Research summary: The efforts of multinational corporations to be socially responsible do not always engender positive evaluations from overseas stakeholders. Drawing on attribution theory, we argue that two heuristics guide stakeholders in evaluating firms' social performance: foreignness and the valence of firms' social responsibility. We provide evidence from a field study of secondary stakeholders and an experimental study involving 129 non-governmental organizations. Consistent with attribution theory, the liability of foreignness is minimized when firms engage in "do-good" social responsibility (focused on proactive engagement creating positive externalities) but is substantial when firms engage in "do-no-harm" social responsibility (focused on attenuating negative externalities). In online supporting information, Appendix S1, we demonstrate that these evaluations have consequences for whether stakeholders subsequently cooperate, or sow conflict, with firms.
Managerial summary: There is no guarantee that efforts to be socially responsible will improve multinational corporations' relations with overseas stakeholders, such as customers, governments, and activists. In a field study and an experiment, we unpack when foreign firms suffer from harsh stakeholder evaluations. Foreign firms especially suffer from harsh evaluations when they conduct "do-no-harm" CSR rather than "do-good" CSR. Stakeholders attribute the motive for foreign firms' do-no-harm CSR to managerial interests and shareholder pressures, perceiving a wedge between managers and owners (who may be unmotivated to reduce the negative impacts of their business activities) and local stakeholders (who bear the social costs). A practical implication is that foreign firms gain more from highlighting do-good rather than do-(no)-harm CSR initiatives.
The authors thank associate editor Tomi Laamanen and two anonymous reviewers for their constructive advice. The authors are indebted to Lourdes Casanova, Kai Hockerts, Mario Minoja, Peter Neergaard, Esben Pedersen, Francesco Perrini, Susan Schneider, Antonio Tencati, and Maurizio Zollo for contributing to the research design and data collection in the field study section. This paper has benefited from London Business School Research and Materials Development funding and Hong Kong Research Grants Council funding (PolyU 155030/14B, and 155054/14B).
© 2015 John Wiley & Sons, Ltd.
- attribution theory
- corporate social responsibility
- liability of foreignness