Multinationals and Corporate Social Responsibility in Host Countries: Does Distance Matter?

Journal of International Business Studies, Forthcoming

Mays Business School Research Paper No. 2012-51

48 Pages Posted: 17 Sep 2011 Last revised: 29 Nov 2014

See all articles by Joanna Tochman Campbell

Joanna Tochman Campbell

Texas A&M University - Department of Management

Lorraine Eden

Texas A&M University - Department of Management ; School of Law, Texas A&M University

Stewart R. Miller

University of Texas at San Antonio - Department of Management

Date Written: September 14, 2011

Abstract

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 to 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 distance affects the MNE’s willingness and ability to engage in CSR abroad. We also predict that host-country 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.

Keywords: Corporate Social Responsibility, Liability of Foreignness, Cultural Distance, Institutional Distance, CAGE, Community Reinvestment Act, Banking

JEL Classification: M14, D21, F23, G21, G38

Suggested Citation

Campbell, Joanna Tochman and Eden, Lorraine and Miller, Stewart R., Multinationals and Corporate Social Responsibility in Host Countries: Does Distance Matter? (September 14, 2011). Journal of International Business Studies, Forthcoming; Mays Business School Research Paper No. 2012-51. Available at SSRN: https://ssrn.com/abstract=1928016 or http://dx.doi.org/10.2139/ssrn.1928016

Joanna Tochman Campbell (Contact Author)

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Lorraine Eden

Texas A&M University - Department of Management ( email )

415D Wehner Bldg, TAMU 4221
College Station, TX 77843-4221
United States
979-845-4851 (Phone)
979-845-9641 (Fax)

HOME PAGE: http://mays.tamu.edu/mgmt/

School of Law, Texas A&M University ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States
9797773489 (Phone)

Stewart R. Miller

University of Texas at San Antonio - Department of Management ( email )

501 W. Durango
San Antonio, TX 78207
United States

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