Democracy, national culture and greenhouse gas emissions: An international study

Abstract

This study examines whether a country's level of democracy is associated with greenhouse gas emission intensity of corporations and if national culture influences this association. Using cross-country evidence, we find that firms operating in countries with strong democratic institutions are negatively associated with carbon emission intensity controlling for other country-level variables. Democracy also moderates the positive effect of individualistic cultures on greenhouse gas emission intensity, whereas countries with high uncertainty avoidance and indulgence are associated with high emissions despite high democratic scores. That is, while the effects of democracy and culture on greenhouse gas emission intensity supplement each other, culture shapes a firm's strategy on environmental matters to a greater extent than democracy. The results are robust to alternative variable measurement.