Date of Award
Doctor of Business Administration (DBA)
Dr. Lance E. Brouthers
Dr. Keith Brouthers
Dr. Rajaram Veliyath
How do environmental institutional influences in a multinational enterprise’s (MNE’s) portfolio of locations affect social responsibility (and irresponsibility)? To explore this question, I engaged in two complementary empirical research studies, each exploring a particular subset of the MNE portfolio environment-social responsibility dynamic.
The first study applies the concept of institutional distance from the international business literature to examine how the differences in formal and informal institutional environments across a firm’s full portfolio of operating locations can affect its social performance. I hypothesize and find that firms with greater informal institutional distance within their locations will have lower overall levels of corporate social performance. I also suggest that greater average formal institutional distance within the MNE’s portfolio will moderate the social responsibility benefits associated with greater international scope. These hypotheses were tested and found to be supported using secondary data on a sample of 408 firms headquartered throughout Europe, Asia, and North America.
The second study also explores the institutional environment of MNEs and social responsibility, but from a different perspective. This study looks at the influence of institutionalized corruption on firms’ corporate social irresponsibility (CSiR). Consistent with institutional theory, I conceptualize corruption as having both a formal and informal component and hypothesize that operating in portfolios of locations with greater formal and/or informal corruption environments may lead MNEs to have higher levels of social irresponsibility. Furthermore, I explore the relationship between irresponsible behavior and firm performance, finding that higher levels of firm CSiR are related to lower performance. Support for my social irresponsibility hypotheses was confirmed using a sample of 699 MNEs operating throughout the world.
It has been noted that institutions matter to international business. These studies help us better understand the complex institutional environments of MNEs and how specific institutional environments can matter to MNE social responsibility-related outcomes, providing guidance related to country selection for MNE managers concerned about maintaining high corporate social performance and minimizing incidents of social irresponsibility in their firms.