Corporate Social Irresponsibility in Host Countries: The Interplay of Home and Host Institutions

Abstract

Corporate social irresponsibility (CSI) by multinational enterprises (MNEs) has been attracting increasing attention by policy makers as well as scholars. Building on institutional perspectives and the ‘distance’ research in the international business (IB) field, our study examines how the institutional characteristics of home and host countries, their interplay, as well as cross-national institutional distances affect MNEs’ CSI in host countries. We test our hypotheses using panel data of 1,087 listed firms based in 48 countries, with CSI incidents occurring in 150 host countries during 2007-2018. We find that both stronger home and host institutions are negatively associated with CSI occurring in the host markets, but the mitigating effect of host (home) institutions on CSI will be weaker when home (host) institutions are stronger. We further find that as institutional distance between home and host countries increases, MNEs’ involvement in CSI incidents in the host countries grows. We contribute to CSI research and ‘distance’ literatures by offering theoretical mechanisms and empirical evidence on whether and when MNEs respond to varied stakeholder and institutional pressures in their CSI engagements.