Tóm tắt investigate factors affecting green investment decisions of enterprises in laos a study on the industrial sector

Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policym

FOREIGN TRADE UNIVERSITY

SUMMARY OF DOCTORAL THESIS

INVESTIGATE FACTORS AFFECTING GREEN INVESTMENT DECISIONS OF ENTERPRISES IN LAOS: A STUDY ON THE INDUSTRIAL SECTOR

Major: Business Administration

VILAYSAN PHOMMEXAY

HANOI - 2025

Supervisor: 1 Associate Professor, Dr Dao Ngoc Tien

2 Dr Chu Thi Mai Phuong

Counter-Argument 1:

Counter-Argument 2:

Counter-Argument 3:

The thesis will be defended before the Thesis Evaluation Council at the

university meeting at the Foreign Trade University

At:

The thesis can be referenced at the National Library and the

Library of the Foreign Trade University

RELATED TO THE THESIS

1 Tran Van Khoi, Nguyen Dieu Linh, Thanongxay Khontphaythone, Vilaysan Phommysay, Kotlachit Mangnomet (2022), ‘Proposed model on circular economy

affects sustainable performance in vietnamese construction enterprises’, International

Conference Proceedings: Digital transformation in international supply chain,

ISBN: 978-604-386-713-8

2 Vilaysan Phommysay (2023), ‘Khó khăn, thách thức trong “đầu tư xanh” của doanh

nghiệp Lào’, Tạp chí Kinh tế Châu Á – Thái Bình Dương, số cuối tháng 10/2023

3 Vilaysan Phommysay (2023), ‘Những yếu tố ảnh hưởng đến hoạt động đầu tư xanh:

Nghiên cứu thực nghiệm đối với các doanh nghiệp FDI tại Lào’, Tạp chí Quản lý

nhà nước, ISSN e-2815-5831

4 Vilaysan Phommysay (2023), ‘Green investment in asia and lessons for Laos’, The

17th Ifeama international conference proceeding in Vietnam, ISBN:

978-604-330-711-5

legitimacy Together, these theories help explain why organizations make environmental investments despite uncertain financial returns, particularly in developing economies with evolving governance structures Second, the text explores stakeholder theory, introduced by Freeman in 1984, which examines how organizations balance various stakeholder interests in environmental investment decisions The theory distinguishes between primary stakeholders (essential for survival) and secondary stakeholders (influential but non-essential), emphasizing that traditional financial metrics are insufficient for evaluating environmental initiatives Particularly in developing economies like Laos, organizations must develop capabilities for stakeholder dialogue and conflict resolution, adapting their environmental investment approaches based on specific stakeholder configurations and institutional contexts The theoretical frameworks collectively demonstrate that environmental investment decisions

in developing economies are influenced by a complex interplay of institutional pressures, legitimacy requirements, and stakeholder interests, extending beyond purely financial considerations This helps explain the varied approaches organizations take toward environmental investments in different institutional and stakeholder contexts

2.2.4 Integration with Green Investment Context

The text presents an integrated theoretical framework for understanding environmental investment decisions in emerging economies It combines four key theoretical perspectives: resource-based view and dynamic capabilities theory, institutional and legitimacy theories, stakeholder theory, and neoclassical and agency perspectives This synthesis is particularly relevant for developing economies like Laos, where organizations must address challenges at multiple levels while navigating evolving environmental governance structures The framework suggests that successful environmental initiatives require organizations to simultaneously develop technical capabilities, maintain institutional legitimacy, manage stakeholder relationships, and ensure economic viability, all while operating within the unique constraints and opportunities of developing economy contexts

2.3 Theoretical framework of Sustainable Development and Green Investment Decision

2.3.1 Sustainable Development

The text examines the relationship between industrialization, environmental sustainability, and green investment practices As manufacturing sectors increase their resource usage, environmental concerns have grown, leading to the emergence of sustainable development (SD) theory and green theory These frameworks emphasize the need for balancing current needs with future sustainability through eco-friendly practices Recent studies have identified various factors influencing green investments, including ethical business conduct, stakeholder pressure, environmental regulations, and technological expertise While research has extensively covered sustainable development and eco-friendly investments, the relationship between Corporate Social Responsibility (CSR) practices and environmental investments remains understudied The text suggests that combining environmental sustainability strategies with CSR activities could be a significant predictor of eco-friendly investments

2.3.2 Motivations of Green Investment Decision

The text explores the diverse motivations driving green investment (GI) decisions across different organizations While financial returns remain paramount for most firms, other factors such as ethical considerations, ecological impact, and reputational benefits also influence investment choices

comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-legitimacy Together, these theories help explain why organizations make environmental investments despite uncertain financial returns, particularly in developing economies with evolving governance structures Second, the text explores stakeholder theory, introduced by Freeman in 1984, which examines how organizations balance various stakeholder interests in environmental investment decisions The theory distinguishes between primary stakeholders (essential for survival) and secondary stakeholders (influential but non-essential), emphasizing that traditional financial metrics are insufficient for evaluating environmental initiatives Particularly in developing economies like Laos, organizations must develop capabilities for stakeholder dialogue and conflict resolution, adapting their environmental investment approaches based on specific stakeholder configurations and institutional contexts The theoretical frameworks collectively demonstrate that environmental investment decisions

in developing economies are influenced by a complex interplay of institutional pressures, legitimacy requirements, and stakeholder interests, extending beyond purely financial considerations This helps explain the varied approaches organizations take toward environmental investments in different institutional and stakeholder contexts

