Beyond cops and robbers: The contextual challenge driving the multinational corporation public crisis in China and Russia

Entering the new century, foreign Fortune 500 companies operating in China and Russia have encountered an increasing number of public crises concerning various social and environmental issues. The public crisis refers to an unexpected, non-routine, and media-exposed event in which affected stakeholders (e.g., community members, employees, customers) charge that a company has compromised their interests. Although many of these crises involved the misdeeds of multinational corporations (MNCs), the story is beyond catching baddies. Instead, there are contextual challenges rooted in the social, political, and market environments of China and Russia that drive the occurrence of the public crisis regardless of MNC misdeeds. Considering the institutional change and stakeholder growth in these countries, it is increasingly important for MNCs to understand and effectively deal with these challenges. This article provides insights to MNCs and researchers in three ways. First, the article reveals the patterns of MNC crises in the two countries from 2000 to 2011 and presents the variation between the two countries. Second, the article identifies four types of contextual challenges, including the global-national challenge, the social-trust challenge, the institutional-voids challenge, and the normalized-misdeed challenge. Finally, the article discusses the managerial implications of these challenges and recommends tackling strategies.     

An Institution of Corporate Social Responsibility (CSR) in Multi-National Corporations (MNCs): Form and Implications

This article investigates corporate social responsibility (CSR) as an institution within UK multi-national corporations (MNCs). In the context of the literature on the institutionalization of CSR and on critical CSR, it presents two main findings. First, it contributes to the CSR mainstream literature by confirming that CSR has not only become institutionalized in society but that a form of this institution is also present within MNCs. Secondly, it contributes to the critical CSR literature by suggesting that unlike broader notions of CSR shared between multiple stakeholders, MNCs practise a form of CSR that undermines the broader stakeholder concept. By increasingly focusing on strategic forms of CSR activity, MNCs are moving away from a societal understanding of CSR that focuses on redressing the impacts of their operations through stakeholder concerns, back to any activity that supports traditional business imperatives. The implications of this shift are considered using institutional theory to evaluate macro-institutional pressures for CSR activity and the agency of powerful incumbents in the contested field of CSR.     

Corporate Social Responsibility in Transnational Spaces: Exploring Influences of Varieties of Capitalism on Expressions of Corporate Codes of Conduct in Nigeria

Drawing from the varieties of capitalism theoretical framework, the study explores the home country influences of multinational corporations (MNCs) on their corporate social responsibility (CSR) practices when they operate outside their national/regional institutional contexts. The study focusses on a particular CSR practice (i.e. corporate expressions of code of conducts) of seven MNCs from three varieties of capitalism – coordinated (2), mixed (2) and liberal (3) market economies – operating in the oil and gas sector of the Nigerian economy. The study concludes that the corporate codes of conduct of these MNCs operating in Nigeria, to a large extent, reflect the characteristics of their home countries’ model of capitalism, respectively, albeit with certain degree of modifications. The home countries’ model of capitalism is also found to have implications for the degree of adaptability of these MNCs’ CSR practices to the Nigerian institutional context – with the mixed market economy model of capitalism adapting more flexibly than the liberal and coordinated market economies, respectively. The findings of this study will contribute to the emerging literature on the institutional embeddedness of CSR practices in transnational social spaces, understanding of varieties of capitalism, and CSR in developing economies.     

The Role of Religiosity in Business and Consumer Ethics: A Review of the Literature

This study investigates antecedents of corporate social responsibility (CSR) in multinational corporations’ (MNCs’) subsidiaries. Using stakeholder theory and institutional theory that identify internal and external pressures for legitimacy in MNCs’ subsidiaries, we integrate international business and CSR literatures to create a model depicting CSR practices in MNCs’ subsidiaries. We propose that MNCs’ subsidiaries will be likely to adapt to local practices to legitimize themselves if they operate in host countries with different institutional environments and demanding stakeholders. We also predict that MNCs’ subsidiaries will be likely to adapt to local practices to avoid spillover effects if their parent companies suffer major legitimacy problems at home or abroad. However, we speculate that MNCs’ subsidiaries will be less likely to adapt to local practices if they are strongly annexed to their parent companies and the benefit to gain internal legitimacy outweighs external legitimacy. This article contributes to the discourse on CSR across borders by exploring the antecedents of CSR practices in MNCs’ subsidiaries at social and organizational levels, and integrating institutional and stakeholder views. We provide a number of propositions for future studies and explore implications for practitioners.     

