Research on the Environmental Effects of Foreign Direct Investment: Taking Environmental Regulations as Adjusting Variable
Keywords:
Foreign Direct Investment, Environmental Performance, Environmental Regulations, Sense of Environmental Protection, Environmental Sustainability.Abstract
Foreign Direct Investment (FDI) has the potential to significantly contribute to the advancement of environmental sustainability through its ability to motivate enterprises to embrace environmentally friendly practises and facilitate the growth of renewable energy and green technologies inside the recipient nation. The objective of this study is to investigate the determinants influencing Foreign Direct Investment (FDI) and environmental performance, as well as the impact of environmental rules and environmental concern on these underlying elements. The researchers employed online purposive convenience sampling to gather data from a sample of 329 company executives and managers who are affiliated with financial institutions and investors engaged in foreign direct investment (FDI) activities in China. Partial least squares structural equation modelling (PLS-SEM) is a statistical technique that is commonly used in social science research to analyse complex relationships between latent variables. Partial Least Squares Structural Equation Modelling (PLS-SEM) proves to be particularly advantageous in cases where the sample size is limited or when the data fails to meet the assumptions of conventional structural equation modelling. In this work, PLS-SEM was employed to examine and evaluate the proposed study model. The findings indicate a statistically significant relationship between the path coefficient of 0.82 and the impact of factors influencing foreign direct investment (FDI) on environmental performance. The imposition of environmental regulations has a detrimental impact on the correlation between variables influencing foreign direct investment (FDI) and environmental performance. This implies that more stringent environmental regulations have the potential to deter foreign direct investment. Promoting environmental conservation can serve as an effective means of managing the interplay between variables influencing foreign direct investment (FDI) and environmental sustainability. This implies that investors that prioritise environmental preservation are inclined to allocate their investments towards environmentally beneficial initiatives. Furthermore, the presence of environmental protection serves as a mediator in the connection between many determinants influencing foreign direct investment (FDI) and the overall environmental performance. This study contributes to the existing body of information by examining the relationship between environmental regulations, a sense of environmental protection, foreign direct investment (FDI), and environmental performance.