2.2.4 Integration with Green Investment Context

The text presents an integrated theoretical framework for understanding environmental investment decisions in emerging economies It combines four key theoretical perspectives: resource-based view and dynamic capabilities theory, institutional and legitimacy theories, stakeholder theory, and neoclassical and agency perspectives This synthesis is particularly relevant for developing economies like Laos, where organizations must address challenges at multiple levels while navigating evolving environmental governance structures The framework suggests that successful environmental initiatives require organizations to simultaneously develop technical capabilities, maintain institutional legitimacy, manage stakeholder relationships, and ensure economic viability, all while operating within the unique constraints and opportunities of developing economy contexts

2.3 Theoretical framework of Sustainable Development and Green Investment Decision

2.3.1 Sustainable Development

The text examines the relationship between industrialization, environmental sustainability, and green investment practices As manufacturing sectors increase their resource usage, environmental concerns have grown, leading to the emergence of sustainable development (SD) theory and green theory These frameworks emphasize the need for balancing current needs with future sustainability through eco-friendly practices Recent studies have identified various factors influencing green investments, including ethical business conduct, stakeholder pressure, environmental regulations, and technological expertise While research has extensively covered sustainable development and eco-friendly investments, the relationship between Corporate Social Responsibility (CSR) practices and environmental investments remains understudied The text suggests that combining environmental sustainability strategies with CSR activities could be a significant predictor of eco-friendly investments

2.3.2 Motivations of Green Investment Decision

The text explores the diverse motivations driving green investment (GI) decisions across different organizations While financial returns remain paramount for most firms, other factors such as ethical considerations, ecological impact, and reputational benefits also influence investment choices

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive

The discussion highlights potential conflicts between GI implementation and fiduciary duties, particularly in certain global regions, emphasizing the need for green investments to be financially competitive with traditional options The text notes that investment motivations vary based on organizational type, legal context, and decision-maker preferences, with some entities like charitable funds prioritizing environmental goals over financial returns The evolution of investment paradigms shows a shift from purely financial considerations to a more comprehensive approach that integrates long-term environmental and social impacts, reflecting growing recognition of sustainability's importance in investment decisions and expanding definitions of fiduciary duty

2.3.3 Measuring Green Investment

The text outlines comprehensive approaches to measuring green projects and investments, emphasizing the need for multi-dimensional evaluation methods It discusses six dimensions and twenty-four criteria proposed by Chou et al (2017) for assessing green projects, along with the importance of integrated evaluation systems and life-cycle based criteria The text highlights various analytical techniques, including the "fuzzy AHP" method, and emphasizes the crucial role of third-party validation in preventing greenwashing Following Song and Yu's (2018) framework, the assessment of green investment encompasses analysis of environmental management strategies, sustainable development practices, and green innovation outcomes This includes evaluating changes in manufacturing processes, pollution prevention initiatives, and eco-friendly technology adoption, while also considering green organizational identity through employee awareness and values The measurement framework integrates strategic changes, organizational culture, creativity, and innovation outcomes to provide a holistic assessment of green investments

2.4 The mediating role of Environmentally Sustainable Development in the nexus of Corporate Social Responsibility and Green Investment Decision

The literature presents a sophisticated theoretical framework examining the mediating role of Environmentally Sustainable Development (ESD) in the relationship between Corporate Social Responsibility (CSR) and Green Investment Decisions (GID) This nexus is fundamentally grounded

in stakeholder theory (Freeman et al., 2010) and institutional theory, which elucidate how organisations balance diverse stakeholder interests while responding to environmental imperatives The mediating function of ESD manifests through multiple theoretical pathways Delmas and Toffel's (2008) longitudinal analysis of 536 manufacturing facilities demonstrated that robust environmental management systems significantly enhance organisations' capacity to translate CSR commitments into concrete environmental investments This institutional perspective is complemented by the resource-based view, articulated in Sharma and Vredenburg's (1998) empirical investigation of environmental capability development The theoretical framework is further enriched by organisational learning theory, with March's (1991) distinction between explorative and exploitative learning providing crucial insights into how firms develop environmental capabilities This learning process creates pathways through which CSR influences investment decisions, with ESD serving as the critical intermediary mechanism Empirical validation comes from multiple methodological approaches, notably Russo and Fouts' (1997) longitudinal study demonstrating the positive association between environmental and financial performance in high-growth industries The synthesis of these theoretical perspectives yields significant

2.1.2 Definition of green investment decision

GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy

GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context

of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

2.1.3 Components of green investment

Key components of green investment: low-emission energy supply, energy efficiency, and carbon sequestration In terms of low-emission energy supply, there has been a significant shift toward funding energy solutions with reduced carbon footprints, with nearly 90% of electricity generation investment in 2023 directed toward low-emissions energy The investment ratio between low-carbon energy and fossil fuels has increased substantially, ranging from 4.1 to 8.1 between 2021 and 2050, with global investment reaching a record $1.1 trillion in 2022 Regarding energy efficiency, the text emphasizes its crucial role in securing sustainable economic futures The European Investment Bank's Survey highlights the importance of supportive regulatory frameworks, high-quality information, and advanced management practices in promoting energy efficiency investments These investments offer multiple benefits, including reduced energy consumption, lower greenhouse gas emissions, and improved financial performance through reduced operating costs Carbon sequestration investments focus on reducing atmospheric CO2 through various means, including sustainable agricultural practices, anti-deforestation initiatives, and carbon capture and storage (CCS) technologies This includes funding for no-till farming, cover cropping, agroforestry, and forest preservation, as well as technological solutions for capturing and storing CO2 emissions from industrial sources The effectiveness of these investments relies on complementary policies and regulations that incentivize carbon reduction and penalize emissions

