Multinational enterprises (MNEs), heterogeneity in corporate social responsibility (CSR), and subsidiary employment in host countries: A signaling perspective

Using a sample of 11,086 subsidiary-year cases from Japanese MNEs between 2002 and 2013, this study examines the heterogeneous impacts of social versus environmental commitment practices on employment levels at MNEs’ overseas subsidiaries from a signaling perspective, which are proposed to be contingent on the firms’ outbound foreign direct investment (FDI) motivations and geographic scopes. The empirical findings from the study are threefold: (1) both social and environmental commitment practices of MNEs positively relate to subsidiary employment in host countries, with the former’s effect stronger than the latter’s; (2) the positive impacts of social commitment practices on subsidiary employment are more pronounced for MNEs pursuing downstream market-seeking motivations with their outbound FDI projects and for those operating within their home region; however, (3) the positive impacts of environmental commitment practices on subsidiary employment are not significantly affected by MNEs’ outbound FDI motivations or geographic scopes. The study concludes with theoretical, empirical, and managerial implications for MNEs in the international business (IB) literature.