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Firm-Level Determinants of Political CSR in Emerging Economies: Evidence from India

Abstract

Multinational companies (MNCs) frequently adopt corporate social responsibility (CSR) activities that are aimed at providing ‘public goods’ and influencing the government in policymaking. Such political CSR (PCSR) activities have been determined to increase MNCs’ socio-political legitimacy and to be useful in building relationships with the state and other key external stakeholders. Although research on MNCs’ PCSR within the context of emerging economies is gaining momentum, only a limited number of studies have examined the firm-level variables that affect the extent to which MNCs’ subsidiaries in emerging economies pursue PCSR. Using insights from resource dependence theory, institutional theory, and the social capital literature, we argue that MNCs’ subsidiaries that are critically dependent on local resources, have greater ties to managers of related businesses and to policymakers, and that those that are interdependent on the MNCs’ headquarters and other foreign subsidiaries, are more likely to be involved in PCSR. We obtain support for our hypotheses using a sample of 105 subsidiaries of foreign firms that operate in India. Our findings enhance our understanding of the factors that determine MNCs’ political CSR in emerging economies.

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Notes

  1. We thank one of our anonymous reviewers for noting this issue.

  2. We thank one of our anonymous reviewers for noting this issue.

Abbreviations

CSR:

Corporate social responsibility

MNC:

Multinational corporation

NGO:

Non-governmental organization

PCSR:

Political corporate social responsibility

RDT:

Resource dependence theory

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Appendix: Survey Items

Appendix: Survey Items

PCSR (Hillman 2003; Hillman and Wan 2005) (α = .80)

About specific activities used by your organization to deal with the Indian government

How important have the following activities been for you to deal with government officials in this country over the past year? (1: not at all important, up to 5: very important)

  1. 1.

    Public relations advertising in the media on specific issues related to policy

  2. 2.

    Mobilizing grassroots political programs (such as organizing demonstrations, signature campaigns, using social networks to organize communities, etc.)

  3. 3.

    Forming coalitions with other organizations not in your sectoral trade associations (such as environmental groups and social groups)

Resource Criticality (Srivastava et al. 2001)

About the importance of various resources available in India to your organization.

How important are the following for the day-to-day operations of your business? (1: not at all important, up to 5: very important).

Tangible (α = .826)

  1. 1.

    Land (e.g., for construction or agri-businesses)

  2. 2.

    Up-to-date production machinery/equipment

  3. 3.

    Unskilled workers (low-cost, minimum wage labor)

  4. 4.

    Raw materials (natural resources)

Intangible (α = .701)

  1. 1.

    Specifically owned patented technology/technological know-how

  2. 2.

    Highly skilled employees (engineers, scientists, doctors, accountants, consultants, etc.)

  3. 3.

    Reputation of your company (e.g., product brand names or company name)

International Interdependence (O’Donnell 2000; Subramaniam and Watson 2006) (α = .71)

About the interdependence of your organization with headquarters and other foreign subsidiaries

To what extent do you disagree/agree with the following statements (1: strongly disagree, up to 5: strongly agree)

  1. 1.

    The activities of headquarters influence our outcomes.

  2. 2.

    Our activities influence the outcomes of headquarters.

  3. 3.

    The activities of other foreign subsidiaries influence our outcomes.

  4. 4.

    Our activities influence the outcomes of other foreign subsidiaries.

Managerial Ties (Peng and Luo 2000; Sheng et al. 2011)

About your organization’s managerial connections

To what extent do you disagree/agree with the following statements? (1: strongly disagree, up to 5: strongly agree)

We have maintained good personal relationships with:

Political Ties (α = .88)

  1. 1.

    Officials at various levels of government

  2. 2.

    Regulatory and supporting organizations such as tax bureaus, state banks, and commercial administration bureaus

Business Ties (α = .61)

  1. 1.

    Supplier firms in India

  2. 2.

    Customer firms in India

  3. 3.

    Competitor firms in India

  4. 4.

    Marketing-based collaborators in India (e.g., distributors, advertisers, etc.)

  5. 5.

    Technological collaborators in India (e.g., information systems/web-service providers etc.).

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Shirodkar, V., Beddewela, E. & Richter, U.H. Firm-Level Determinants of Political CSR in Emerging Economies: Evidence from India. J Bus Ethics 148, 673–688 (2018). https://doi.org/10.1007/s10551-016-3022-0

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  • DOI: https://doi.org/10.1007/s10551-016-3022-0

Keywords

  • Political corporate social responsibility
  • Corporate political activity
  • Resource dependency theory
  • Institutional theory
  • Social capital
  • India