2.2 Theoretical framework of investment decisions

2.2.1 Classical Investment Theory and Its Evolution

The text discusses the theoretical underpinnings of corporate investment behavior, particularly

in relation to environmental investments It begins with Jorgenson's 1963 neoclassical economic framework, which established the foundation for understanding firms' capital allocation decisions based

on rational evaluation of present value maximization However, this conventional framework shows

2.1.2 Definition of green investment decision

GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy

GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context

of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

2.1.3 Components of green investment

Key components of green investment: low-emission energy supply, energy efficiency, and carbon sequestration In terms of low-emission energy supply, there has been a significant shift toward funding energy solutions with reduced carbon footprints, with nearly 90% of electricity generation investment in 2023 directed toward low-emissions energy The investment ratio between low-carbon energy and fossil fuels has increased substantially, ranging from 4.1 to 8.1 between 2021 and 2050, with global investment reaching a record $1.1 trillion in 2022 Regarding energy efficiency, the text emphasizes its crucial role in securing sustainable economic futures The European Investment Bank's Survey highlights the importance of supportive regulatory frameworks, high-quality information, and advanced management practices in promoting energy efficiency investments These investments offer multiple benefits, including reduced energy consumption, lower greenhouse gas emissions, and improved financial performance through reduced operating costs Carbon sequestration investments focus on reducing atmospheric CO2 through various means, including sustainable agricultural practices, anti-deforestation initiatives, and carbon capture and storage (CCS) technologies This includes funding for no-till farming, cover cropping, agroforestry, and forest preservation, as well as technological solutions for capturing and storing CO2 emissions from industrial sources The effectiveness of these investments relies on complementary policies and regulations that incentivize carbon reduction and penalize emissions

2.2 Theoretical framework of investment decisions

2.2.1 Classical Investment Theory and Its Evolution

The text discusses the theoretical underpinnings of corporate investment behavior, particularly

in relation to environmental investments It begins with Jorgenson's 1963 neoclassical economic framework, which established the foundation for understanding firms' capital allocation decisions based

on rational evaluation of present value maximization However, this conventional framework shows

limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-legitimacy Together, these theories help explain why organizations make environmental investments despite uncertain financial returns, particularly in developing economies with evolving governance structures Second, the text explores stakeholder theory, introduced by Freeman in 1984, which examines how organizations balance various stakeholder interests in environmental investment decisions The theory distinguishes between primary stakeholders (essential for survival) and secondary stakeholders (influential but non-essential), emphasizing that traditional financial metrics are insufficient for evaluating environmental initiatives Particularly in developing economies like Laos, organizations must develop capabilities for stakeholder dialogue and conflict resolution, adapting their environmental investment approaches based on specific stakeholder configurations and institutional contexts The theoretical frameworks collectively demonstrate that environmental investment decisions

in developing economies are influenced by a complex interplay of institutional pressures, legitimacy requirements, and stakeholder interests, extending beyond purely financial considerations This helps explain the varied approaches organizations take toward environmental investments in different institutional and stakeholder contexts

2.2.4 Integration with Green Investment Context

The text presents an integrated theoretical framework for understanding environmental investment decisions in emerging economies It combines four key theoretical perspectives: resource-based view and dynamic capabilities theory, institutional and legitimacy theories, stakeholder theory, and neoclassical and agency perspectives This synthesis is particularly relevant for developing economies like Laos, where organizations must address challenges at multiple levels while navigating evolving environmental governance structures The framework suggests that successful environmental initiatives require organizations to simultaneously develop technical capabilities, maintain institutional legitimacy, manage stakeholder relationships, and ensure economic viability, all while operating within the unique constraints and opportunities of developing economy contexts

2.3 Theoretical framework of Sustainable Development and Green Investment Decision

2.3.1 Sustainable Development

The text examines the relationship between industrialization, environmental sustainability, and green investment practices As manufacturing sectors increase their resource usage, environmental concerns have grown, leading to the emergence of sustainable development (SD) theory and green theory These frameworks emphasize the need for balancing current needs with future sustainability through eco-friendly practices Recent studies have identified various factors influencing green investments, including ethical business conduct, stakeholder pressure, environmental regulations, and technological expertise While research has extensively covered sustainable development and eco-friendly investments, the relationship between Corporate Social Responsibility (CSR) practices and environmental investments remains understudied The text suggests that combining environmental sustainability strategies with CSR activities could be a significant predictor of eco-friendly investments

2.3.2 Motivations of Green Investment Decision

The text explores the diverse motivations driving green investment (GI) decisions across different organizations While financial returns remain paramount for most firms, other factors such as ethical considerations, ecological impact, and reputational benefits also influence investment choices

