Institutional Determinants of Environmental Corporate Social Responsibility: Are Multinational Entities Taking Advantage of Weak Environmental Enforcement in Lower‐Income Nations?

29 Pages Posted: 12 Mar 2018

See all articles by Stephen Luxmore

Stephen Luxmore

Rochester Institute of Technology (RIT) - Saunders College of Business

Clyde Eiríkur Hull

Rochester Institute of Technology (RIT) - Saunders College of Business

Zhi Tang

Rochester Institute of Technology (RIT)

Date Written: Spring 2018

Abstract

Multinational enterprises (MNEs) are often accused of taking advantage of lax environmental regulations in developing countries. However, no quantitative analysis of the impact of doing business in nations of different income levels on environmental corporate social responsibility (ECSR) has been done prior to this study. Incorporating institutional factors in our approach, we argue that endoisomorphic and exoisomorphic pressures relating to ECSR impact MNEs differently according to the MNEs' level of activity in low‐, lower‐middle‐, upper‐middle‐, and high‐income nations. We predict and, using data from 113 companies, find that selling in poorer nations is positively associated with increased levels of ECSR. Our research suggests that MNEs may not be participating in a "race to the bottom" but may instead be responding to global institutional pressure by exceeding local norms for environmental stewardship. Alternative interpretations of our findings are discussed.

Suggested Citation

Luxmore, Stephen and Hull, Clyde Eiríkur and Tang, Zhi, Institutional Determinants of Environmental Corporate Social Responsibility: Are Multinational Entities Taking Advantage of Weak Environmental Enforcement in Lower‐Income Nations? (Spring 2018). Business and Society Review, Vol. 123, Issue 1, pp. 151-179, 2018. Available at SSRN: https://ssrn.com/abstract=3136717 or http://dx.doi.org/10.1111/basr.12138

Stephen Luxmore (Contact Author)

Rochester Institute of Technology (RIT) - Saunders College of Business ( email )

105 Lomb Memorial Dr.
Rochester, NY 14623
United States

Clyde Eiríkur Hull

Rochester Institute of Technology (RIT) - Saunders College of Business ( email )

105 Lomb Memorial Dr.
Rochester, NY 14623
United States

Zhi Tang

Rochester Institute of Technology (RIT) ( email )

Rochester, NY 14623
United States

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