Foreign direct investments: The role of corporate social responsibility

Mei Liu, Andrew Marshall and Patrick McColgan

Journal of Multinational Financial Management, 2021, vol. 59, issue C

Abstract: This paper investigates whether superior corporate social responsibility (CSR) performance leads to greater firm-level foreign direct investment (FDI). We argue that the decisions managers take on their CSR can have a positive influence in the external perception of the firm and act as an important intangible asset. Using a sample of 4764 firms from 44 countries spanning 2003–2014, we find evidence of a positive relation between CSR performance and the propensity to engage in FDI. The positive relation between CSR performance and FDI propensity is strongest for firms without prior international experience in FDI. Our results suggest that that a strong CSR reputation can act as important intangible asset and help firms’ internationalization by increasing external legitimacy and reputation. The results are robust to controls for endogeneity, alternative measures of international experience, and alternative model specifications.

Keywords: Corporate social responsibility; Foreign direct investment (search for similar items in EconPapers)
JEL-codes: F23 G34 M14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:59:y:2021:i:c:s1042444x20300529

DOI: 10.1016/j.mulfin.2020.100663

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