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive

characteristics, institutional pressures, and environmental investment behavior in developing economies The research seeks to understand how various dimensions of corporate social responsibility influence organizations' inclination towards green investments within Laos's specific context It examines the impact of external factors such as regulatory frameworks, market dynamics, and stakeholder pressures on environmental investment decisions Additionally, it investigates the role of innovation capabilities in green investment decisions within resource-constrained environments Ultimately, the research aims to identify effective policy frameworks and organizational practices that promote green investment behavior in Laos's industrial sector, with the goal of translating theoretical insights into practical recommendations for sustainable industrial development in developing economies These questions collectively form a comprehensive framework for investigating the complex dynamics of green investment decision-making in emerging market contexts

1.5 Research Scope

The text outlines the research scope for studying green investment decisions in Laos's industrial sector across three main dimensions: content, temporal, and spatial In terms of content, the research focuses on determinants of green investment decisions within organizations, specifically examining direct investments in environmental sustainability such as renewable energy infrastructure and energy-efficient technologies The study employs theoretical frameworks including stakeholder theory, institutional theory, and resource-based perspectives, while explicitly excluding personal investment decisions, portfolio investments, and non-capital environmental management practices The temporal scope covers the period 2022-2023, a significant phase in Laos's industrial development and environmental policy evolution, coinciding with the implementation of key environmental regulations and increased integration into global supply chains This timeframe ensures the data's relevance to current policy formulation Regarding spatial scope, the research focuses exclusively on Laos's industrial sector, particularly manufacturing enterprises across the country's Northern, Central, and Southern industrial corridors This geographical delimitation allows for detailed examination of how local institutional contexts, regional policies, and market conditions influence green investment decisions The study includes both domestic and foreign-invested enterprises, providing a

The discussion highlights potential conflicts between GI implementation and fiduciary duties, particularly in certain global regions, emphasizing the need for green investments to be financially competitive with traditional options The text notes that investment motivations vary based on organizational type, legal context, and decision-maker preferences, with some entities like charitable funds prioritizing environmental goals over financial returns The evolution of investment paradigms shows a shift from purely financial considerations to a more comprehensive approach that integrates long-term environmental and social impacts, reflecting growing recognition of sustainability's importance in investment decisions and expanding definitions of fiduciary duty

2.3.3 Measuring Green Investment

The text outlines comprehensive approaches to measuring green projects and investments, emphasizing the need for multi-dimensional evaluation methods It discusses six dimensions and twenty-four criteria proposed by Chou et al (2017) for assessing green projects, along with the importance of integrated evaluation systems and life-cycle based criteria The text highlights various analytical techniques, including the "fuzzy AHP" method, and emphasizes the crucial role of third-party validation in preventing greenwashing Following Song and Yu's (2018) framework, the assessment of green investment encompasses analysis of environmental management strategies, sustainable development practices, and green innovation outcomes This includes evaluating changes in manufacturing processes, pollution prevention initiatives, and eco-friendly technology adoption, while also considering green organizational identity through employee awareness and values The measurement framework integrates strategic changes, organizational culture, creativity, and innovation outcomes to provide a holistic assessment of green investments

2.4 The mediating role of Environmentally Sustainable Development in the nexus of Corporate Social Responsibility and Green Investment Decision

The literature presents a sophisticated theoretical framework examining the mediating role of Environmentally Sustainable Development (ESD) in the relationship between Corporate Social Responsibility (CSR) and Green Investment Decisions (GID) This nexus is fundamentally grounded

in stakeholder theory (Freeman et al., 2010) and institutional theory, which elucidate how organisations balance diverse stakeholder interests while responding to environmental imperatives The mediating function of ESD manifests through multiple theoretical pathways Delmas and Toffel's (2008) longitudinal analysis of 536 manufacturing facilities demonstrated that robust environmental management systems significantly enhance organisations' capacity to translate CSR commitments into concrete environmental investments This institutional perspective is complemented by the resource-based view, articulated in Sharma and Vredenburg's (1998) empirical investigation of environmental capability development The theoretical framework is further enriched by organisational learning theory, with March's (1991) distinction between explorative and exploitative learning providing crucial insights into how firms develop environmental capabilities This learning process creates pathways through which CSR influences investment decisions, with ESD serving as the critical intermediary mechanism Empirical validation comes from multiple methodological approaches, notably Russo and Fouts' (1997) longitudinal study demonstrating the positive association between environmental and financial performance in high-growth industries The synthesis of these theoretical perspectives yields significant

legitimacy Together, these theories help explain why organizations make environmental investments despite uncertain financial returns, particularly in developing economies with evolving governance structures Second, the text explores stakeholder theory, introduced by Freeman in 1984, which examines how organizations balance various stakeholder interests in environmental investment decisions The theory distinguishes between primary stakeholders (essential for survival) and secondary stakeholders (influential but non-essential), emphasizing that traditional financial metrics are insufficient for evaluating environmental initiatives Particularly in developing economies like Laos, organizations must develop capabilities for stakeholder dialogue and conflict resolution, adapting their environmental investment approaches based on specific stakeholder configurations and institutional contexts The theoretical frameworks collectively demonstrate that environmental investment decisions

in developing economies are influenced by a complex interplay of institutional pressures, legitimacy requirements, and stakeholder interests, extending beyond purely financial considerations This helps explain the varied approaches organizations take toward environmental investments in different institutional and stakeholder contexts

