Linking governance structure and sustainable operations of Chinese manufacturing firms: the moderating effect of internationalization

Based on 2,775 firm-year observations of Chinese manufacturing firms (CMFs) as their significant impact on mitigating climate change and distinctive governance structures, this paper examines whether CMFs’ internationalization degree (INTD) improves the effect of their governance structure (GS) on sustainable operations (SO). Specifically, we define GS from aspects of ownership concentration, size of independent director, and state-holding intensity. Through OLS regression, Fixed Effect Test, and Random Effect Test, the change of SO can be robustly explained in a systematic manner. Empirical results present that CMFs’ INTD is lower in general. Stronger state-holding can significantly improve SO, and INTD can motivate ownership concentration to act on SO. Further, INTD that exceeds the average of all sample significantly improves ownership concentration’s effect on SO, but lower INTD is unable to promote any GS indicator to produce a positive effect. Additionally, the size of independent director has not been able to improve SO. Our findings indicate that key shareholders’ decision-making authority more directly guides firms’ sustainability, and thus CMFs with centralized governance mode are more likely to develop SO. What’s more, global-market expansion provides a feasible path that helps link corporate governance and SO.