Corporate social responsibility, organisational reputation and liability of foreignness

Abstract

Purpose: This study aimed to test the impact of corporate social responsibility (CSR) and its subdivision dimensions on the liability of foreignness (LOF), as well as the mediating effect of organisational reputation.Methodology: A total of 301 observations from 43 branches and subsidiaries of China’s four major banks in 23 host countries from 2012 to 2018 were selected as samples to examine the impact of CSR and its segmented dimensions on the LOF. The mediating role of the parent company’s organisational reputation in the relationship between CSR and LOF was also examined. After controlling for the possible influence of firm age, firm size, economic distance, regulatory distance, and cultural distance on the model, three regression models were built.Findings: Liability of foreignness can be reduced by increasing CSR; and increasing technical CSR is especially effective in this regard. Organisational reputation plays a mediating role in the relationship between CSR and LOF.Practical Implications: Fulfilling CSR can help reduce the LOF.Originality: This research comprehensively explains the different views of current scholars on CSR and enriches the existing research on overcoming the LOF from the perspective of non-market mechanisms. It also provides new insight into the mediating effect of organisational reputation on CSR and its indirect effect on the LOF.