Understanding Environmental Governance in Emerging Markets: A Multi-Level Theory-Building Review of Institutions, Stakeholders, and Firm Capabilities

This theory-building review explores how environmental governance works in emerging markets. It synthesizes findings from twenty-three empirical studies in Asia, Africa, Latin America, and emerging Europe. Using PRISMA guidelines, structured search, the review integrates institutional, stakeholder, legitimacy, and resource-based insights to explain why firms react differently to environmental expectations. The findings highlight that credible regulatory enforcement emerged as the most consistently identified factor shaping substantive environmental practices; when enforcement is limited, firms are more likely to comply symbolically. Stakeholder pressure—exercised by NGOs, media, communities, and global buyers—serves an important complementary function, particularly where the state’s capacity is limited. Firm-level capabilities (e.g., board experience, financial slack, and environmental expertise) moderate how organizations interpret and implement governance pressures. Adoption is further strengthened by a cohesive mix of policy instruments. The review proposes an integrated conceptual framework and outlines implications for policymakers, regulators, firms, and global value-chain actors.