Abstract
Climate change entails potential risks for investors, and its effects on investment has spread beyond physical borders. This study investigates how multinational corporations (MNCs) incorporate climate risks into their decisions regarding foreign direct investments (FDIs). We find that large differences in the climate risks of home and host cities discourages FDI by increasing cross-border adaptation costs. Such impacts are particularly pronounced among environmentally sensitive industries that are more exposed to climate risks. Further analysis reveals that city-based smartness factors mitigate the negative impacts of climate risk differences on FDI by reducing adaptation costs and engendering new business opportunities. This study provides new evidence on the profound effects of climate risks on FDI and how smart cities can increase their resilience to climate risks in the context of international business.
| Original language | English |
|---|---|
| Article number | 10 |
| Journal | Climatic Change |
| Volume | 174 |
| Issue number | 1-2 |
| Online published | 14 Sept 2022 |
| DOIs | |
| Publication status | Published - Sept 2022 |
Research Keywords
- Climate risk
- Cross-border investments
- Business and the environment
- Smart city
- Resilient efect
Publisher's Copyright Statement
- COPYRIGHT TERMS OF DEPOSITED POSTPRINT FILE: This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: http://dx.doi.org/10.1007/s10584-022-03431-x.
