While outward foreign direct investments (OFDIs) shift resources from a home economy to foreign destinations, increased market and resource access as well as technological and knowledge effects in return have positive impacts on the home region. Such effects may be especially important in emerging contexts, such as that of China. Analyzing data of 285 Chinese city-regions, this paper investigates the impact of OFDIs on home-region income. We show that foreign investment activity positively and significantly impacts income levels in the home region, with differentiated effects depending on the knowledge characteristics of investments and regional absorptive capacity.

Geopolitical risk (GPR) poses a significant obstacle to the achievement of sustainable development goals, yet its nuanced impact on the environmental, social, and governance (ESG) performance of multinational enterprises (MNEs) remains insufficiently examined. This study explores the influence of GPR on ESG performance by utilizing a comprehensive dataset of 12,699 subsidiaries of Chinese MNEs. The empirical results reveal an inverted U-shaped relationship between GPR and ESG performance: at moderate levels of geopolitical risk, firms tend to proactively improve their ESG practices as a risk management strategy. However, as GPR intensifies beyond a certain threshold, this approach loses its effectiveness, leading to deteriorating ESG outcomes. Further investigation uncovers the moderating roles of firm-specific advantages (FSAs) and country-specific advantages (CSAs). Robust FSAs equip firms with a greater capacity to uphold ESG standards under rising geopolitical uncertainty, while high CSAs strengthen subsidiaries’ incentives to engage in ESG activities to buffer against external political threats. Subgroup analyses demonstrate that service-oriented MNEs, state-owned enterprises, and subsidiaries operating in high-income countries are particularly susceptible to the negative consequences of heightened GPR. By shedding light on the complex interplay between geopolitical risk and corporate sustainability, this study extends the ESG literature and provides practical implications for researchers, corporate strategists, and policymakers aiming to foster resilient and responsible global business operations.

The recent rise in anti-globalization sentiment has renewed interest in how tariffs influence the location decisions of multinational enterprises (MNEs). However, these decisions have also been reshaped by ongoing geopolitical tensions-a factor that remains underexplored in the existing literature. In this study, we construct a panel dataset comprising 283,272 country-country-industry observations spanning the years 2009 to 2021. The data are drawn from the WITS, BvD, World Bank, and GDELT databases. Using fixed-effects regression, fixed-effects logit, and fixed-effects negative binomial models, we examine how MNEs respond to tariffs under varying levels of geopolitical risk. Our analysis yields three key insights. First, in contexts of low or no geopolitical risk, higher tariffs increase the likelihood of international investment by MNEs, consistent with the “tariff jumping” hypothesis. However, under high geopolitical risk, this effect disappears-regardless of tariff levels, MNEs are not more likely to invest abroad. Second, tariff increases can escalate low levels of geopolitical tension between home and host countries, further discouraging international investment. In contrast, high levels of geopolitical risk are not significantly correlated with tariff changes. Third, when low-level geopolitical tensions arise, MNEs may redirect investment to neighboring countries or major trading partners of the host country as a way to access its market indirectly.

This article investigates whether a nonlinear relationship exists between outward foreign direct investments (OFDIs) from Chinese city-regions and home-region income, related to regional spillovers from access to foreign knowledge and markets. Using quadratic panel regressions from 2003 through 2016, we identify a U-shaped relationship between OFDIs and home-region income. When OFDI activity is low, OFDIs are negatively associated with home-region income due to limited absorptive capacity at an early development stage, but as investment activity intensifies, positive income effects dominate. We find that prior exposure to inward foreign direct investments (IFDIs) moderates this nonlinear relationship between OFDIs and home-region income.