Local Adaptation of Global Integration - TNCs in Midstream? A Case Study of Environmental Management in Malaysia

This occasional paper presents results of a case study of the environmental management of TNC-affiliate companies in Malaysia. Based on a comprehensive survey and interviews with selected companies, the paper addresses the environmental governance structure between parent company/headquarters and the affiliate and the relationship of the affiliate to local Malaysian suppliers/subcontractors and environmental authorities. The main drivers of affiliate environmental performance are identified and analyzed in conjunction with a discussion of the main constraints of environmental improvements in the nexus between localizing and globalizing forces. The author concludes that the main driver of affiliate environmental performance is the position in a group of internationally oriented companies in a TNC group in the form of headquarters policies, standards and procedures rather than the influence from market forces in the shape of pressure from consumers and industrial buyers. The primary constraints on affiliate environmental performance are found to be economic/financial constraints and weak/non-existing local environmental regulations and enforcement. Contrary to what was expected, there is only little evidence that export orientation plays a major role for TNC’s environmental practices. However, pressures from especially industrial buyers appear to influence environmental management practice.