Orchestrating corporate social responsibility in the multinational enterprise

Abstract

Research Summary: Multinational enterprises (MNEs) invest significant resources in corporate social responsibility (CSR), but their attempts to build a global “social brand” may clash with the execution of operational strategies at a subsidiary level. Using a game‐theoretic model, this research addresses the complex interplay of different contingencies that shape the coordination and control challenges facing MNEs when they implement global CSR strategies, including brand spillovers, the risk of public scandals caused by irresponsible behavior, the size of the MNE network, as well as the roles played by nongovernmental organizations and altruistic managers. Challenging the view of CSR as insurance against lapses of responsible conduct, our model shows that investment in social brands helps avoid irresponsible practices across the MNE network, thereby inducing subsidiaries to “walk the talk.” Managerial Summary: Global social brands are increasingly valuable to multinational enterprises (MNEs), which makes the control and coordination of responsible behavior across their network of foreign subsidiaries a relevant managerial challenge. Indeed, lapses of responsible conduct at the subsidiary level often generate reputational damage at the multinational level. This research explores several mechanisms that help MNEs manage this coordination and control challenge. First, it shows under what conditions MNEs can leverage their investments in social brands to induce responsible practices across their global network. Second, it illustrates how MNEs can exploit collaborations with nongovernmental organizations to reduce the costs of coordinating and controlling their subsidiaries. Finally, it identifies conditions under which MNEs benefit from hiring altruistic managers to run their subsidiaries.

Navigating cross-border institutional complexity: A review and assessment of multinational nonmarket strategy research

“…Regarding conceptual articles, IB journals published about two-thirds of the total, with many of these taking the form of literature reviews, perspective articles, and special issue introductions. However, with the exception of two articles published in Academy of Management Review in the mid-2000s, theory development articles on the multinational dimension of corporate nonmarket activity were mostly absent in general management journals until 2019 (Asmussen & Fosfuri, 2019 ).…”

Applying and advancing internalization theory: The multinational enterprise in the twenty-first century

“…While ownership boundaries may have receded in a GVC, control has a wider span, while the firm's responsibility boundaries now stretch much further than do its control boundaries (Narula, 2019). In that context, the MNE's 'social brand' can be considered a particular type of non-location-bound FSA, which can be built-but more importantly also destroyed-on a global scale (Asmussen & Fosfuri, 2019). Greater responsibility boundaries are incompatible with reduced control, and the increased transaction costs of exerting 'full-chain responsibility' are non-negligible (Narula, 2019).…”

The Influence of a Firm’s CSR Initiatives on Brand Loyalty and Brand Image

“…Most of these studies cited have been based on the brand of the enterprise itself in the consideration of the impact of consumer perception and product quality on brand loyalty and brand image. Furthermore, the studies have shown that the CSR performance of a company could help in bringing higher stock returns (Lins et al, 2017), which are in turn favorable for brand reputation (Asmussen & Fosfuri, 2019).…”