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How does foreign pressure affect a firm's corporate social performance? Evidence from listed firms in Taiwan

Author

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  • Chiou, Chyi-Lun
  • Shu, Pei-Gi

Abstract

We propose the foreign pressure (FP) hypothesis to illustrate how firms confronting FP from their FDI in countries with high CSR affects a firm's corporate social performance (CSP). We use a battery of proxies from a firm's FDI exposure to measure FP and adopt a sample of listed firms in Taiwan to verify the FP hypothesis. Alternatively, the positive FP–CSP relationship can be explained with the learning effect, indicating firms learn and voluntarily adopt practices of high CSR. However, we cannot confirm a positive FP–CSP relationship when firms have FDI in tax havens. Moreover, firms respond more to FP when it originates from concerns with CSP than from strengths in CSP. These results are inconsistent with those of the learning effect. Finally, we explore CSP sub categoriesand note the FP effect is more salient in employee-related CSP than in community or environment-related CSP.

Suggested Citation

  • Chiou, Chyi-Lun & Shu, Pei-Gi, 2019. "How does foreign pressure affect a firm's corporate social performance? Evidence from listed firms in Taiwan," Journal of Multinational Financial Management, Elsevier, vol. 51(C), pages 1-22.
    • Handle: RePEc:eee:mulfin:v:51:y:2019:i:c:p:1-22
    DOI: 10.1016/j.mulfin.2019.04.006
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    Citations

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    Cited by:

    1. Tolossa Fufa Gulema & Yadessa Tadesse Roba, 2021. "Internal and external determinants of corporate social responsibility practices in multinational enterprise subsidiaries in developing countries: evidence from Ethiopia," Future Business Journal, Springer, vol. 7(1), pages 1-19, December.
    2. Shu, Pei-Gi & Chiang, Sue-Jane, 2020. "The impact of corporate governance on corporate social performance: Cases from listed firms in Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    3. Ma Ying & He Shan & Gashaw Awoke Tikuye, 2021. "How Do Stakeholder Pressures Affect Corporate Social Responsibility Adoption? Evidence from Chinese Manufacturing Enterprises in Ethiopia," Sustainability, MDPI, vol. 14(1), pages 1-23, December.
    4. Liu, Mei & Marshall, Andrew & McColgan, Patrick, 2021. "Foreign direct investments: The role of corporate social responsibility," Journal of Multinational Financial Management, Elsevier, vol. 59(C).

    More about this item

    Keywords

    Corporate social performance; Foreign direct investment; Confucian familism;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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