CSR and stakeholder salience in MNE subsidiaries in emerging markets

The purpose of this study is to identify the key stakeholder groups pressuring multinational enterprises (MNEs) in emerging markets (EMs), also if the pressure is global or local, to develop corporate social responsibility (CSR) strategies. Drawing on stakeholder salience and institutional theories, all the stakeholder groups acknowledged and analysed in the literature were identified and examined to understand if they were perceived by MNEs in China as effective in pressuring them to engage in CSR strategies and activities. Results demonstrate that only stakeholder groups with power – government power or voting power – are perceived as having enough pressure to make MNEs’ Chinese subsidiaries engage in CSR, which is contrary to current theories. Our results allow us to theorise on an extension of the concept of utilitarian power and political power when analysing stakeholder salience in EMs. This research has important implications for managers as balancing and working with limited resources and correctly identifying and prioritising key stakeholders are vital to successfully improving performance.     

Corporate social responsibility in international joint ventures: Empirical examinations in South Korea

This study aims to investigate organizational characteristics and develop a framework relating to corporate social responsibility (CSR) practices of international joint ventures (IJVs) established in the South Korean market. Based on institutional and stakeholder theories, regression analyses produced a framework facilitating a better understanding and identification of factors that drive CSR in local markets. Consumers, competitors, and non-governmental organizations (NGOs) were discovered to be primary determinants of responsible behaviors. Additionally, some significant differences were found with respect to CSR related to IJV’s formative characteristics. This study contributes to furthering knowledge of IJVs and CSR, as well by providing some practical implications for organizations pursuing international markets.     

Firm-Level Determinants of Political CSR in Emerging Economies: Evidence from India

Multinational companies (MNCs) frequently adopt corporate social responsibility (CSR) activities that are aimed at providing ‘public goods’ and influencing the government in policymaking. Such political CSR (PCSR) activities have been determined to increase MNCs’ socio-political legitimacy and to be useful in building relationships with the state and other key external stakeholders. Although research on MNCs’ PCSR within the context of emerging economies is gaining momentum, only a limited number of studies have examined the firm-level variables that affect the extent to which MNCs’ subsidiaries in emerging economies pursue PCSR. Using insights from resource dependence theory, institutional theory, and the social capital literature, we argue that MNCs’ subsidiaries that are critically dependent on local resources, have greater ties to managers of related businesses and to policymakers, and that those that are interdependent on the MNCs’ headquarters and other foreign subsidiaries, are more likely to be involved in PCSR. We obtain support for our hypotheses using a sample of 105 subsidiaries of foreign firms that operate in India. Our findings enhance our understanding of the factors that determine MNCs’ political CSR in emerging economies.     

The Common Good of the Firm and Humanistic Management: Conscious Capitalism and Economy of Communion

This study examines corporate stakeholder orientation (CSO) across industries and over time prior to the introduction of mandatory CSR. We argue that CSO is a legitimacy signal consciously employed by firms to demonstrate their shareholder and specific non-shareholder orientations in the midst of institutional pressures emerging from country and industry contexts. Using a 7-code index of CSO on CEO–shareholder communications from India, we find that in general large firms in India exhibit a pre-dominant, significant and rising trend of pro-shareholder orientation in the six-year period immediately preceding the CSR law. Yet, we uncover significant industry differences in CSO potentially driven by four key factors: the degree of competitive dynamics, nature of products and services, extent of negative externalities and social activism, and exposure to international markets. Our findings support the view that while some minimum threshold of regulatory intervention is required to balance the interests of business with society, legislation raises questions in relation to the usefulness of a uniform one-size-fits-all CSR across all industries.     

The Signaling Effect of Corporate Social Responsibility in Emerging Economies

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility (CSR) practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm’s financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature.     

The Emergence of Corporate Social Responsibility in Chile: The Importance of Authenticity and Social Networks

Little is known about how and why corporate social responsibility (CSR) emerged in lesser developed countries. In order to address this knowledge gap, we used Chile as a test case and conducted a series of in-depth interviews with leaders of CSR initiatives. We also did an Internet and literature search to help provide support for the findings that emerged from our data. We discovered that while there are similarities in the drivers of CSR in developed countries, there are distinct differences as well. In particular, we found that different sectors drive CSR in Chile. In contrast to other geographies where consumer demand and government regulation provided the impetus for CSR efforts, multinational companies (MNCs) and non-governmental organizations (NGOs) are key actors in Chile. MNCs imported their CSR beliefs, skills, and processes into Chile. Their efforts resulted in a virtuous cycle. Once large domestic firms felt pressured by their MNC rivals, they too adopted CSR initiatives. The ability to manage relationships with multiple stakeholders and perceptions of authenticity were also critical to the success of CSR in Chile. Using network theory as a lens, we suggest that network density and centrality largely determine whether CSR efforts will be authentic. Based on these contentions, we suggest avenues for future research.     

