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Local stakeholders and local legitimacy: MNEs' social strategies in emerging economies

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  • Reimann, Felix
  • Ehrgott, Matthias
  • Kaufmann, Lutz
  • Carter, Craig R.
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    Abstract

    Despite the ever-increasing footprint of multinational enterprises (MNEs) in the world's emerging economies, the role of corporate social responsibility in MNEs' emerging economy operations has only recently started to attract the interest of international management scholars. We add to this growing stream of research by investigating how MNEs' social conduct in their emerging economy subsidiaries relates to their relationships with certain local stakeholders in the respective countries. Using stakeholder theory and the concept of local legitimacy, we argue that employees and the local governments are among the forces that drive firms to push for high standards in their working conditions and to engage in developing the local community. Further, we hypothesize that such efforts positively affect the performance of the subsidiary's employees and its relationship with local authorities. To test our hypotheses, we conduct a large-scale, cross-industry analysis using data from 213 MNE subsidiaries in Asia, Eastern Europe, and Latin America. Our results show that MNEs' local mid-level employees drive corporate social efforts and also positively react to the corporate social engagement of their employer. In contrast, local governments do not have a significant influence on MNEs' social strategies. Their support of the firm may increase, however, as a result of the firm's active development of the local community.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 18 (2012)
    Issue (Month): 1 ()
    Pages: 1-17

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    Handle: RePEc:eee:intman:v:18:y:2012:i:1:p:1-17

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    Related research

    Keywords: Corporate social responsibility (CSR); Stakeholder theory; Local legitimacy; Multinational enterprise (MNE); Emerging economies;

    References

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    Cited by:
    1. Alcantara, Lailani Laynesa & Mitsuhashi, Hitoshi, 2012. "Make-or-Break Decisions in Choosing Foreign Direct Investment Locations," Journal of International Management, Elsevier, vol. 18(4), pages 335-351.
    2. Kristin Hah & Susan Freeman, 2014. "Multinational Enterprise Subsidiaries and their CSR: A Conceptual Framework of the Management of CSR in Smaller Emerging Economies," Journal of Business Ethics, Springer, vol. 122(1), pages 125-136, June.
    3. Gold, Stefan & Hahn, Rüdiger & Seuring, Stefan, 2013. "Sustainable supply chain management in “Base of the Pyramid” food projects—A path to triple bottom line approaches for multinationals?," International Business Review, Elsevier, vol. 22(5), pages 784-799.
    4. Holtbrügge, Dirk & Dögl, Corinna, 2012. "How international is corporate environmental responsibility? A literature review," Journal of International Management, Elsevier, vol. 18(2), pages 180-195.
    5. Kearney, Colm, 2012. "Emerging markets research: Trends, issues and future directions," Emerging Markets Review, Elsevier, vol. 13(2), pages 159-183.

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