The grass is always greener: The impact of home and host country CSR reputation signaling on cross-country investments

This study introduces the novel concept of CSR reputation signaling and analyzes its impact on cross-country investments. We combine Diffuse Reciprocity from international relations literature and Institutional Theory to argue that having a home country with high CSR reputation signaling is an advantage that firms can exploit, as it makes these firms more attractive to potential host markets as policymakers contemplate inward foreign direct investment strategies. Moreover, we propose that there are increased cross-country investments between countries with dissimilar levels of CSR reputation signaling, and that firms can benefit from this normative institutional gap; additionally, this relationship is positively moderated by the economic distance between the countries. Analyses of 25,672 country-pair observations across 5,474 country pairs from 153 countries from 2004 to 2011 provide robust support. Overall, our analyses suggest that high country-level CSR reputation signaling imprints on firms as they invest abroad, helping to promote CSR on a global basis, thus supporting policymakers as they pursue sustainable development and the 2030 Agenda.