2.2.4 Integration with Green Investment Context

The text presents an integrated theoretical framework for understanding environmental investment decisions in emerging economies It combines four key theoretical perspectives: resource-based view and dynamic capabilities theory, institutional and legitimacy theories, stakeholder theory, and neoclassical and agency perspectives This synthesis is particularly relevant for developing economies like Laos, where organizations must address challenges at multiple levels while navigating evolving environmental governance structures The framework suggests that successful environmental initiatives require organizations to simultaneously develop technical capabilities, maintain institutional legitimacy, manage stakeholder relationships, and ensure economic viability, all while operating within the unique constraints and opportunities of developing economy contexts

2.3 Theoretical framework of Sustainable Development and Green Investment Decision

2.3.1 Sustainable Development

The text examines the relationship between industrialization, environmental sustainability, and green investment practices As manufacturing sectors increase their resource usage, environmental concerns have grown, leading to the emergence of sustainable development (SD) theory and green theory These frameworks emphasize the need for balancing current needs with future sustainability through eco-friendly practices Recent studies have identified various factors influencing green investments, including ethical business conduct, stakeholder pressure, environmental regulations, and technological expertise While research has extensively covered sustainable development and eco-friendly investments, the relationship between Corporate Social Responsibility (CSR) practices and environmental investments remains understudied The text suggests that combining environmental sustainability strategies with CSR activities could be a significant predictor of eco-friendly investments

2.3.2 Motivations of Green Investment Decision

The text explores the diverse motivations driving green investment (GI) decisions across different organizations While financial returns remain paramount for most firms, other factors such as ethical considerations, ecological impact, and reputational benefits also influence investment choices

2.1.2 Definition of green investment decision

GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy

GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context

of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

2.1.3 Components of green investment

Key components of green investment: low-emission energy supply, energy efficiency, and carbon sequestration In terms of low-emission energy supply, there has been a significant shift toward funding energy solutions with reduced carbon footprints, with nearly 90% of electricity generation investment in 2023 directed toward low-emissions energy The investment ratio between low-carbon energy and fossil fuels has increased substantially, ranging from 4.1 to 8.1 between 2021 and 2050, with global investment reaching a record $1.1 trillion in 2022 Regarding energy efficiency, the text emphasizes its crucial role in securing sustainable economic futures The European Investment Bank's Survey highlights the importance of supportive regulatory frameworks, high-quality information, and advanced management practices in promoting energy efficiency investments These investments offer multiple benefits, including reduced energy consumption, lower greenhouse gas emissions, and improved financial performance through reduced operating costs Carbon sequestration investments focus on reducing atmospheric CO2 through various means, including sustainable agricultural practices, anti-deforestation initiatives, and carbon capture and storage (CCS) technologies This includes funding for no-till farming, cover cropping, agroforestry, and forest preservation, as well as technological solutions for capturing and storing CO2 emissions from industrial sources The effectiveness of these investments relies on complementary policies and regulations that incentivize carbon reduction and penalize emissions

2.2 Theoretical framework of investment decisions

2.2.1 Classical Investment Theory and Its Evolution

The text discusses the theoretical underpinnings of corporate investment behavior, particularly

in relation to environmental investments It begins with Jorgenson's 1963 neoclassical economic framework, which established the foundation for understanding firms' capital allocation decisions based

on rational evaluation of present value maximization However, this conventional framework shows

characteristics, institutional pressures, and environmental investment behavior in developing economies The research seeks to understand how various dimensions of corporate social responsibility influence organizations' inclination towards green investments within Laos's specific context It examines the impact of external factors such as regulatory frameworks, market dynamics, and stakeholder pressures on environmental investment decisions Additionally, it investigates the role of innovation capabilities in green investment decisions within resource-constrained environments Ultimately, the research aims to identify effective policy frameworks and organizational practices that promote green investment behavior in Laos's industrial sector, with the goal of translating theoretical insights into practical recommendations for sustainable industrial development in developing economies These questions collectively form a comprehensive framework for investigating the complex dynamics of green investment decision-making in emerging market contexts

1.5 Research Scope

The text outlines the research scope for studying green investment decisions in Laos's industrial sector across three main dimensions: content, temporal, and spatial In terms of content, the research focuses on determinants of green investment decisions within organizations, specifically examining direct investments in environmental sustainability such as renewable energy infrastructure and energy-efficient technologies The study employs theoretical frameworks including stakeholder theory, institutional theory, and resource-based perspectives, while explicitly excluding personal investment decisions, portfolio investments, and non-capital environmental management practices The temporal scope covers the period 2022-2023, a significant phase in Laos's industrial development and environmental policy evolution, coinciding with the implementation of key environmental regulations and increased integration into global supply chains This timeframe ensures the data's relevance to current policy formulation Regarding spatial scope, the research focuses exclusively on Laos's industrial sector, particularly manufacturing enterprises across the country's Northern, Central, and Southern industrial corridors This geographical delimitation allows for detailed examination of how local institutional contexts, regional policies, and market conditions influence green investment decisions The study includes both domestic and foreign-invested enterprises, providing a

