Institutional Governance, Emergent Adaptations, and Corporate CO2 Emissions: A Complex Adaptive Systems Perspective

Abstract

This study attempts to fill the gap in understanding how institutional governance influences CO₂ emissions through environmental pressures. By integrating institutional theory with complex adaptive systems perspectives, this study examines interactions among governance quality, flexible organizational structure and Co2 emission outcomes. Panel vector autoregressive (VAR) framework is applied to data that is specifically taken from 500 multinational corporations over the period 2014–2024. From this sample countries dataset, the focus is on governance indicators (voice and accountability, control of corruption), adaptation proxies (vulnerability indices, renewable energy adoption rates), and CO2 emission scopes. The modeling of this paper uses High-dimensional fixed effects (HDFE) where moderated-mediation analysis is performed that is drawn on Thomson Reuters ESG datasets. The results reveal that governance framework minimizes climate vulnerability, thereby CO2 emissions is control to a certain extent. Further, the model is tested through interactions with corporate social responsibility (CSR) committees that shows minimal moderation that is suggesting governance influences primarily through adaptive capacity. Understanding of these patterns show heterogeneous responses across emission categories aligning with institutional pressures. These patterns underscore heterogeneous responses across emission categories, aligning with institutional pressures and system emergence. The emergent adaptions work as mediator to see the association between governance and emissions. This offers a novel insight of firm level shadow dynamics that is explained through complex adaptive system (CAS) offering novel insights into shadow dynamics and vulnerability in complex systems.