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Escaping the iron cage: Liabilities of origin and CSR reporting of emerging market multinational enterprises

Abstract

This article examines the link between the condition of institutional voids in emerging markets and the use of the practice of corporate social responsibility (CSR) reporting by emerging market multinational enterprises (EM-MNEs). Based on neo-institutional theory and in light of the specificity of emerging markets, we propose a positive relationship between institutional voids and CSR reporting. Home-country institutional voids push companies to internationalize as a way to escape the institutional constraints and inefficiencies in their own markets, but at the same time create legitimacy challenges for these companies abroad. In particular, EM-MNEs from less institutionally developed countries are likely to face liabilities of origin – negative perceptions in host countries about these firms’ willingness and ability to conduct legitimate business. CSR reporting is an effective strategy to overcome such liabilities and barriers to legitimation as it conveys to host countries and global stakeholders alignment with global meta-norms and expectations. Internationalization, listing on developed country stock exchanges, and time, further magnify EM-MNEs’ legitimacy challenges and thus the use of CSR reporting to mitigate them. Our hypotheses are supported in a longitudinal study of 157 of the largest EM-MNEs ranked by the United Nations Conference on Trade and Development (UNCTAD) between 2004 and 2011.

Abstract

Cet article examine le lien entre l’état de vides institutionnels dans les marches émergents et l’utilisation de la pratique du rapport de responsabilité sociale des entreprises (RSE) par les entreprises multinationales de marchés émergents (EMN-ME). En nous appuyant sur la théorie néo-institutionnelle et compte tenu des spécificités des marchés émergents, nous proposons une relation positive entre les vides institutionnels et le rapport de RSE. Les vides institutionnels du pays d’origine incitent les entreprises à s’internationaliser pour échapper aux contraintes institutionnelles et aux inefficacités de leurs propres marchés, mais créent en même temps des problèmes de légitimité pour ces entreprises à l’étranger. En particulier, les EMN-ME de pays moins développés sur le plan institutionnel risquent de s’exposer aux faiblesses liées à leur pays d’origine – les perceptions négatives dans les pays d’accueil de leur volonté et capacité à conduire des affaires de manière légitime. Le rapport de RSE constitue une stratégie efficace pour surmonter ces faiblesses et obstacles de légitimation, parce qu’il assure aux pays d’accueil et parties prenantes globales un alignement sur les méta-normes et attentes globales. L’internationalisation, les cotations en bourse dans les pays développés et le temps amplifient les problèmes de légitimité des EMN-ME et ainsi l’utilisation du rapport de RSE pour les atténuer. Nos hypothèses sont validées à l’aide d’une étude longitudinale de 157 parmi les plus grandes EMN-ME classées par la Conférence des Nations Unies pour le Commerce et le Développement (CNUCED) entre 2004 et 2011.

Abstract

Este artículo examina el vínculo entre la condición de vacíos institucionales en mercados emergentes y el uso de la practica de presentación de informes de responsabilidad social empresarial (RSE) en empresas multinacionales de mercados emergentes (EM-MNEs). Con base en la teoría neo-institucional y a la luz de las especificidades de mercados emergentes, proponemos una relación positiva entre vacíos institucionales y los reportes de RSE. Los vacíos institucionales en el país de origen empujan a las empresas a internacionalizarse como una manera de escapar las limitaciones e ineficiencias en sus propios mercados, pero al mismo tiempo, crea retos de legitimidad para estas empresas en el extranjero. En particular, las empresas multinacionales de mercados emergentes de países menos desarrollados institucionalmente son propensas a sufrir limitaciones de origen – percepciones negativas en países receptores acerca de la disposición y la habilidad de estas empresas de tener negocios legítimos. Los informes de RSE son una estrategia efectiva para sobreponer estas limitaciones y barreras para legitimación debido a que ya se transmite a los países anfitriones y a las partes interesadas globalmente una alineación de meta-normas y expectativas globales. La internacionalización, cotizar en bolsas en países desarrollados, y el tiempo, aumentan aún más los retos de legitimidad de las empresas multinacionales de mercados emergentes, y es por eso que los reportes de RSE mitigan estos retos. Nuestra hipótesis son apoyadas con un estudio longitudinal de las 157 empresas multinacionales de mercados emergentes más grandes incluidas en el ranking de la Conferencia de las Naciones Unidas para el Comercio y el Desarrollo (UNCTAD) entre 2004-2011.

