Stakeholder pressure, democracy levels, and multinational enterprise corporate social responsibility: Stakeholder and institutional theories

Abstract

This study analyzes how multinational enterprises (MNEs) respond to stakeholder pressure and institutional environments when engaging in Corporate Social Responsibility (CSR) in foreign markets. By integrating stakeholder and institutional theory, we examine the influence of primary and secondary stakeholder pressure on socially responsible practices and investigate whether political rights, civil liberties, and institutional voids moderate these relationships. Using survey data from 216 foreign subsidiaries operating in South Korea, our findings show that primary and secondary stakeholder pressure positively impact MNEs’ CSR engagement; however, these relationships are contingent on the host country’s institutional context (i.e., democratic distance and voids). Specifically, political and institutional voids intensify the positive effects of primary and secondary stakeholder pressure on responsible conduct, whereas the democratic distance between home and host countries weakens these effects. These findings provide invaluable insights for MNE subsidiary managers on appropriately balancing stakeholder pressure and overcoming institutional challenges to improve CSR activities in host markets.