Impact of internal and external corporate social responsibility on internationalization speed: Evidence from Chinese multinational enterprises

Abstract

We investigate the association between corporate social responsibility (CSR) and the internationalization speed of Chinese multinational enterprises (CMNEs) through the lenses of a resource-constraint framework and a legitimacy perspective. By considering the tension between legitimacy and efficiency, and utilizing the 2206 firm-year data from 473 publicly listed CMNEs from 2011 to 2019, we illustrate the distinct effects between two types of CSR (e.g., internal CSR and external CSR) and internationalization speed. While external CSR focuses on commitments to external stakeholders, such as customers, communities, and the environment, internal CSR prioritizes internal practices and rules that fulfill the organization's duties to the employees. Specifically, the costs associated with engaging in internal CSR surpass the legitimacy gains, resulting in a negative impact on internationalization speed; conversely, the efficiency benefits of engaging in external CSR outweigh the legitimacy losses, thereby positively influencing internationalization speed. What is more, institutional distance, which captures the difference in institutional profiles between two countries, weakens the positive impact of external CSR on internationalization speed but intensifies the negative effect of internal CSR on internationalization speed. This research contributes to the international business literature by considering a balanced perspective on the trade-off between legitimacy and efficiency. Our study further enriches the CSR literature by shedding light on the distinct influences that diverse CSR initiatives exert within the context of internationalization.