The environmental actions of firms: Examining the role of spillovers, networks and absorptive capacity

In the light of climate uncertainty and growing concern for the natural environment, an increasingly important aspect of global business is the environmental behaviour of firms. In this paper we consider the factors that influence firms' environmental actions (EAs). Our study of Argentinean firms concentrates on measures of environmental spillovers, informal and formal networks and absorptive capacity by testing four related hypotheses. We find that foreign-owned firms, large firms and those with a greater capacity to assimilate new environmental technologies are more likely to adopt EAs. We also show that formal and informal networks aid the adoption of EAs in the presence of traditional firm-level spillovers. Finally, we show that foreign-owned firms have different motives to domestic firms for undertaking EAs.