Survival from Adversity: Carbon Risk and Firms’ Internationalization Behavior—Evidence from Chinese Firms

Firms with high carbon risk confront mounting challenges across dual dimensions: internationally, they grapple with emerging trade mechanisms, whereas domestically, they struggle with structural imbalances characterized by industrial overcapacity and unsustainable consumption patterns. Drawing on institutional theory, this study explores the mechanisms through which carbon risk influences firms’ internationalization behavior, with a focus on green sustainable innovation and carbon alliance. The former reflects the innovation compensation mechanism under the Porter hypothesis, whereas the latter represents cooperative behavior akin to “huddling together for warmth” in response to environmental regulation. The findings reveal that carbon risk promotes firms’ outward foreign direct investment (OFDI) and export activities. Additionally, media scrutiny and green total factor productivity (GTFP) suppress OFDI while enhancing overseas exports. These results provide valuable insights for firms navigating both domestic and international environmental challenges to achieve sustainable internationalization.