Standardization or localization? Executing corporate philanthropy in international firms

Abstract

Corporate social responsibility (CSR) has become a key component of a firm's reputation. The reputational vulnerabilities and pressure for CSR are perhaps greatest among international firms with business activities across many countries and cultures. Although the strategies of firms entering new markets have been well researched, the CSR component of the market entry decision has been largely ignored, despite its significant relationship with the financial performance of the firm. Further, previous research has largely considered CSR from an environmental performance point of view, and thus has focused on a minimum level of investment in CSR as opposed to the optimal form of the investment. Our paper seeks to address this gap by examining market entry decisions as they relate to corporate philanthropy. Copyright © 2009 John Wiley & Sons, Ltd.

Corporate social responsibility in international marketing: review, assessment, and future research

“…Resource-dependence theory was applied to investigate several issues, such as: the role of external power influences on sustainability reporting (Nikolaeva and Bicho, 2011), the success of "powerful" stakeholder communities on influencing organizational buying practices (Maignan and McAlister, 2003), the control of the firm over its subsidiaries' resources in terms of authority in centralizing decision-making that can lead to more CSR standardization (Merz and Peloza, 2010), and the overall role of political imperatives in the headquarters-subsidiaries relationship (Jamali, 2010). This theory was particularly useful in explaining why specific stakeholder groups can exert greater power than others in satisfying their "demands" over an organization (Pfeffer, 2003).…”

“…The first category refers to the external environmental influences, with the most frequently examined element being culture, particularly focusing on determining perceptions, expectations, and the structure of socially responsible strategies. Many studies have stressed the role of cultural factors in explaining variations of CSR practices and programs across countries (Bouvain et al, 2013;Merz and Peloza, 2010;Torres et al, 2013).…”

“…Philanthropic strategies were also perceived to fulfill the duty of multinational firms to be both profitable and socially responsible (Collins, 1993). This issue was also examined from a standardization/localization perspective, where similarity in terms of the dominant value system, cultural dimensions, market infrastructure, and the political/legal environment between home and host country suggested greater standardization (Merz et al, 2010). Moreover, issues pertaining to sustainable development involved: specific requirements to implement such a policy by the various entrepreneurial functions, particularly by marketing planning, which was shown to be a latecomer to the process (Tinsley and Melton, 1997); and the importance of integrating sustainable development values to achieve socially responsible marketing strategies (Barthel and Ivanaj, 2007;Kolk and Margineantu, 2009).…”

The Corporate Social Performance of Developing Country Multinationals

“…First, developing country multinationals (DMNCs), which we define as firms headquartered in developing countries that operate foreign subsidiaries (Hitt, Hoskisson, & Kim, 1997; Kotabe, Srinivasan, & Aulakh, 2002), now account for a large proportion of overseas foreign direct investment (OFDI) globally (UNCTAD, 2014; Meyer & Thaijongrak, 2013) and, as such, their CSP has increasingly widespread implications. Second, as they internationalize, DMNCs face reputational and legitimacy challenges (Merz, Peloza, & Kim, 2010; Zaheer, 1995; Graafland, 2002; Gunningham, Kagan, & Thornton, 2004) that they may try to address by improving their CSP.…”

“…These rationales for DMNCs venturing abroad would suggest that any shift in their CSP relative to that of their purely domestic cousins is likely to be a consequence, rather than a cause, of their internationalization. When DMNCs do venture abroad, there is evidence that they face both reputation and legitimacy deficits in the eyes of the various international stakeholders in the foreign countries in which they operate (Merz et al, 2010; Petersen & Pedersen, 2002; Zaheer, 1995; Gunningham et al, 2004). These deficits result from both the fact that DMNCs are foreign (a potential issue for all multinationals) and that they originate from developing countries.…”