Multinational companies and the corporate social responsibility at home: the stakeholder approach

Abstract

PurposeThe purpose of this paper is to integrate stakeholder and international business (IB) theories to explore the relationship between the international diversification of emerging-market multinational corporations (EMNCs) and corporate social performance (CSP) in their home markets. While the IB literature generally assumes a positive effect from international diversification on CSP as a result of global learning, the study aims at investigating the complicated effects in the link to the stakeholder theory.Design/methodology/approachThis paper used combined sources of public survey data (corporate social responsibility (CSR) of the Korean firms) and archival data (foreign direct investment and corporate data). A truncated regression is used for statistical model.FindingsInternational diversification helps MNCs to enhance CSP in their home countries. Thus, EMNCs can develop CSR capabilities at the global level, thereby benefiting domestic stakeholders. Also, significant investment in domestic research and development (R&D) and advertising negatively moderates the relationship between international diversification and domestic CSP. In this regard, expanding R&D and advertising facilitates global competitiveness. Moreover, as international diversification increases, EMNCs may redirect resources and re-orient CSR policies toward foreign stakeholders. Consequently, the relationship between international diversification and domestic CSP weaken.Practical implicationsAcceleration in international diversification may weaken domestic CSP, which arises from transformation into the global enterprises.Originality/valueThe study highlights the difficulties of EMNCs in serving domestic stakeholders effectively when their businesses are increasingly internationalized.