Social License to Acquire Abroad
49 Pages Posted: 18 Jan 2014 Last revised: 16 Jul 2016
Date Written: July 15, 2016
I examine the strategic impact of corporate social responsibility (CSR) on international expansion. When going abroad, firms often face liabilities of foreignness, newness, and origin. I argue that information about their CSR activities can help circumvent these liabilities and affect the outcome of international expansion. A quantitative analysis of 4,130 cross-border M&A announcements by firms from Brazil, Russia, India, China, and South Africa (1990-2011) shows that positive (negative) news about CSR is associated with greater (lower) likelihood of and faster (slower) M&A deal completion. Thus, social license to acquire, or social approval of the acquiring firm by the relevant stakeholders, plays an important role in gaining access abroad. The study bridges instrumental stakeholder theory, corporate social responsibility, international business, and strategic management research.
Keywords: corporate social responsibility (CSR), international expansion, emerging market multinationals (EMMs), M&As, public takeover process
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