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive

limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive

comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

CHAPTER 1: INTRODUCTION 1.1 Research Rationale

The text discusses the critical shift towards environmental sustainability in business, particularly focusing on green investment and corporate social responsibility (CSR) The transition to a low-carbon economy requires substantial private sector investment by 2030, with green investment emerging as a global trend despite higher initial costs and delayed returns The evolution of environmental consciousness has transformed investment behavior since the introduction of CSR in 1924 This theoretical framework has evolved from profit-oriented thinking to encompass broader societal and environmental responsibilities, leading to the emergence of socially responsible investments and the integration of environmental, social, and governance (ESG) criteria in investment strategies Research has identified multiple factors influencing green investment decisions, including ethical business conduct, stakeholder influence, institutional frameworks, and organizational capabilities Studies have shown positive correlations between environmental responsibility and financial performance, challenging the traditional assumption of a trade-off between environmental responsibility and profitability The text particularly highlights a research gap in understanding the relationship between CSR practices and green investments in developing economies, specifically in Laos's industrial sector The study aims to examine how enterprises in emerging markets balance competitive pressures with environmental responsibilities, contributing to both theoretical understanding and practical application

in sustainable business development The research's significance lies in its potential to inform policy development and strategic decision-making in developing market contexts

1.2 Research objectives

The primary goal is to understand the relationships between corporate social responsibility, environmental sustainability, and strategic business imperatives in developing economies The research aims to accomplish several key objectives It seeks to develop a comprehensive theoretical model by integrating various perspectives on green investment decision-making, including corporate social responsibility theory, institutional theory, and innovation capability frameworks The study will examine how different aspects of CSR (environmental, community, employee, and consumer-oriented) influence organizations' green investment decisions within Laos's specific context, considering the mediating role of environmentally sustainable development Furthermore, the research will analyze external factors such as regulatory frameworks, market dynamics, and stakeholder pressures, while also evaluating the relationship between organizations' innovation capabilities and their inclination towards green investments This analysis considers the unique challenges of resource constraints and capability development in developing economies Ultimately, the research aims to produce evidence-based recommendations for enhancing green investment behavior in Laos's industrial sector, providing practical guidance for both policymakers and organizational decision-makers to advance sustainable industrial development in developing economies

1.3 Research questions

The text presents key research questions focused on understanding green investment making in developing economies, particularly in Laos's industrial sector The questions explore how different theoretical frameworks can be integrated to explain the relationships between organizational

decision-legitimacy Together, these theories help explain why organizations make environmental investments despite uncertain financial returns, particularly in developing economies with evolving governance structures Second, the text explores stakeholder theory, introduced by Freeman in 1984, which examines how organizations balance various stakeholder interests in environmental investment decisions The theory distinguishes between primary stakeholders (essential for survival) and secondary stakeholders (influential but non-essential), emphasizing that traditional financial metrics are insufficient for evaluating environmental initiatives Particularly in developing economies like Laos, organizations must develop capabilities for stakeholder dialogue and conflict resolution, adapting their environmental investment approaches based on specific stakeholder configurations and institutional contexts The theoretical frameworks collectively demonstrate that environmental investment decisions

in developing economies are influenced by a complex interplay of institutional pressures, legitimacy requirements, and stakeholder interests, extending beyond purely financial considerations This helps explain the varied approaches organizations take toward environmental investments in different institutional and stakeholder contexts

2.2.4 Integration with Green Investment Context

The text presents an integrated theoretical framework for understanding environmental investment decisions in emerging economies It combines four key theoretical perspectives: resource-based view and dynamic capabilities theory, institutional and legitimacy theories, stakeholder theory, and neoclassical and agency perspectives This synthesis is particularly relevant for developing economies like Laos, where organizations must address challenges at multiple levels while navigating evolving environmental governance structures The framework suggests that successful environmental initiatives require organizations to simultaneously develop technical capabilities, maintain institutional legitimacy, manage stakeholder relationships, and ensure economic viability, all while operating within the unique constraints and opportunities of developing economy contexts

2.3 Theoretical framework of Sustainable Development and Green Investment Decision

2.3.1 Sustainable Development

The text examines the relationship between industrialization, environmental sustainability, and green investment practices As manufacturing sectors increase their resource usage, environmental concerns have grown, leading to the emergence of sustainable development (SD) theory and green theory These frameworks emphasize the need for balancing current needs with future sustainability through eco-friendly practices Recent studies have identified various factors influencing green investments, including ethical business conduct, stakeholder pressure, environmental regulations, and technological expertise While research has extensively covered sustainable development and eco-friendly investments, the relationship between Corporate Social Responsibility (CSR) practices and environmental investments remains understudied The text suggests that combining environmental sustainability strategies with CSR activities could be a significant predictor of eco-friendly investments

2.3.2 Motivations of Green Investment Decision

The text explores the diverse motivations driving green investment (GI) decisions across different organizations While financial returns remain paramount for most firms, other factors such as ethical considerations, ecological impact, and reputational benefits also influence investment choices

The discussion highlights potential conflicts between GI implementation and fiduciary duties, particularly in certain global regions, emphasizing the need for green investments to be financially competitive with traditional options The text notes that investment motivations vary based on organizational type, legal context, and decision-maker preferences, with some entities like charitable funds prioritizing environmental goals over financial returns The evolution of investment paradigms shows a shift from purely financial considerations to a more comprehensive approach that integrates long-term environmental and social impacts, reflecting growing recognition of sustainability's importance in investment decisions and expanding definitions of fiduciary duty

