The Impact of FDI Inflow on Domestic Firms’ Uptake of CSR Activities: The Moderating Effects of Host Institutions

Abstract

This study examines whether foreign direct investment (FDI) infl ow helps or hinders local fi rms' uptake of corporate social responsibility (CSR) activities in a developing host country. The study further examines the interaction effect of host institutions on the relationship between FDI infl ow and local fi rms' uptake of CSR activities. Results of hierarchical regression analysis of data from a sample of 227 local fi rms in Ghana, reveal that local fi rms' uptake of CSR improves signifi cantly with an increasing infl ow of FDI through knowledge transfer. Host institutions are also found to infl uence the transfer of CSR activities from foreign fi rms to local fi rms. However, when the quality of institutions is very high, the impact of FDI on local fi rms' CSR activities diminishes. Research and practical implications of these fi ndings are discussed. question surprisingly remains unexplored and unanswered. Moreover, Meyer (2004) noted the ambiguity in studies regarding the spillover effect of FDI on local firms and calls for further research to enhance our understanding of the specific impacts. Kolk and van Tulder (2010) also underscored that CSR is something to be explicitly taken into account in such studies. Following these calls, this article empirically examines (1) whether FDI inflow and, for that matter, the presence of foreign firms in a developing host country impacts domestic firms' uptake of CSR activities;The Impact of FDI Infl ow on Domestic Firms' Uptake of CSR Activities: The Moderating Effects of Host Institutions

FDI and Welfare Dynamics in Africa

“…Recently, Nyuur, Ofori, and Debrah () examined the impact of FDI inflows on domestic firms’ implementation of CSR activities by focusing on the moderating effects and host institutions. The study employed hierarchical regression analysis of data from a sample of 227 local firms in Ghana.…”

“…Other studies (Elmawazini, ; Elmawazini, Atallah, Nwankwo, & Dissou, ; Xu, ) focus on technological progress/diffusion, quality of institution (Cleeve, ) and corporate social responsibility (Nyuur, Ofori, & Debrah, ). However, a higher technological progress/diffusion does not necessarily translate into welfare gains.…”

Research on Corporate Social Responsibility in Ghana

“…Findings revealed three main CSR projects of the construction firms: social, infrastructural and environmental, albeit the industry was more inclined towards social/intangible CSR projects. Nyuur, Ofori and Debrah (2015) examined the impact of Foreign Direct Investment (FDI) inflow on local companies' engagement in CSR in hostcountry institutions, and found a positive correlation between the two. Various forms of CSR knowledge and practices transferred from foreign to domestic firms contributed in part to this relationship.…”

Determinants of Nigerian managers’ environmental attitude: Africa's Ubuntu ethics versus global capitalism

“…Researchers have long explored the incentives that cause companies to behave in a proactive socially and environmentally responsible manner, based on studies involving business managers in advanced democracies in the West (Coleman, ; Orlitzky, ). More recently, these studies have been increasingly replicated in emerging economies and other less developed countries around the world (Amaeshi, & Amao, ; Ben Brik, Mellahi, & Rettab, ; Doh, Husted, & Yang, ; Nyuur, Ofori, & Debrah, ). The growing focus on developing countries reflects at least three trends.…”