Generous to a fault: Differential impact of CSR investments on financial gains in Indian market multinationals

To date, the extant Corporate Social Responsibility (CSR) literature has overlooked the performance consequences of different forms of CSR investments made by Emerging Market Multinational Corporations (EMNCs). Addressing this knowledge gap, and drawing on legitimacy theory, we examine the impact of external CSR investments (e.g., social and community philanthropic support activities) and internal CSR investments (e.g., working conditions, employee rights and equal employment opportunities) on financial performance of EMNCs, while also accounting for the moderating effects of internationalization location choices. We test our hypotheses on a panel consisting of 1513 unique Indian EMNCs, in the 2014–2019 time-period. On applying various estimation techniques, the findings reveal that both external and internal CSR investments are positively associated with financial performance of EMNCs, while the destination location of foreign investments and home-host geographic and institutional distance moderate these relationships. This study offers new empirical evidence on the financial implications of different types of CSR investments available to EMNCs and advances legitimacy theory by expanding its dimensional and contextual scope.