2.3.3 Measuring Green Investment

The text outlines comprehensive approaches to measuring green projects and investments, emphasizing the need for multi-dimensional evaluation methods It discusses six dimensions and twenty-four criteria proposed by Chou et al (2017) for assessing green projects, along with the importance of integrated evaluation systems and life-cycle based criteria The text highlights various analytical techniques, including the "fuzzy AHP" method, and emphasizes the crucial role of third-party validation in preventing greenwashing Following Song and Yu's (2018) framework, the assessment of green investment encompasses analysis of environmental management strategies, sustainable development practices, and green innovation outcomes This includes evaluating changes in manufacturing processes, pollution prevention initiatives, and eco-friendly technology adoption, while also considering green organizational identity through employee awareness and values The measurement framework integrates strategic changes, organizational culture, creativity, and innovation outcomes to provide a holistic assessment of green investments

2.4 The mediating role of Environmentally Sustainable Development in the nexus of Corporate Social Responsibility and Green Investment Decision

The literature presents a sophisticated theoretical framework examining the mediating role of Environmentally Sustainable Development (ESD) in the relationship between Corporate Social Responsibility (CSR) and Green Investment Decisions (GID) This nexus is fundamentally grounded

in stakeholder theory (Freeman et al., 2010) and institutional theory, which elucidate how organisations balance diverse stakeholder interests while responding to environmental imperatives The mediating function of ESD manifests through multiple theoretical pathways Delmas and Toffel's (2008) longitudinal analysis of 536 manufacturing facilities demonstrated that robust environmental management systems significantly enhance organisations' capacity to translate CSR commitments into concrete environmental investments This institutional perspective is complemented by the resource-based view, articulated in Sharma and Vredenburg's (1998) empirical investigation of environmental capability development The theoretical framework is further enriched by organisational learning theory, with March's (1991) distinction between explorative and exploitative learning providing crucial insights into how firms develop environmental capabilities This learning process creates pathways through which CSR influences investment decisions, with ESD serving as the critical intermediary mechanism Empirical validation comes from multiple methodological approaches, notably Russo and Fouts' (1997) longitudinal study demonstrating the positive association between environmental and financial performance in high-growth industries The synthesis of these theoretical perspectives yields significant

comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

characteristics, institutional pressures, and environmental investment behavior in developing economies The research seeks to understand how various dimensions of corporate social responsibility influence organizations' inclination towards green investments within Laos's specific context It examines the impact of external factors such as regulatory frameworks, market dynamics, and stakeholder pressures on environmental investment decisions Additionally, it investigates the role of innovation capabilities in green investment decisions within resource-constrained environments Ultimately, the research aims to identify effective policy frameworks and organizational practices that promote green investment behavior in Laos's industrial sector, with the goal of translating theoretical insights into practical recommendations for sustainable industrial development in developing economies These questions collectively form a comprehensive framework for investigating the complex dynamics of green investment decision-making in emerging market contexts

1.5 Research Scope

The text outlines the research scope for studying green investment decisions in Laos's industrial sector across three main dimensions: content, temporal, and spatial In terms of content, the research focuses on determinants of green investment decisions within organizations, specifically examining direct investments in environmental sustainability such as renewable energy infrastructure and energy-efficient technologies The study employs theoretical frameworks including stakeholder theory, institutional theory, and resource-based perspectives, while explicitly excluding personal investment decisions, portfolio investments, and non-capital environmental management practices The temporal scope covers the period 2022-2023, a significant phase in Laos's industrial development and environmental policy evolution, coinciding with the implementation of key environmental regulations and increased integration into global supply chains This timeframe ensures the data's relevance to current policy formulation Regarding spatial scope, the research focuses exclusively on Laos's industrial sector, particularly manufacturing enterprises across the country's Northern, Central, and Southern industrial corridors This geographical delimitation allows for detailed examination of how local institutional contexts, regional policies, and market conditions influence green investment decisions The study includes both domestic and foreign-invested enterprises, providing a

comprehensive perspective while maintaining a specific focus on the industrial sector to enable precise analysis of sector-specific challenges and opportunities

1.6 Research Methodology

The text describes a comprehensive research methodology for investigating green investment decisions in Laos's industrial sector, employing a mixed-methods approach guided by a pragmatic philosophical paradigm The research design consists of both qualitative and quantitative phases, ensuring a thorough examination of factors influencing environmental investment behavior The qualitative phase involved in-depth interviews with key stakeholders in Laos's industrial sector, including senior management and environmental officers, to contextualize the theoretical framework and refine measurement constructs The quantitative phase utilized a cross-sectional survey design with

a stratified sample of 370 industrial enterprises, distributed across different sizes (30% large, 40% medium, 30% small) and geographical regions (130 Northern, 150 Central, 90 Southern) Data collection was conducted through a structured questionnaire that operationalized key constructs related

to corporate social responsibility, external factors, firm innovation capabilities, and green investment decisions The analytical framework employed sophisticated multivariate techniques, including exploratory factor analysis, with a Kaiser-Meyer-Olkin measure of 0.733, Bartlett's test of sphericity, communalities examination, correlation analysis, and multiple regression analysis This methodological approach ensures both theoretical rigor and practical relevance for policy formulation and strategic management in Laos's industrial sector

CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Conceptualization of the key terms

