From firms’ greenness to sustainable development. a multi-country analysis

Abstract

The primary objective of this study is to investigate and analyze the key factors influencing the environmental engagement, or "greenness," of firms. To accomplish this, the research utilizes data from the World Bank Enterprise Survey (WBES), which covers a sample of 14,852 firms across 19 countries. The study draws on three main theoretical frameworks stakeholder theory, institutional theory, and the resource-based view to identify the determinants that drive firms towards adopting environmentally friendly practices. The study employs Negative Binomial Regression to estimate the effects of various factors on a firm's likelihood of adopting green measures. Following this, a probit model is used to evaluate the specific impact of each environmental measure, offering a more granular understanding of the factors influencing individual aspects of greenness. The results of both the probit and Negative Binomial Regression models reveal several important findings. First, the study demonstrates that firms subject to stringent environmental regulations are more likely to adopt environmentally friendly practices a phenomenon the study terms "forced greenness”. This suggests that innovation and greenness are closely linked, with forward-thinking firms being more inclined to explore and adopt sustainable technologies and practices as part of their broader innovation strategies. The results indicate that family-owned firms tend to exhibit higher levels of corporate social responsibility compared to non-family-owned firms. This finding aligns with existing literature suggesting that family-owned firms are often more concerned with protecting socio-emotional wealth and maintaining a positive reputation, which may lead them to engage more actively in environmentally responsible practices