Abstract

https://ssrn.com/abstract=2506164
 


 



Offshoring Pollution while Offshoring Production


Xiaoyang Li


Shanghai Jiaotong University

Yue Maggie Zhou


University of Michigan, Stephen M. Ross School of Business

November 1, 2016

Fama-Miller Working Paper
Ross School of Business Paper No. 1253

Abstract:     
We examine the role of firm strategy in the global combat against pollution. We find that U.S. plants release less toxic emissions when their parent firm imports more from low-wage countries (LWCs). Consistent with the Pollution Haven Hypothesis, goods imported by U.S. firms from LWCs are in more pollution-intensive industries; U.S. plants shift production to less pollution-intensive industries, produce less waste, and spend less on pollution abatement when their parent imports more from LWCs. The negative impact of LWC imports on emissions is stronger for U.S. plants located in counties with greater institutional pressure for environmental performance, but weaker for more-capable U.S. plants and firms. These results highlight the role of local institutions and firm capability in explaining firms’ choice of offshoring and environmental strategy.

Number of Pages in PDF File: 43

Keywords: environmental strategy, pollution haven, offshoring, institutions, globalization, supply chain sustainability

JEL Classification: F18, Q56


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Date posted: October 7, 2014 ; Last revised: January 19, 2017

Suggested Citation

Li, Xiaoyang and Zhou, Yue Maggie, Offshoring Pollution while Offshoring Production (November 1, 2016). Fama-Miller Working Paper; Ross School of Business Paper No. 1253. Available at SSRN: https://ssrn.com/abstract=2506164 or http://dx.doi.org/10.2139/ssrn.2506164

Contact Information

Xiaoyang Li (Contact Author)
Shanghai Jiaotong University ( email )
800 Dongchuan Rd
Minhang, Shanghai 200240
China
Yue Maggie Zhou
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI 48109
United States

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