Stakeholder Pressure on MNEs and the Transfer of Socially Irresponsible Practices to Subsidiaries

Academy of Management Journal, Vol. 56, No. 2, 549-572, 2013

24 Pages Posted: 28 Aug 2014 Last revised: 23 Jan 2015

See all articles by Jordi Surroca

Jordi Surroca

Universidad Carlos III de Madrid - Department of Business Administration

Josep A. Tribo

Universidad Carlos III de Madrid - Department of Business Administration

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: 2013

Abstract

In this study, we explain how multinational enterprises (MNEs) respond to pressure to conform to their stakeholders’ expectations for greater attention to corporate social responsibility (CSR). We invoke institutional theory to propose that mounting stakeholder pressure in an MNE’s home country leads to the transfer of socially irresponsible practices from its headquarters to its overseas subsidiaries. This transfer is more pronounced when a subsidiary is apparently unconnected to an MNE, yet is controlled by an MNE’s headquarters through the appointment of the subsidiary’s board members; the institutional environment of the MNE’s home country enforces compliance; and the degree of institutional enforcement, vigilance, and sanctions for noncompliance in the subsidiary’s host country is low. Our hypotheses are empirically supported using panel data on 269 subsidiaries in 27 countries belonging to 110 MNEs from 22 countries. Results are robust to alternative measures, explanations, and sample.

Keywords: CSR, MNEs, Controversial Activities

JEL Classification: M21

Suggested Citation

Surroca, Jordi and Tribo Gine, Josep Antonio and Zahra, Shaker A., Stakeholder Pressure on MNEs and the Transfer of Socially Irresponsible Practices to Subsidiaries (2013). Academy of Management Journal, Vol. 56, No. 2, 549-572, 2013 . Available at SSRN: https://ssrn.com/abstract=2487624

Jordi Surroca

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

HOME PAGE: http://www.uc3m.es/uc3m/dpto/EMP/profesor/ijordi.htm

Josep Antonio Tribo Gine (Contact Author)

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain
34-916249321 (Phone)

HOME PAGE: http://www.business.uc3m.es/en/faculty/profesor/perfil/josep-a-tribo

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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