Proactive Environmental Strategy, Foreign Institutional Pressures, and Internationalization of Chinese SMEs

•Proactive environmental strategy have a positive impact on both inward-focused and outward-focused internationalization activities.•Foreign environmental regulatory pressure has an inverted U-shaped moderating effect on the relationship between proactive environmental strategy and inward-focused internationalization activities.•Foreign environmental customer pressure has an inverted U-shaped moderating effect on the relationship between proactive environmental strategy and outward-focused internationalization activities. We explain how proactive environmental strategy affects emerging country small- and medium-sized enterprise (SME) internationalization and the contingency roles of foreign institutional environment. A survey of 217 Chinese SMEs reveals the positive effects of proactive environmental strategy on inward-focused and outward-focused internationalization activities. The results also show that foreign institutional pressures influence such effects in nonlinear ways. That is, a medium level of foreign environmental regulatory pressure maximizes the positive effects of proactive environmental strategy on inward-focused internationalization activities, while a medium level of foreign environmental customer pressure maximizes the positive effects of proactive environmental strategy on outward-focused internationalization activities.