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In this paper we examine three distinct types of ownership advantages, and argue that these are associated with three different kinds of limits to the growth of the firm. For some firms, the inability to regenerate its asset‐based advantages is critical, while for others, the inability to effectively coordinate its assets (inside or outside the firm), or the inability to negotiate the nonmarket environment are more salient. We think that the identification of different analytical categories of ownership advantages enables the construction of better proxies in empirical research, and helps to explain the limited geographical reach of MNEs observed in the literature.

What if the Academy actually mattered, was the title of a Presidential address at the annual conference of the Academy of Management in the United States ten years ago. My purpose in putting together this volume is no less ambitious than trying to show that in a very real sense, research on strategic management and business economics matters, at least when it comes to the environment. The studies contained in this volume have been selected because all of them reflect empirical research of a high standard that aims to shed some light on the relationship between multinationals and environmental standards. The first chapter by Lundan presents the general theoretical framework within which all of the research reported in this volume can be placed. While each chapter addresses a specific topic, and can be read independent of the other chapters, the sequence of the chapters aims to highlight the most salient aspects of the relationship between multinationals and the environment in the global economy.

This chapter presents a conceptual framework to understand the role of multinational enterprises in the process of environmental standard setting in the global economy. Inside the multinational, we discuss the impact of path-dependency and irreversibility on environmental investment, and the importance of the integrated network structure of the multinational in enabling the transfer of standards within the firm. Outside the firm, we discuss the impact of regulation and market forces, and particularly the role of NGOs, in triggering change in firm behavior both at home and abroad. We conclude by considering the impact of supranational institutions on the environmental behavior of multinationals.

Empirical evidence from the past decade confirms that multinationals increasingly see the environment as a strategic issue, whether in terms of limiting damage to the bottom line from adverse publicity, or actually gaining in the marketplace by pioneering more environmentally conscious solutions. During the same period, NGOs have become a visible part of the political process, in influencing the environmental strategies of multinationals through direct action, as well as by forming broader coalitions aimed at influencing the agenda at multilateral institutions such as the WTO and the OECD regarding environmental concerns and the behavior of multinationals. This chapter explores the importance of different environmental drivers on the behavior of firms in the pulp and paper industry, with particular focus on the role of Greenpeace in changing industry practices. We discuss the extent to which the paper industry might be a special case in this respect, and conclude by assessing the implications for public policy.

In their book Multinational Enterprises and the Global Economy, John M. Dunning and Sarianna M. Lundan offer a generally accepted definition of the term multinational enterprise (MNE): “A Multinational or transnational enterprise is an enterprise that engages in foreign direct investment (FDI) and owns or, in some way controls value added activities in more than one Country” (Dunning & Lundan, p. 3). The title, however, may be misleading since it ignores the fact that each multinational has a home country as well as one or more host countries. Multinationals, in other words, have a nationality. It is the difference between the implications of home and host countries for the individual MNEs that the present chapter explores. It uses a case study involving Teva, Israel's flagship MNE, to address the question: “If Teva changed its nationality, would Israel's economy would be affected?”

The hypothetical case of a change in Teva's nationality and its implications are employed to demonstrate the general validity of the concept of “Distance Premium,” to examine the implication of nationality to individual multinational business enterprises. The chapter explores the proposition that despite its declining effect, due to far reaching technological and political developments, the distance premium, continues to favor home country over host country locations and intra- over interorganizational value activities. The chapter goes on to examine expected changes in the distribution of rents generated by the MNEs between different stakeholder groups. It concludes that, with the exception of stockholders whose welfare is generally not affected by change of nationality, other stakeholders in the new home country gain at the expense of old home country stakeholders.

Purpose – This chapter discusses the possibilities and difficulties in the development of pragmatic solutions to address human rights issues in global value chains in line with the existing institutional framework.

Design/methodology/approach – A conceptual chapter examining the development and impact of a new public–private governance institution, namely the protect–respect–remedy framework developed under the auspices of the UN.

Findings – The concept of due diligence that is central to the UN framework has been incorporated into other codes by the OECD and the IFC, and offers a promising way of defining the human rights responsibilities of MNEs. At the same time, the information required for an effective due diligence analysis is difficult to gather, and requires extensive cooperation with nonmarket partners.

Originality/value – The chapter combines perspectives from international business and legal studies to achieve a better understanding of the development and implications of a new governance instrument concerning the human rights obligations of MNEs.

Globalization increases concerns about national governments’ ability to regulate firms’ environmental conduct because firms can avoid complying with stringent environmental regulations by locating polluting operations in countries with low regulations. Business self-regulation is increasingly seen as a force that can counterbalance the decreasing power of governments in the global economy. Previous research identified external stakeholder pressures as an important determinant of business self-regulation. In this chapter we explore how firm capabilities affect the likelihood that firms self-regulate their environmental conduct by adopting ISO 14000 environmental standards. Our findings show that firm capabilities are indeed an important determinant of self-regulation in the global economy. We discuss implications of this finding for governments, other stakeholders, and business decision makers.