Multinational Enterprises and Distance: Exploring Opportunities and Challenges involved in Practicing CSR in Host-Countries

Abstract

This study explores how multinational enterprises (MNEs) should implement corporate social responsibility (CSR) to build external legitimacy, especially in subsidiaries operating in host-countries, where the effects of distance is felt most by MNE foreign subsidiaries. For long, international business (IB) research has analysed the effects of distance on MNEs’ expansion to host-countries, while a parallel strand of work in economic geography investigates the dimensions of proximity and how they influence firms’ knowledge development, especially in the varying host-countries they operate. Despite the noticeable relatedness and complementarities, these two bodies of literature have so far poorly interacted. Moreover, despite increased strategic motivation for corporate social responsibility (CSR) practices, we still lack understanding of the effects of distance on MNEs’ CSR behaviour in host-countries. The present study addresses this limitation by analysing and integrating the extant literature on how MNEs can, through their CSR behaviour in host-countries, cope with and mitigate the effects of distance. It provides perspectives on what may constitute appropriate CSR strategies in varying host-countries’ institutional environments (i.e., what CSR strategies might be appropriate for MNEs to adopt in a more proximate/less distant and less proximate/more distant institutional contexts and their implications for the effects of distance). Based on an analysis of the extant literature, the present study discusses patterns of complementarities across distance and proximity, and draws attention to avenues for future research that, in a more effective way, interact the two strands of literature, thereby setting the ground for empirical testing of a conceptual framework proposed by this study.

Keywords: Multinational enterprises; distance; proximity; corporate social responsibility.