Diffusion of CSR in Global Business Networks: An Embeddedness Perspective
KeywordsCorporate Social Responsibility
Global production networks
Business Administration, Management, and Operations
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AbstractThis dissertation examines the role of firm embeddedness in its global business network, relative to the adoption of Corporate Social Responsibility (CSR) practices. Global business networks refer to the nexus of inter-firm and intra-firm relationships, in which focal actors are engaged. These networks are focal firm specific, span multiple countries and involve different types of economic relationships between the focal actor and its business partners. This study argues that global business networks affect a focal organization's CSR adoption decisions, since they provide access to resources and information and also channel CSR-related institutional influences from the various countries where the focal firm's business partners are located. The firm is exposed to a multiplicity of institutional forces concerning CSR because of its ties to business partners located in countries with varying CSR institutional requirements. Therefore, how should the firm prioritize these influences? In order to answer this question, this dissertation considers two aspects of the environment in which the firm operates, namely its institutional and its economic embeddedness in the global business network. In the context of this study, institutional embeddedness refers to the CSR-related norms rules, beliefs and the uniformity (or lack thereof) of these. Economic embeddedness is defined as the type and quantity of economic resources that flow through a network and determine the degree of dependence of the focal firm on a specific business partner. A firm's economic and institutional embeddedness are considered jointly because economic ties channel the institutional forces that are present within the global business networks. Based on their strength and nature they also contribute to shaping the intensity with which these forces are experienced by the focal actors. Therefore, an actor's economic and institutional embeddedness represent the building blocks of the main constructs of interest of this study. These capture the strength of the institutional requirements concerning CSR within the global business network, their heterogeneity, and whether the firm operates in contexts with more stringent requirements for CSR than those of its home country. Results indicate that these factors are all important drivers of a firm's decision to adopt CSR practices. They also show that a focal firm's foreign direct investment- (FDI-) based relationships are more effective channels for the diffusion of institutional influences than trade-based relationships. This dissertation makes several theoretical contributions. First, it contributes to the international business research area by expanding the conceptualization of the global space where MNCs operate. This has traditionally been analyzed in terms of its intra-firm network (Ghoshal & Bartlett, 1990). This work extends the conceptualization of this space to also include the organization's inter-firm ties. It also contributes to the emergent interest among international business scholars for considering both the "constraining" and "enabling" effects of institutional forces (e.g., Kostova, Roth & Dacin, 2008; Saka-Helmhout & Geppert, 2011). In addition, the dissertation contributes to organizational theory by narrowing the existing gap between institutional and network perspectives about organizational behavior, by making explicit the role that networks play as conduits for the diffusion of institutional practices (Owen-Smith & Powell, 2008). The second contribution to organizational theory focuses on the embeddedness research area, by answering recent calls to focus not only on the structure of network ties, but also on their content, which are here explored in terms of the firm's institutional and economic embeddedness. This work also provides a nuanced investigation of the firm's embeddedness, by measuring and modeling the intensity and types of economic exchanges between the focal firm and its business partners as constitutive elements of the intensity with which the focal actor perceives these institutional influences that emerge from the global business network. This dissertation also contributes to CSR research by expanding the analytical focus in order to make sense of the firm's CSR adoption decisions beyond the traditional firm and national boundaries and to also consider the complex composite of institutional forces that emerge from firm's embeddedness in the global business network. To conduct the study, longitudinal data was collected from a diverse range of sources. The sampling history extends from 2007 to 2011, and the number of sampled corporations is 710. In total, there are 2386 firm-year observations in the sample. The sample in this study consists of publicly traded U.S. firms listed on the Russell 3000 index, which includes the largest U.S. multinationals in terms of market capitalization, with matching information from the Kinder, Lydenberg and Domani (KLD), Port Import Export Report Service (PIERS), Corporate Affiliations and Compustat databases.