Green partnership across borders: the location-specific institutional and stakeholder pressures on firm participation

Abstract

Firms operating production and sales across different locations face environmental challenges that regulatory regimes struggle to address. Therefore, regulators have developed voluntary cross-border environmental programs that encourage firm participation. However, the location-specific effects of institutional and stakeholder pressures remain underexplored. By drawing on voluntary club, stakeholder, and institutional isomorphism theories, this study examines how pressure from production sites and headquarters influences firms' participation and the timing of involvement. Using data from cross-border programs between Hong Kong and mainland China's Guangdong province, we find that regulatory pressures from both headquarters (Hong Kong) and production sites (Guangdong province) and peer pressures from competition at production sites significantly increase firm participation. Among all the stakeholder influences in both regions, only regulatory pressures increased Hong Kong-based firms' early involvement in these programs. These findings suggest that policymakers should tailor cross-border programs to address institutional dynamics and leverage local competition and regulatory enforcement to enhance firm participation and improve environmental governance.

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