MNE Irresponsibility and its Disincentives: An Institutional Complexity Approach

Abstract

Purpose – This paper puts forward a definition of corporate social irresponsibility (CSI) which is relevant to the study of the multinational enterprise (MNE). We then offer an institutional complexity framework through which to understand the mechanisms that disincentivize MNE irresponsibility. Design/methodology/approach – In presenting the approaches taken by social regulation researchers as well as international business policy scholars to understand CSI, we propose a definition of CSI and explicate the various disincentives associated with MNE irresponsibility. Originality/value – We recognize that a primary hurdle to the advancement of international management research concerning MNE irresponsibility has been a lack of a precise definition of CSI. MNEs manage complex global operations and supply chains, situated within diverse institutional environments, with often competing stakeholder perceptions, pressures, and demands. Should MNEs be identified as having behaved irresponsibly, they may experience pressure by formal institutional mechanisms led by regulatory bodies and policymakers, as well as by informal social regulatory mechanisms, where deterioration in stakeholder perceptions may, among other performance deficits, lead to damages in MNE reputation. We offer a definition of CSI that is sufficiently nuanced to capture the complexity of the contemporary MNE context, as well as a framework that presents a clearer understanding of the institutional mechanisms that may disincentivize MNE irresponsibility. By examining the institutional complexity of MNE irresponsibility, our framework offers a bridge connecting the international business policy and social regulation research streams.