When does foreign technology help firms from periphery countries improve their environmental impact? An ability–motivation–opportunity framework

In the face of climate change, transferring climate-friendly technologies to peripheral countries, where firms often rely on outdated technologies, poses a significant policy challenge. Licensing foreign technology to these firms offers promise, yet uncertainties remain regarding how they implement such technologies and consequently improve their environmental performance. This study develops an ability–motivation–opportunity framework to capture the interplay between firms’ technical capabilities, internal motivational forces, and external opportunity structures in institutionally underdeveloped settings. Analyzing a sample of 2237 firms from 30 countries in Eastern Europe and Central Asia, the findings indicate that firms acquiring licensed foreign technology adopt more environmentally friendly measures. However, the extent of these improvements is jointly determined by their technical ability, both intrinsic and extrinsic motivations, and the opportunity to devote resources and attention to these measures. The results highlight that policy efforts to reduce emissions must go beyond merely facilitating technology licensing. Effective strategies ideally also focus on enhancing firms’ internal capabilities, strengthening incentives to fully exploit new technology features, and streamlining administrative procedures that hinder the adoption of cleaner production practices.