Separating fact from perception in MNEs’ energy demand and pollution

The halo effect refers to a reasoning failure when the perception of a person, an entity, or an event is influenced by prior experiences or generalized assumptions, leading to the unfounded judgment of the situation as “good” or “bad.” In the case of multinational enterprises (MNEs), this effect often manifests itself negatively, as they are frequently viewed as major contributors to natural resource exploitation and environmental degradation due to their perceived high energy and resource demands. However, there is a growing body of literature that indicates MNEs, despite the common belief, are the ones who lead green transformation in certain cases. In this context, whether or not MNEs’ energy demand significantly contributes to environmental pollution has become a critical question. Through building on the “halo effect” theory, the present study investigates the following two opposing views across the contemporary body of scholarly literature: a) MNEs’ energy consumption impacts the environment less than their domestic counterparts; therefore, the negative perception and stigma about MNEs’ energy consumption resulting from the negative halo effect. b) MNEs’ energy consumption impacts the environment more negatively than their domestic counterparts; therefore, the negative perception and stigma about MNEs’ energy consumption is a sound concern, not a halo effect. By utilizing the PRISMA systematic literature review, the study examines 208 scholarly works. Findings indicate the presence of a negative halo effect toward MNEs. Therefore, the study's main contribution is elucidating the discrepancy between MNE’s perceived and actual environmental impact through their energy demand while offering theoretical insight and practical recommendations. Additionally, it contributes to the international business and energy literature by exemplifying MNEs’ positive impact on renewable energy efforts in their host countries.