The Impact of Domestic CSR on the Internationalisation of Emerging-Market Multinational Enterprises: Evidence from India

Vikrant Shirodkar,Namita Shete

doi:10.1007/s11575-021-00455-w

Abstract

Emerging-market multinational enterprises (EMNEs) are, on the one hand, investing in both developed and developing countries aggressively. On the other hand, they are facing greater pressures from their home and host countries to operate in a socially responsible manner. In this paper, combining institutional theory with strategic perspectives on corporate social responsibility (CSR), we argue that EMNEs spending on CSR more intensively in their domestic context are likely to have a greater scope of internationalisation. We also argue that this effect decreases for government-owned EMNEs and increases when EMNEs target developed host markets or institutionally stronger emerging markets. Our data used to test our hypotheses are based on a sample of 686 Indian firms. Our findings provide support for most of our arguments, and we contribute to a greater understanding of the relationship between CSR and internationalisation.

Highlights

The internationalisation of firms from emerging economies is gaining widespread academic attention, as these new types of multinationals are increasingly engaging in foreign direct investment (FDI) in both developed and developing countries (Awate UK1 3 Vol.:(0123456789)V
In hypothesis 3a, we argued that the effect of domestic corporate social responsibility (CSR) on Emerging-market multinational enterprises (EMNEs)’ scope of internationalisation would be more pronounced when these firms internationalise into developed countries versus when they internationalise into emerging economies
Our study was inspired by ongoing research on the relationship between CSR and internationalisation (Attig et al, 2016; Bondy & Starkey, 2014; Cheung et al, 2015), and our aim was to examine the extent to which EMNEs’ domestic CSR impacts their prospects of internationalisation

Summary

Introduction

The internationalisation of firms from emerging economies is gaining widespread academic attention, as these new types of multinationals are increasingly engaging in foreign direct investment (FDI) in both developed and developing countries (Awate UK1 3 Vol.:(0123456789)V. Emerging-market multinational enterprises (EMNEs) are catching up with their developed country counterparts by upgrading their technological capabilities via foreign acquisitions and alliances They are known to face additional barriers to internationalisation due to their weaker home institutions and due to their relative newness to international business, which results in a negative perception of EMNEs among stakeholders in host countries (Marano et al, 2017). In this context, we suggest that less is known about the extent to which EMNEs’ domestic corporate social responsibility (CSR) (i.e., CSR conducted in their home country) impacts their internationalisation prospects. We expect that the legitimisation and reputational advantages engendered through CSR can potentially reduce EMNEs’ ‘liabilities of origin’ during internationalisation (Attig et al, 2016; Marano & Tashman, 2012; Marano et al, 2017)

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