To go green or not: the impact of competition intensity and global institutional diversity on multinational enterprises’ investments in dynamic green capabilities

Purpose This paper aims to investigate how competition intensity and global institutional diversity influence the decisions of multinational enterprises (MNEs) to invest in dynamic green capabilities (DGCs) for green transformation. It aims to understand why some MNEs systematically embrace green transformation through DGCs while others resist, focusing on the role of these two factors. Design/methodology/approach This study takes a conceptual approach, conducting a critical analysis of existing literature to explore the effect of competition intensity and global institutional diversity on MNEs’ investments in DGCs. Findings The paper proposes that competition intensity and global institutional diversity magnify the economic benefits of deploying DGCs. MNEs that navigate decision-making challenges – such as myopia, heightened perceived risks and loss aversion – are better positioned to invest in DGCs. Originality/value The novelty of this paper lies in its comprehensive approach. While prior research has explored aspects of DGCs, stakeholder pressures and MNE green transformation, the influence of global stakeholders on MNEs’ investments in DGCs remains underexplored. Previous studies have either examined DGCs in isolation or focused on stakeholder roles in environmental strategies without linking them to DGCs and MNEs. This study addresses this gap by investigating how global stakeholders drive MNEs’ decision-making on DGC investments, emphasizing two key factors: competition intensity and global institutional diversity.