Cultural imprints: Emerging market multinationals’ post-acquisition corporate social performance

Abstract

Many emerging market multinational corporations (EMNCs) acquire firms in developed markets to attain advanced technology and managerial know-how. However, adopting socially responsible practices may not show immediate financial returns and thus, are potentially overlooked. Given the lack of formal institutions to enforce socially responsible practices in their home country, EMNCs have discretion in improving their post-acquisition corporate social responsibility performance (CSRP). This study extends the institution-based view on EMNCs’ internationalization and investigates how informal institutions, specifically home country cultures, affect EMNCs’ post-acquisition CSRP. Studying a sample of EMNCs’ acquisitions in the U.S., we find that EMNCs’ home country cultures exert “imprinting” effects that enable or discourage their post-acquisition CSRP. Uncertainty avoidance and power distance are positively related to the improvement of EMNCs’ CSRP, while individualism has a marginally negative relationship. Post-hoc analysis suggests that compared to manufacturing firms, service firms are more susceptible to the cultural imprinting effects.