Firm Internationalization and Corporate Social Responsibility
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Using a large sample of 3,040 U.S. firms and 16,606 firm-year observations over the 1991–2010 period, we find strong evidence that firm internationalization is positively related to the firm’s corporate social responsibility (CSR) rating. This finding persists when we use alternative estimation methods, samples, and proxies for internationalization and when we address endogeneity concerns. We also provide evidence that the positive relation between internationalization and CSR rating holds for a large sample of firms from 44 countries. Finally, we offer novel evidence that firms with extensive foreign subsidiaries in countries with well-functioning political and legal institutions have better CSR ratings. Our findings shed light on the role of internationalization in influencing multinational firms’ CSR activities in the U.S. and around the world.
KeywordsCorporate international diversification Corporate social performance Institutional environments
We thank Sabri Boubaker, Ruiyuan Chen, Walid Saffar, Helen Wang, and especially Gary Monroe (Section Editor) and two anonymous referees for constructive comments. We appreciate the generous financial support from Canada’s Social Sciences and Humanities Research Council.
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