Journal Article

Multinationals and corporate social responsibility in host countries: Does distance matter?

Eden, Lorraine, Miller, Stewart R, Campbell, Joanna Tochman

2012

Overview

Prior studies have found that foreign affiliates of multinational enterprises (MNEs) suffer from liability of foreignness (LOF). Foreign affiliates may be able to improve their social legitimacy and overcome LOF by demonstrating social commitment to host-country constituents through corporate social responsibility (CSR). If LOF is positively related to the distance between the home and host countries, and CSR activities confer social legitimacy benefits on foreign affiliates, we should expect CSR activities and distance to be positively related. However, we argue that, despite this potential motivation, foreign affiliates from more distant home countries are in fact less likely to engage in host-country CSR. Our argument focuses on the ways in which distance affects the MNE's willingness and ability to engage in CSR abroad. We also predict that hostcountry CSR reputation negatively moderates this relationship. Using Community Reinvestment Act data for foreign bank affiliates from 32 countries in the United States over 1990-2007, we find strong support for our hypotheses. The paper enriches our understanding of CSR practices in MNEs, and of when and how MNEs try to overcome legitimacy issues in host countries.

• Publisher: Palgrave Macmillan,Palgrave Macmillan UK
• Subject: Affiliates / Ausländische Tochtergesellschaft / Banking industry / Banking regulation / Banks / Business and Management / Business Strategy/Leadership / Business structures / Commercial regulation / Community Reinvestment Act / Corporate affiliates / Corporate Social Responsibility / Empathy / Foreign enterprises / Home country / Host countries / Host country / International Business / Investment strategies / Legitimacy / Liability / Management / Motivation / Multinational corporations / Multinational enterprises / Multinationales Unternehmen / Organization / Public good / Reputations / Social commitment / Social responsibility / U.S.A / Unvollkommene Information