Responding to public disclosure of corporate social irresponsibility in host countries: Information control and ownership control

Stephanie Lu Wang () and Dan Li ()
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Stephanie Lu Wang: Indiana University
Dan Li: Indiana University

Journal of International Business Studies, 2019, vol. 50, issue 8, No 4, 1283-1309

Abstract: Abstract We extend the internalization literature by theorizing on how public disclosure of corporate social irresponsibility (CSI) can damage reputation-based firm-specific advantages of multinational companies (MNCs) and how foreign subsidiary governance can subsequently be used as strategic responses. Specifically, we distinguish between two foreign subsidiary governance mechanisms – information control and ownership control – that the prior literature has often assumed operate in parallel, and posit that they function in divergent directions in this context. Furthermore, we explain how two host-country characteristics – press freedom and regulatory quality – amplify the need for MNCs to utilize different governance mechanisms as responses to CSI disclosure.

Keywords: corporate social irresponsibility; reputation; foreign subsidiary governance; internalization theory; firm-specific advantage; information control; ownership control; host-country press freedom; host-country regulatory quality (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (35)

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DOI: 10.1057/s41267-019-00224-w

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