Transnational Corporations

Abstract

This article presents a framework that relates financial, regulatory and organizational variables to the environmental practices and performances of transnational corporations. The framework is tested empirically using multiple regression analysis. The results suggest that organizational and regulatory factors influence environmental practices, but that the relationship between practice and performance is weak. No relationship is found between environmental performance and subsequent financial performance.Despite the rapidly growing literature on environmental management, there has been little systematic research into the intemational dimensions of this subject. There are several reasons for studying corporate environmental performance in the international context. First, transnational corporations (TNCs) tend to be very large producers of pollution due to their size and predominance in pollution-intensive industries such as chemicals, petroleum and mineral extraction and processing. Second, because of their relatively high expenditures on research and development and their intemational coordination of manufacturing, TNCs can potentially create and/or transfer pollutionreducing technologies to their globally dispersed operations. Finally, the behaviour of TNCs is expected to differ from that of purely national firms. Transnational corporations are faced with regulations and enforcement practices that vary across countries and have to make choices between a standardized or differentiated response (and, in the case of the former, which standards to follow). Moreover, TNCs are subject to international conventions, but are arguably more powerful and less subject to control by national governments and agencies than purely national firms (