2.1.1 Definition of Green Investment

The text provides a comprehensive overview of Green Investment (GI) and its various interpretations in academic literature GI is broadly defined as investments that consider environmental objectives alongside conventional investment goals, focusing on reducing carbon emissions and pollution while maintaining production efficiency It encompasses investments in renewable energy, energy efficiency measures, and carbon sequestration technologies The concept gained prominence following the 2008 financial crisis and has become integral to discussions about sustainable development and the green economy GI is closely aligned with eco-innovation, which involves creating new products, methods, and services that provide value while reducing environmental impact Eco-innovation is categorized into three main areas: processes (cleaner production methods), products (environmentally enhanced goods and services), and organizational structures (new management approaches and frameworks) In the context of this study, GI is defined as a strategic investment approach that redirects capital toward efficient, sustainable, and low-pollution activities It focuses on three primary components: renewable energy investment (such as wind, solar, and hydropower), energy efficiency (reducing energy consumption while maintaining output), and carbon sequestration (capturing and storing atmospheric carbon dioxide) This approach combines economic efficiency through resource conservation with enhanced environmental performance, reflecting a comprehensive shift toward sustainable business practices

characteristics, institutional pressures, and environmental investment behavior in developing economies The research seeks to understand how various dimensions of corporate social responsibility influence organizations' inclination towards green investments within Laos's specific context It examines the impact of external factors such as regulatory frameworks, market dynamics, and stakeholder pressures on environmental investment decisions Additionally, it investigates the role of innovation capabilities in green investment decisions within resource-constrained environments Ultimately, the research aims to identify effective policy frameworks and organizational practices that promote green investment behavior in Laos's industrial sector, with the goal of translating theoretical insights into practical recommendations for sustainable industrial development in developing economies These questions collectively form a comprehensive framework for investigating the complex dynamics of green investment decision-making in emerging market contexts

1.5 Research Scope

The text outlines the research scope for studying green investment decisions in Laos's industrial sector across three main dimensions: content, temporal, and spatial In terms of content, the research focuses on determinants of green investment decisions within organizations, specifically examining direct investments in environmental sustainability such as renewable energy infrastructure and energy-efficient technologies The study employs theoretical frameworks including stakeholder theory, institutional theory, and resource-based perspectives, while explicitly excluding personal investment decisions, portfolio investments, and non-capital environmental management practices The temporal scope covers the period 2022-2023, a significant phase in Laos's industrial development and environmental policy evolution, coinciding with the implementation of key environmental regulations and increased integration into global supply chains This timeframe ensures the data's relevance to current policy formulation Regarding spatial scope, the research focuses exclusively on Laos's industrial sector, particularly manufacturing enterprises across the country's Northern, Central, and Southern industrial corridors This geographical delimitation allows for detailed examination of how local institutional contexts, regional policies, and market conditions influence green investment decisions The study includes both domestic and foreign-invested enterprises, providing a

limitations when applied to environmental investments, especially in contexts with market imperfections and externalities, as it fails to capture the complex nature of environmental value creation and long-term benefits The introduction of agency theory by Jensen and Meckling in 1976 provided additional insights into organizational dynamics and conflicts of interest in investment decision-making This theory explains how the separation of ownership and control can lead to underinvestment in environmental initiatives, particularly when managers focused on short-term performance metrics are reluctant to commit to long-term environmental projects The challenge is especially pronounced in emerging economies, where capital market imperfections and institutional voids complicate the valuation of environmental investments The theoretical evolution highlights the need for more sophisticated frameworks that can better address the complexities of environmental investment decisions in developing economies The limitations of neoclassical approaches and the insights from agency theory emphasize the importance of aligning managerial incentives with long-term environmental objectives and developing appropriate corporate governance mechanisms to promote sustainable investment decisions

2.2.2 Resource-Based View and Dynamic Capabilities

The text explores how the Resource-Based View (RBV) and dynamic capabilities perspectives provide theoretical frameworks for analyzing green investment decisions The RBV, introduced by Barney in 1991, suggests that sustainable competitive advantage comes from resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN) In environmental investments, firms with superior technological capabilities, environmental management systems, and environmental knowledge demonstrate better capacity to identify and execute green investment opportunities The dynamic capabilities perspective, developed by Teece et al in 1997, adds a temporal dimension to this understanding by emphasizing organizations' ability to create, extend, and modify their resource base

in response to environmental challenges This framework focuses on three key capabilities: sensing environmental opportunities, seizing them through strategic investments, and reconfiguring organizational resources The integration of RBV and dynamic capabilities is particularly relevant in developing economies, where institutional environments and environmental regulations are rapidly evolving The synthesis of these theories highlights the importance of complementary assets and long-term capability development in environmental investment decisions Organizations must develop not only initial investment capabilities but also ongoing management and adaptation skills to respond to changing technological and regulatory landscapes This theoretical framework helps explain variations

in firms' propensity to undertake environmental investments and their success in implementing such initiatives, particularly in developing economy contexts

2.2.3 Institutional Theory and Legitimacy Perspectives

The text discusses two major theoretical frameworks for understanding environmental investment decisions in developing economies First, it presents the integration of institutional theory and legitimacy theory Institutional theory, from DiMaggio and Powell's 1983 work, identifies three institutional isomorphism mechanisms: coercive (regulatory), normative (professional standards), and mimetic (competitive) pressures Legitimacy theory, developed by Suchman in 1995, complements this by explaining how organizations pursue social approval through pragmatic, moral, and cognitive