Stakeholder Perspectives on CSR of Mining MNCs in Argentina

This article examines the conceptualisation of corporate social responsibility (CSR) in the context of mining multinationals (MNCs) in Argentina. It explores the suitability of CSR for addressing social, environmental and economic issues associated with mining in the country. The study is based on interviews with four stakeholder groups in the country: government, civil society, international financial organisations, and mining industry. These are analysed using content and interpretative techniques and supplemented by the content analysis of secondary data from headquarters of mining MNCs. Using the concept of corporate social responsibility orientation (CSRO), the study contrasts the perceptions of major stakeholders and examines adaptation of mining companies’ CSRO to local context. It reveals that the CSRO of mining managers in Argentina differs from CSRO developed by global headquarters; and in Argentina companies “negotiate” economic, environmental and legal dimensions of CSR with the government. Although companies “negotiate” philanthropic responsibilities with the communities, ethical responsibilities are defined by the headquarters and not negotiated locally. The analysis suggests that environmental duties are the critical element of CSR in the mining sector in Argentina. This study treats environment as a separate dimension of corporate responsibility defined as to do “what is safe for the environment”.     

Stakeholder pressures,EMS implementation,and green innovation in MNC overseas subsidiaries

In this paper, we address the issue of green innovation by the overseas subsidiaries of multinational corporations (MNCs). Drawing upon stakeholder theory and institutional theory, we propose a conceptual model to explain how stakeholder pressures in host countries prompt MNC subsidiaries to undertake green product and process innovations. Our findings indicate that MNC subsidiaries need to meet market stakeholders’ pressures in order to achieve social legitimacy in host countries, and that the implementation of formal environmental management systems (EMS) is an important mechanism translating these pressures into green innovation initiatives. Furthermore, we find that the positive relationship between market stakeholder pressures and EMS implementation is reinforced by global ‘green’ institutional pressures in the different host countries.     

Corporate name change: Investigating South African multinational corporations' postacquisition performance

It has long been argued a multinational corporation (MNC) needs to be able to leverage the firm‐specific advantages to overcome the liability of foreignness in the host markets so the MNC can enjoy the benefit of internationalization while competing with the indigenous firms in the host market. However, emerging‐market MNCs, which have the nontraditional ownership advantages, such as flexibility and cost‐advantage, may require different international strategies to realize the anticipated profit in their cross‐border acquisitions. This article takes an organizational identity approach to study how the foreign identity of South African MNCs constitutes the source of liability and negatively impacts their postacquisition performance. We find South African MNCs that adopted a corporate name change for their acquired subsidiaries experienced worse postacquisition return on asset than the South African MNCs who did not do so. On the other hand, facing a large economic distance, South African MNCs that facilitate the acquired subsidiary corporate name change enjoy better postacquisition performance.     

The Multinational Corporation and Global Governance: Modelling Global Public Policy Networks

Globalization has increased the economic power of the multinational corporation (MNC), engendering calls for greater corporate social responsibility (CSR) from these companies. However, the current mechanisms of global governance are inadequate to codify and enforce recognized CSR standards. One method by which companies can impact positively on global governance is through the mechanism of Global Public Policy Networks (GPPN). These networks build on the individual strength of MNCs, domestic governments, and non-governmental organizations to create expected standards of behaviour in such areas as labour rights, environmental standards, and working conditions. This article models GPPN in the issue area of CSR. The potential benefits of GPPN include better overall coordination among industry and government in establishing what social expectations the modern MNC will be expected to fill. David Detomasi is an assistant professor of international business at the School of Business, Queen’s University, Kingston, Ontario Canada. His research areas include corporate governance, corporate social responsibility, and business and society.     

Conceptualizing CSR as innovative adoption by MNCs from emerging Asian economies

Two frequently researched fundamental factors in the recent business arena are corporate governance and corporate social responsibility (CSR). Though the earlier is globalized in various aspects, the latter is still traditionally identified as a Western practice for corporations. This research paper argues that Multi-national Corporations (MNCs) from emerging economies contribute to their parent country's business dynamics including CSR through “reverse knowledge innovation.” To some extent, CSR is prioritized and implemented in these emerging economies, as their MNCs adopt and diffuse CSR practices domestically through reverse knowledge flows. Based on 10 economies from Asia in terms of CSR adoption, we find that CSR is largely considered a Western business innovation among the emerging economies and their home-grown multinationals are the main vehicle of transfer in this case. This study identifies that there are three different levels of CSR adoption depending on a country's phase of economic development: Luxury, diffusion, and institutionalized. The study thus contributes in terms of a multi-level theory by highlighting a source of CSR variation at the national level in the domain of Asian emerging economies.     

