International transfer of employee‐oriented CSR practices by multinational SMEs

Abstract

PurposeStarting from the question whether the globalisation process leads to a social “race to the bottom”, this paper aims to highlight the international transfer of socially responsible, employee‐oriented practices by multinational small to medium‐sized enterprises (SMEs) as a possible way to counter such a trend.Design/methodology/approachBased on a literature review, an exploratory framework – building on three perspectives – is proposed about the conditions in which employee‐oriented corporate social responsibility (CSR) affects long‐term firm performance positively. First, the stakeholder view on CSR entails that employees can be considered as legitimate stakeholders of the firm justifying introduction of employee‐oriented CSR. Second, the human resource management perspective matters as employee‐oriented CSR materialises in human resource management policies and practices that increase employee commitment. Finally, as regulative, normative and cognitive institutions differ across countries, the institutionalist perspective is relevant to understand diverging demands on content and form of employee‐oriented CSR practices.FindingsIt is argued that owner‐managers of (multinational) SMEs, who view their employees as legitimate stakeholders of the firm, will introduce employee‐oriented CSR out of their sense of moral responsibility towards their employees. This sense of moral responsibility is conditional on achieving sustainable mutual value creation as a result of employee‐oriented CSR. Finally, transfer of employee‐oriented CSR to foreign subsidiaries is positively mediated by the level of owner‐managers' institutional entrepreneurship.Originality/valueThis is one of the few studies addressing the position of employees as internal stakeholders of small and medium‐sized enterprises in an international context. It signals the relevance of institutional differences across countries to entrepreneurs who wish to improve long‐term firm performance through employee‐oriented CSR.