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The Impact of Corporate Social Performance on a Firm’s Multinationality

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Abstract

Using panel data of 4,244 company years, we examine whether and how corporate social performance (CSP) affects a firm’s capacity to achieve profitable sales in foreign markets. Based on our extension of instrumental stakeholder theory into the international arena, we hypothesized a U-shaped relationship between CSP and multinationality. Results supported our contention that multinational enterprises (MNEs) need to be substantially committed to social performance objectives if they are to recoup the cost of their CSP investments, and improve their capacity to compete in foreign markets. MNEs engaged in intermediate levels of CSP achieve lower levels of multinationality than firms operating at either anchor of the social performance continuum. In addition, this study demonstrates that CSP moderates a well-established relationship in international business literature – the relationship between R&D investment and a firm’s multinationality. Implications for research and practice are discussed.

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Acknowledgments

Financial support from the Social Sciences and Humanities Research Council of Canada is greatly appreeciated.

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Authors and Affiliations

  1. Schulich School of Business, York University, 4700 Keele Street, Toronto, ON, Canada, M3J1P3

    Cyril Bouquet & Yuval Deutsch

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  1. Cyril Bouquet
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  2. Yuval Deutsch
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Correspondence to Cyril Bouquet.

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Bouquet, C., Deutsch, Y. The Impact of Corporate Social Performance on a Firm’s Multinationality. J Bus Ethics 80, 755–769 (2008). https://doi.org/10.1007/s10551-007-9467-4

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