Internationalization strategy, social responsibility pressure and enterprise value

Abstract

Recent years has seen Chinese enterprises competing to broaden the scope of business through the internationalization strategy. The proliferation of the strategy is attributable to the favorable environment created by the Chinese government with the increasingly stringent requirements on corporate social responsibility. The external pressure of social responsibility has also stimulated the fulfillment of social responsibility within the enterprises. Against this backdrop, this paper constructs a mathematical model with the constraint of external social responsibility pressure and applies the model to examine the effect of the internationalization strategy of Chinese enterprises on enterprise value. The research finds that: First, the internationalization strategy enhances the enterprise value; the stakeholders will jointly promote the strategy once they are aware of its significance. Second, with the increase in the external pressure of social responsibility, the enterprises will promote enterprise value through the implementation of social responsibility. Third, the fulfillment of corporate social responsibility contributes to the proliferation of internationalization strategy and further enhances the long-term enterprise value. These modeling conclusions are validated through an empirical test. This research enriches the exploration into the internationalization strategy of enterprises in emerging markets and pioneers the study on the fulfillment of corporate social responsibility from the external angle.