What happens abroad, stays abroad? Exploring how corporate social irresponsibility in domestic and international markets influences corporate reputation

Abstract

Corporate social irresponsibility (CSI) can occur in the multinational enterprise's (MNE) domestic and international markets, thereby risking corporate reputation. However, are corporate reputations differentially influenced by the location of CSI events? Drawing on the ethnocentric bias perspective, we examine how CSI affects corporate reputations according to whether CSI emerges in the MNE's home or international markets. We theorize that, when CSI occurs in an international host market, the negative relationship between CSI and corporate reputation is generally weaker. Conversely, when CSI arises within the home location, home country-located CSI has the strongest negative relationship to corporate reputation. Our findings generally reflect the core argument of the paper: home-country based CSI incidents may be more consequential to an MNE's corporate reputation compared to those CSI incidents which unfold in certain host countries. Our longitudinal analysis, comprising of 2,401 CSI events, involving 465 MNEs, confirms our theorizing. Among our principal contributions, this study adds to the growing and important literature on the dark side of international business (IB).