, but has operations limited to that state. Our study suggests that while the pressures of local embeddedness may drive firms to be more environmentally responsible towards their local community, they also make firms more indifferent to their global environmental impact.
Co-author: Jiao Luo