Environmental Governance Gaps in Emerging Markets: Strategies for Addressing Institutional Voids and Mitigating Externalities

Introduction

Environmental degradation has become an urgent global concern, with emerging and developing economies facing a particularly complex set of challenges. While many of these countries are rapidly industrializing and increasingly integrated into global value chains, they often lack the regulatory infrastructures, institutional capacity, and enforcement mechanisms necessary to ensure environmentally responsible economic activity. These so-called environmental institutional voids amplify the negative externalities of business operations, threatening both ecological integrity and long-term development prospects.

This Special Issue addresses a significant blind spot in international business (IB) research: the intersection between environmental governance and institutional voids in emerging markets. While the concept of institutional voids has received growing attention in IB literature—mainly in relation to market and regulatory failures—its environmental dimensions remain underexplored. In particular, how multinational enterprises (MNEs) navigate weak or absent environmental regulations, and how they may act as institutional entrepreneurs or sources of environmental innovation, warrants deeper scrutiny.

Drawing on this gap, this Special Issue invites scholarly contributions that critically examine the environmental strategies of MNEs operating in institutionally weak contexts. It seeks to understand the mechanisms through which MNEs circumvent, cope with, or compensate for governance deficiencies, and to assess the role they play—intentionally or unintentionally—in shaping environmental outcomes in host countries. Contributors are encouraged to engage with questions of climate justice, sustainability transitions, and the interplay between formal and informal institutions in shaping corporate environmental behavior.

The contributions to this issue aim not only to advance theory, but also to offer actionable insights for practitioners and policymakers seeking to strengthen environmental governance frameworks. In line with CPoIB’s mission, we invite critical perspectives that consider power asymmetries, transnational influence, and the responsibilities of business actors in settings where state regulation is uneven or contested. Comparative, cross-country, and interdisciplinary approaches are particularly welcome, as are empirical studies that foreground the lived realities of stakeholders most affected by environmental externalities.

We believe this Special Issue is both timely and necessary. The compounding effects of climate change, geopolitical tensions, and shifting global production networks underscore the urgency of understanding how firms operate in institutionally constrained environments—and what they can do to foster sustainable development. By focusing on environmental governance gaps and the corporate strategies that emerge in response, we aim to contribute to a more comprehensive, justice-oriented, and context-sensitive understanding of international business in the 21st century.

List of topic areas

• Understanding Environmental Institutional Voids
  • Defining and conceptualizing environmental institutional voids in emerging markets, and assessing how these voids impact environmental outcomes and corporate behavior (Pisani et al. 2017; Becker-Ritterspach et al. 2019; Kumar et al. 2019). What constitutes an "environmental" institutional void, and how do formal and informal institutions interact to exacerbate or mitigate negative externalities of business operations
• Strategic Responses to Void Contexts
  • Examining how firms strategically respond to institutional voids to achieve environmental objectives. This includes circumventing strategies (bypassing institutional deficiencies), coping mechanisms (adapting to challenges in the absence of robust institutions; cf. Khanna & Palepu 2010; Doh et al. 2017), and compensating actions (offsetting negative environmental impacts when formal governance is lacking - e.g., corporate initiatives to self-regulate or partner with NGOs as described by Becker-Ritterspach et al. 2019).
• Role of MNEs in Shaping Environmental Governance
  • Investigating the influence of multinational enterprises in host countries with weak environmental institutions. How do MNEs transfer environmental standards and best practices from developed to emerging markets (Holtbrügge & Dögl 2012), and with what effects? In what ways can MNEs act as catalysts for improved local environmental governance or institutional change (Doh & Lucea 2013; Cuervo-Cazurra et al. 2023)?
• Environmental Innovation in Institutional Voids
  • Investigating the emergence of environmental or "green" innovation in contexts of institutional voids. When formal support or infrastructure is lacking, how do companies and entrepreneurs innovate to solve environmental problems? Topics may include frugal innovation, social innovation partnerships, and novel business models that address institutional gaps (e.g., the role of social innovation in filling governance voids - cf. Kolk & Lenfant 2015). What strategies enable firms to pursue eco-innovations or sustainable entrepreneurship in institutionally weak settings?
• Sustainability Transitions in Emerging Economies
  • Analyzing how institutional voids influence the transition towards sustainability (such as shifts to low-carbon energy, circular economy, or sustainable agriculture) in emerging markets. We seek insights into how the absence of strong institutions hinders or shapes these transitions, and how firms, industries, or communities work to overcome such barriers. For example, studies might examine the waste management or renewable energy sector to illustrate how actors adapt business models to propel sustainability transitions despite voids (see evidence of institutional voids shaping recycling and waste-management transitions in the Global South - e.g., Daou et al. 2024).
• The Role of the State in (Re)Producing Environmental Voids
  • Exploring how state actors in emerging markets influence the persistence or reduction of environmental institutional voids. While some governments actively support environmental capacity-building and regulatory enforcement, others hinder CER through underinvestment, weak policy coherence, or prioritization of economic over ecological objectives (Rodrigues 2013, Witt & Redding 2013, Handoyo 2024, Jhunior et al. 2025). This theme invites analyses of how different state configurations-centralized vs. fragmented, developmental vs. extractive (c.f. El Ebrashi, 2025)-enable or constrain MNEs in implementing robust environmental strategies and how tensions between national sovereignty and transnational environmental standards shape corporate practices. Contributions may explore how states act as regulators, collaborators, or barriers in MNE-led sustainability efforts, and how public-private interactions co-produce environmental outcomes.
• Policy Implications and Institutional Building
  • Identifying public policy frameworks and collaborative approaches that can help close environmental institutional voids. What roles can governments, international organizations, and civil society play (in partnership with business) to strengthen environmental governance (Kumar et al. 2019)? We welcome analyses of policies or multi-stakeholder initiatives aimed at mitigating negative environmental externalities - for example, how cross-sector collaborations might bolster regulatory capacity (Kolk & Van Tulder 2010). Contributions can also offer recommendations for policymakers on fostering sustainability transitions and climate resilience in institutionally challenged settings.

Submissions Information

Submissions are made using ScholarOne Manuscripts. Registration and access are available here. 

Author guidelines must be strictly followed. Please see here. 

Authors should select (from the drop-down menu) the special issue title at the appropriate step in the submission process, i.e. in response to ““Please select the issue you are submitting to”. 

Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.

Key deadlines 

Opening date for manuscripts submissions: 01/01/2026 

Closing date for manuscripts submission: 30/09/2026

Guest editors

Florian Becker-Ritterspach, HTW Berlin, Germany, [email protected] 

Raghda El Ebrashi, German International University (Cairo), Egypt, [email protected] 

Jasper Hotho, Copenhagen Business School, Denmark, [email protected]