Journal of East Asia Management

Institute of Management Research, Pusan National University (부산대학교 경영연구원)
권호 표지
DOI QR코드

DOI QR Code

The Impact of CSR Strategy of Affiliated Firm on Performance in the Emerging Markets: Resource-Based and Institutional Approaches

  • Cho, Youngsam (College of Business Administration, Gyeongsang National University)
  • Received : 2022.02.15
  • Accepted : 2022.03.04
  • Published : 2022.08.31
Download PDF
⟨ Previous Next ⟩

Abstract

This study suggests an integrated theoretical framework for the relationship between political risk and multinational corporation (MNC) subsidiary's performance in the emerging market. The political risk would have a negative impact on MNC subsidiary's performance in the emerging countries that are developing in Asia, the Commonwealth of Independent States, Africa, and South America. The major reason is that political risks could generate a loss of benefit or a loss of control for MNC's subsidiary. In this study, I suggest that corporate social responsibility (CSR) strategy would be a solution to overcome various political risks. Specifically, the affiliated firms with diversified industries or greater financial resources could mitigate the negative impact of political risk than unaffiliated firms. Because they can use their tangible or nontangible asset such as information, technology, and construction in order to gain legitimacy and trust from local government, local community, and local firms in the emerging market. Finally, I claimed the costs of the affiliated firms would exceed the benefits at the initial stages, while the benefits of affiliated firms would exceed the costs over time when political risks become higher. The reason is that the trust gained from local stakeholders accumulates over time and the impact of CSR strategy would become an important solution to overcome the risks in and unstable context.

