How increased foreign competition motivates domestic firms to do good: an examination of foreign entry mode and domestic CSR response

Abstract

PurposeWe examine whether domestic firms react differently to foreign direct investment (FDI) entry modes –mergers and acquisitions (M&A) versus greenfield. Specifically, we ascertain whether the entry mode of foreign competition motivates different corporate social responsibility (CSR) responses from domestic firms and when such relationships hold.Design/methodology/approachWe employ fixed-effects models using 1,331 US firm-year observations for 2015–2018. Furthermore, we examine the interactive effects of industry concentration to examine a key boundary condition.FindingsForeign entry via greenfield mode has no effect on domestic firm CSR. Entry through M&A has a significantly positive effect. We attribute these findings to the increased threat to domestic firms from foreign M&A whereas foreign entry through greenfield mode is less threatening as entrants face significantly more challenges in host countries. We identify industry concentration as a boundary condition of our findings. The effect of foreign M&A entries on domestic firms' CSR becomes weaker as industries are more concentrated.Originality/valueThis study offers novel insights on FDI by parsing out different reactions to entry mode by domestic firms. We add to our understanding of CSR as a mechanism to stave off foreign competition, offer insights into a key boundary condition of such actions and demonstrate the robustness of our findings.

Sustainable HRM, training for employability and organizational outcomes: the moderating role of competitive intensity

“…In particular, the authors found that increasing investments in HR training and development allowed companies operating in more competitive environments to acquire and dispose of higher-level human capital. The corporate sustainability literature also suggests that sustainable HRM can be a valuable strategy in competitive environments (Zhang et al, 2020;Dupire and M' Zali, 2018;Aziz et al, 2021;Woo et al, 2022). By adopting sustainability-oriented HR strategies, a company can improve its reputation and goodwill with external and internal stakeholders (Fernando and Lawrence, 2014) and differentiate its image from that of its competitors.…”