Abstract: The study of firm pollution has been a focal point of research across disciplines. While management literature has predominantly emphasized the role of external pressures from stakeholders—such as NGOs, activists, and communities—in shaping environmental practices, fewer studies have explored the operational drivers of firm pollution. This paper challenges the dominance of the external pressures framework by advancing an operational perspective that views pollution as a by-product of inefficient manufacturing processes. Using fine-grained facility pollution data from the U.S. Environmental Protection Agency, we find that pollution decreases when a facility is acquired by a foreign firm. However, this reduction is not driven by heightened external scrutiny associated with the Liability of Foreignness (LOF). Instead, it stems from operational challenges during the integration process, which lead to temporary production declines. This relationship between foreign ownership and pollution reduction is more pronounced when the acquiring firm originates from a more administratively distant country, further underscoring the operational nature of the effect. Our findings broaden the understanding of firm environmental performance by offering an alternative perspective that complements stakeholder-centric theories while addressing gaps in the literature on the operational implications of the LOF.