Keywords

References

  1. Aslaksen, I. and Synnestvedt, T. 2003. "Ethical Investment and the Incentives for Corporate Environmental Protection and Social Responsibility", Corporate social-responsibility and environmental management, 10(4), pp. 212~223. https://doi.org/10.1002/csr.47
  2. Barney, J. 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy", Management Science, 32, pp. 1231~1241. https://doi.org/10.1287/mnsc.32.10.1231
  3. Barney, J. 1991. "Firm Resources and Sustained Competitive Advantage", Journal of Management, 17, pp. 99~120. https://doi.org/10.1177/014920639101700108
  4. Bass, B. M., McGregor, D. W., and Walter, J. L. 1977. "Selecting Foreign Plant Sites: Economic, Social and Political Considerations", Academy of Management Journal, 4, pp. 535~551.
  5. Becker, G. S. 1964. Human Capital, New York: Columbia.
  6. Bodnar, G. M., Tang, C., and Weintrop, J. 1999. Both Sides of Corporate Diversification: The Value Impacts of Global and Industrial Diversification. Working paper. Johns Hopkins University.
  7. Chang, S. J. 2003. "Ownership Structure, Expropriation, and Performance of Group-Affiliated Companies in Korea", Academy of Management Journal, 46(2), pp. 238~253. https://doi.org/10.2307/30040617
  8. Chang, S. J. and Hong, J. 2000. "Economic Performance of Group-Affiliated Companies in Korea: Intragroup Resource Sharing and Internal Business Transactions", Academy of Management Journal, 43(3), pp. 429~448. https://doi.org/10.2307/1556403
  9. Chen, M. J. 1996. "Competitor Analysis and Inter-Firm Rivalry: Toward a Theoretical Integration", Academy of Management Review, 21(1), pp. 100~134. https://doi.org/10.2307/258631
  10. Delios, A. and Henisz, W. J. 2000. "Japanese Firms' Investment Strategies in the emerging Ecomomies", Academy of Management Journal, 43(3), pp. 305~323. https://doi.org/10.2307/1556397
  11. Denis, D. J., Denis, D. K. and Yost, K. 2002." Global Diversification, Industrial Diversification, and Firm Value". The Journal of Finance, 5, pp. 1951~1979. https://doi.org/10.1111/0022-1082.00485
  12. Diamonte, R. L., Liew, J. M., and Stevens, R. L. 1996. "Political Risk in the emerging and Developed Markets", Financial Analysis Journal, 52(3), pp. 71~76. https://doi.org/10.2469/faj.v52.n3.1998
  13. DiMaggio, P. J. and Powell, W. W. 1983. "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields", American Sociological Review, 48, pp. 147~160. https://doi.org/10.2307/2095101
  14. Dunning, J. H. 1971. The multicational enterprise. London. Allen and Unwin.
  15. Farge, N. and Wells, L. T. 1982. "Bargaining Power of Multinationals and Host Governments", Journal of International Business Studies, 13, pp. 9~23.
  16. Fitzpatrick, M. 1983. "The Definition and Assessment of Political Risk in International Business: A Review of the Literature", Academy of Management Review, 8(2), pp. 249~254. https://doi.org/10.2307/257752
  17. Ghoshal, S. and Moran, P. 1996. "Bad for Practice: A Critique for the Transaction Cost Theory", Academy of Management Review, 21, pp. 13~47. https://doi.org/10.2307/258627
  18. Harris, M., Kriebel, C. D., and Raviv, A. 1982. "Asymmetric Information, Incentives and Intrafirm Resource Allocation", Management Science, 28, pp. 604~620. https://doi.org/10.1287/mnsc.28.6.604
  19. Henisz, W. J. 1998. The institutional environment for multinational investment. Unpublished dissertation. University of Califonia at Berkeley.
  20. Henisz, W. J. 2000. "The Institutional Environment for Economic Growth", Economic and Politics, 12(1), pp. 1~31. https://doi.org/10.1111/1468-0343.00066
  21. Husted, B. W. and Allen, D. B. 2006. "Corporate Social Responsibility in the Multinatioanl Enterprise: Strategic and Institutional Approaches", Journal of International Business Studies, 37, pp. 838~849. https://doi.org/10.1057/palgrave.jibs.8400227
  22. Kok, P., Weile, T. V. D., McKenna, W. R. and Brown, A. 2001. A Corporate Social Responsibility Audit within a Quality Management Framework", Journal of Business Ethics, 31(4), pp. 285~297. https://doi.org/10.1023/A:1010767001610
  23. March, G. 1991. "Exploration and Exploitation in Organizational Learning", Organization Science, 2, pp. 71~87. https://doi.org/10.1287/orsc.2.1.71
  24. Marquis, C., Glynn, M. A., and Davis, G. F. 2007. "Community Isomorphism and Corporate Social Action", Academy of Management Review, 32(3), pp. 925~945. https://doi.org/10.5465/amr.2007.25275683
  25. McWilliams, A. and Siegel, D. 2001. "Corporate Social Responsibility: A Theory of the Firm Perspective", Academy of Management Review, 26(1), pp. 117~127. https://doi.org/10.2307/259398
  26. Morck, R. and Yeung, B. 1991. "Why Investors Value Multinationality", Journal of Business, 64, pp. 165~187. https://doi.org/10.1086/296532
  27. Oliver, C. 1992. The Antecedents of Deinstitutionalization", Organization Studies, 13(4), pp. 563~589. https://doi.org/10.1177/017084069201300403
  28. Pava, M. L. and Krausz, J. 1996. "The Association between Corporate Social-Responsibility and Financial Performance: The Paradox of Social Cost", Journal of Business Ethics, 15(3), pp. 321~357. https://doi.org/10.1007/BF00382958
  29. Penrose, E. T. 1959. The Theory of the growth of the firm. Blackwell: Oxford.
  30. Porter, M. 1980. Competitive strategy. New York: Free Press.
  31. Reed, R. and DeFillippi, R. 1990. "Causal Ambiguity, Barriers to Imitation, and Sustainable Competitive Advantage", Academy of Management Review, 15, pp. 88~102. https://doi.org/10.2307/258107
  32. Robock, S. H. 1971. "Political Risk: Identification and Assessment", Journal of World Business, 6(4), pp. 6~20.
  33. Schilling, M. A. and Steensma, H. K. 2002. "Disentangling the Theories of Firm Boundaries: A Path Model and Empirical Test", Organization Science, 13(4), pp. 387~401. https://doi.org/10.1287/orsc.13.4.387.2950
  34. Scott, W. R. 1995. Institutions and organizations. Thousand Oaks, CA: Sage.
  35. Simon, J. D. 1984. A Theoretical Perspective on Political Risk", Journal of International Business Studies, 15, pp. 123~143. https://doi.org/10.1057/palgrave.jibs.8490499
  36. Stein, J. C. 1997. "Internal Capital Markets and the Competition for Corporate Resources", Journal of Finance. 52, pp. 111~133. https://doi.org/10.1111/j.1540-6261.1997.tb03810.x
  37. Teece, D. J. 1980. "Economies of Scope and the Scope of the Enterprise", Journal of Economic Behavior and Organization, 1, pp. 223~247. https://doi.org/10.1016/0167-2681(80)90002-5
  38. Tomer, J. F. 1987. Organizational capital: The path to higher productivity and well-being. New York: Praeger.
  39. Udayasankar, K. 2008. "Corporate Social Responsibility and Firm Size", Journal of Business Ethics, 83, pp. 167~175. https://doi.org/10.1007/s10551-007-9609-8
  40. Webster. 2002. Third new international dictionary of the English language. Springfield. MA, Merriam-Webster, Inc.
  41. Weingast, B. R. 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development", Journal of Law, Economics, & Organization, 11(1), pp. 1~31.