Sustainability Implications for Tourism Firms Expanding across Institutional Contexts

Abstract Book of the 7th International Conference on Tourism Management and Hospitality

Year: 2026

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Sustainability Implications for Tourism Firms Expanding across Institutional Contexts

Ana Cuesta-González, Laura Cabeza-García, Roberto Fernández-Gago

ABSTRACT:

Environmental, Social and Governance (ESG) performance has become a defining metric of corporate legitimacy in the global economy, reshaping how firms compete and engage with stakeholders across borders. Furthermore, tourism constitutes a highly international and economically significant sector that sustains employment and community development while generating notable environmental and social impacts, thereby becoming central to corporate sustainability and public policy debates. Drawing on legitimacy and institutional theory, this study argues that international expansion enhances ESG performance by exposing tourism firms to broader stakeholder scrutiny, global sustainability standards and cross-border managerial learning. Furthermore, we propose that this positive association is contingent on the institutional context of subsidiary host countries. We tested these arguments on a cross-sectional sample of 100 listed tourism firms worldwide in 2024 and employed Ordinary Least Squares (OLS) regressions with robust standard errors. Results confirm a positive and significant effect of firm internationalization on ESG performance, particularly pronounced among firms whose subsidiaries are concentrated in high rule-of-law environments. For tourism managers and investors, our findings provide actionable guidance. They demonstrate that international expansion is not merely a revenue diversification strategy but a structural mechanism that elevates ESG performance. For policymakers in tourism destinations aiming to attract international firms truly committed to sustainability, the findings show that good governance is not just a regulatory framework, but also a key factor that supports corporate ESG performance.

Keywords: Internationalization; ESG; Subsidiaries; Rule of Law; Tourism Sector