Enacting institutional drivers towards strategic corporate social responsibility: The sensemaking process in multinational companies

Abstract

AbstractFollowing sensemaking process, this study examines how CSR policy makers of multinational companies (MNCs) interpret institutional drivers, assign meanings on them, and enact them to reduce uncertainties in conducting CSR initiatives. Based on a case study towards Australia MNCs, this study reveals the sensemaking process towards two ecological changes: (1) the communities' expectations and culture and (2) different regulatory and governance standards between home and host countries. Local communities in host countries were believed of having power to express their expectations and demands to the companies. Nevertheless, the communities may not really hold power over the companies. Sensemaking process, however, is about “believing is seeing”, which tends to follow a self‐fulfilling prophecy and self‐validating prophecy. When the corporate leaders selected the interpretation, they created a story to make sense of what happened and to carry on the current activities. They then decided to act upon their interpretations by enacting CSR initiatives. When it came to formulating the CSR policy, they followed the top‐down processing by following the home country's standards that had been applied in many different host countries. Meanwhile, when it came to its implementation, they followed the bottom‐up processing to gain acceptance from the communities. This study asserts that their sense making choices, that is, how they provide meanings and reasonings to their institutions and how their rationalities are enacted, shape their companies' CSR initiatives.