Abstract

Este artigo analisa a relação entre a condição de vazios institucionais nos mercados emergentes e o uso da prática de comunicar atos de responsabilidade social corporativa (CSR) por empresas multinacionais de mercados emergentes (EM-MNEs). Baseados na teoria neo-institucional e à luz da especificidade de mercados emergentes, nós propomos uma relação positiva entre vazios institucionais e comunicados sobre CSR. Vazios institucionais do país de origem pressionam empresas a se internacionalizarem como uma forma de se esquivar das restrições institucionais e ineficiências em seus próprios mercados, mas, ao mesmo tempo, criar desafios de legitimidade para essas empresas no exterior. Em particular, EM-MNEs de países menos desenvolvidos institucionalmente são suscetíveis a enfrentar desvantagens de origem - percepções negativas nos países de destino a respeito da vontade e capacidade para realizar negócios lícitos. Comunicados sobre CSR são uma eficaz estratégia para superar tais desvantagens e barreiras à legitimação, que transmite aos países de acolhimento e a outros atores globais alinhamento com metas, normas e expectativas globais. Internacionalização, listagem em bolsas de valores de países desenvolvidos, e tempo ampliam ainda mais os desafios de legitimidade das EM-MNEs e, por consequência, o uso de comunicados sobre CSR para mitigá-los. Nossas hipóteses são suportadas em um estudo longitudinal de 157 das maiores EM-MNEs classificados pela Conferência das Nações Unidas sobre Comércio e Desenvolvimento (UNCTAD) entre 2004 e 2011.

Abstract

这篇文章研究了新兴市场制度孔隙的条件和新兴市场跨国公司 (EM-MNEs) 企业社会责任 (CSR) 报告实践做法之间的关系。基于新制度理论并鉴于新兴市场的特殊性, 我们提出制度孔隙和CSR报告之间正相关。母国制度孔隙推动企业将国际化作为一种逃避制度约束和自身市场低效率的一种方式, 但与此同时, 也为这些公司在国外发展带来了合法性的挑战。特别是, 来自制度不发达国家的EM-MNEs可能面临起源地劣势——即东道国对这些公司经营合法性业务的意愿和能力的负面感知。CSR报告是一种克服合法化劣势和障碍的有效性战略, 因为它向东道国和全球利益相关者联盟传达了全球元规范和期望的取向。国际化、在发达国家股票交易所上市, 以及时间, 进一步放大了EM-MNEs的合法性挑战, 因此使用CSR报告来降低这些挑战。在一项针对2004-2011年期间由联合国贸易和发展会议 (UNCTAD) 排名的157家最大的EM-MNEs的纵向研究中, 我们的假设得到了支持。

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Notes

  1. The data were obtained from UNCTAD World Investment Reports, downloadable from http://unctad.org/en/Pages/Publications.aspx.

  2. For more information, refer to: http://database.globalreporting.org.

  3. For more information refer to: http://corporateregister.com.

  4. Although there is a “debate over the classification of countries as developed or developing” (Hope, Thomas, & Vyas, 2011: 147), we follow the United Nations’ classification, as reflected in UNCTAD’s World Investment Reports from 2006 to 2013. From that report we have extracted the list of “Top 100 Non-Financial TNCs from Developing Countries” for the years 2004–2011. The United Nations relies on this classification across its various units and research publications (e.g., UN, 2013). The same country classification has been used in several empirical studies, including at least two articles that were recently published in the Journal of International Business Studies (i.e., Hope et al, 2011; Lu, Liu, Wright, & Filatotchev, 2014) and others, including: Ramamurti (2012), Mathews (2006), and Sauvant, Economou, Gal, Lim, and Wilinski (2014). Furthermore, the sample of countries included in our study is consistent with The Economist’s list of emerging markets for the examined time period (see, for example, The Economist’s 2011 Emerging Market Overheating Index: http://www.economist.com/blogs/dailychart/2011/06/overheating-emerging-markets-0).

  5. For more information, refer to: http://info.worldbank.org/governance/wgi/index.aspx#home.

  6. For more information, refer to: http://www.freetheworld.com/datasets_efw.html.

  7. We thank one of the anonymous reviewers for suggesting this possible extension of our work.

  8. We thank the Special Issue Editor for suggesting examining this valuable implication of our research.

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Correspondence to Valentina Marano.

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Accepted by Ayse Saka-Helmhout, Guest Editor, 30 January 2016. This article has been with the authors for three revisions.

APPENDIX

APPENDIX

Table A1

Table A1 Variables, measures, and sources of data

Table A2

Table A2 Dependent variable: Description of CSR reporting indicators

Table A3

Table A3 Description of the world governance indicators

Table A4

Table A4 Components of the Fraser index

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Marano, V., Tashman, P. & Kostova, T. Escaping the iron cage: Liabilities of origin and CSR reporting of emerging market multinational enterprises. J Int Bus Stud 48, 386–408 (2017). https://doi.org/10.1057/jibs.2016.17

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Keywords

  • institutional theory
  • institutional voids
  • corporate social responsibility
  • emerging market multinationals
  • liabilities of origin
  • legitimacy