Stakeholder influence, institutional duality, and CSR involvement of MNC subsidiaries

Abstract

This paper uses stakeholder influence and institutional duality arguments to investigate the influence of stakeholders on foreign subsidiaries' corporate social responsibility (CSR) practice. Voluntarily, or under pressure from various stakeholders in the host country, the foreign subsidiaries engage in CSR activities to maintain and enhance their legitimacy in the country. The authors identify two types of stakeholders, primary and secondary, and two types of CSR practice, symbolic and practical, and predict that primary stakeholder influence affects symbolic CSR, whereas secondary stakeholders' influence affects practical CSR. The authors also predict that the impact of stakeholders is greater when the subsidiary enjoys greater autonomy, but weaker when the host country is plagued with institutional voids. Analysis to address the research hypotheses is conducted upon a dataset collected from a sample of Korean subsidiaries, the majority of which operate in China and Vietnam. The analysis generally supports the hypotheses.