“Teaching the Sushi Chef”: Hybridization Work and CSR Integration in a Japanese Multinational Company

While corporate social responsibility (CSR) is recognized as taking on various national meanings and practices, research has not sufficiently investigated how multinational companies (MNC) simultaneously achieve global CSR integration and local CSR adaptation. Building on a qualitative case study carried out at ASICS, an MNC headquartered in Japan, we show how this organizational dilemma may be solved through hybridization work, a form of institutional work performed by CSR managers in subsidiaries to combine and adapt different institutional approaches to CSR. By developing the notion of hybridization work, we contribute by (1) revealing a set of practices that contribute to institutional change within organizations and (2) enriching the study of CSR organizational change and international business by showing how hybridization Work leads to a greater organizational integration between core and periphery, and by identifying the triggering factors for subsidiary initiative in CSR.     

All animals are equal,but …: management perceptions of stakeholder relationships and societal responsibilities in multinational corporations

The stakeholder approach has become a popular perspective in mainstream management and the corporate social responsibility (CSR) literature. However, it remains an open question as to how real‐life managers actually view stakeholders and what rationales and logics are used for explaining the relationship between the firm and its constituencies. This article examines whom managers in multinational corporations (MNCs) consider to be their important stakeholders, and how they describe the societal responsibilities towards these groups and individuals. It is concluded that managers still tend to hold a rather narrow (managerial) view of the firm and generally give priority to stakeholder groups who are directly involved in the firm's core transformation system. The conclusions are derived from interview and survey data from 647 managers in four MNCs. The paper is based on data collected as part of project RESPONSE: a European Union‐ and corporate‐funded initiative on CSR.     

“Too Good to be True!”. The Effectiveness of CSR History in Countering Negative Publicity

Corporate crises call for effective communication to shelter or restore a company’s reputation. The use of corporate social responsibility (CSR) claims may provide an effective tool to counter the negative impact of a crisis, but knowledge about its effectiveness is scarce and lacking in studies that consider CSR communication during crises. To help fill this gap, this study investigates whether the length of company’s involvement in CSR matters when it uses CSR claims in its crisis communication as a means to counter negative publicity. The use of CSR claims in crisis communication is more effective for companies with a long CSR history than for those with a short CSR history, and consumer skepticism about claims lies at the heart of this phenomenon.     

Corporate Social Responsibility,Ownership Structure,and Political Interference: Evidence from China

Prior research suggests that ownership structure is associated to corporate social responsibility (CSR) in developed countries. This article examines whether and how ownership structure affects CSR in emerging markets using Chinese firms’ social responsibility ranking. Our empirical evidences show that for non-state-owned firms, corporate ownership dispersion is positively associated to CSR. However, for state-owned firms, whose controlling shareholder is the state, this relation is reversed. We attribute the reversed relationship to political interferences and further test this hypothesis by demonstrating that regional economic development is negatively related to CSR for state-owned firms due to decreased political interference in more developed areas. This study is the first to directly examine the relationship between the dispersion of corporate ownership and CSR in emerging markets, and our results depict that it is important to consider ownership type in assessing CSR in emerging market where state ownership is still prevalent such as China. The results also reveal that firm size, profitability, employee power, leverage, and growth opportunity affect CSR in China.     

Configuration of External Influences: The Combined Effects of Institutions and Stakeholders on Corporate Social Responsibility Strategies

This article introduces a theoretical framework that combines institutional and stakeholder theories to explain how firms choose their corporate social responsibility (CSR) strategy. Organizational researchers have identified several distinct CSR strategies (e.g., obstructionist, defensive, accommodative, and proactive), but did not explain the sources of divergence. This article argues that the divergence comes from the variability in the configuration of external influences that consists of institutional and stakeholder pressures. While institutions affect firms’ social behavior by shaping the macro-level incentive structure and sources of legitimacy (distal mechanisms), firms’ stakeholders can amplify or buffer the institutional forces by acting as mediators (proximate mechanisms). The two dimensions are interdependent in that stakeholders draw legitimacy and power from institutions, and institutions are often actualized through stakeholder mechanisms. Together, they form a particular configuration of external influences that shapes how focal firms construct their CSR strategy.