Regulatory Institutional Distance and MNCs' Subsidiary Performance: Climbing up Vs. Climbing Down the Institutional Ladder

We investigate the possibility of regulatory institutional distance exerting an asymmetric effect on multinational corporations' (MNCs') subsidiary performance depending on the direction of institutional distance. We use the term ‘institutional ladder’ to differentiate between upward distance, referred to as when the subsidiary is operating in a relatively stronger institutional environment than its parent-firm's home country, and downward distance for vice versa. Combining institutional theory with organisational imprinting and learning perspectives, we argue that the implications of regulatory institutional distance on subsidiary performance are relatively more positive (or less negative) when MNCs are climbing down the institutional ladder as compared to when MNCs are climbing up the institutional ladder. We also argue that subsidiary ownership strategy – i.e. the choice of a wholly owned subsidiary (WOS) versus joint venture (JV) – moderates the above-mentioned implications of institutional distance on subsidiary performance. We test these hypotheses based on a panel data-set of 1936 foreign subsidiaries representing 70 host countries and 66 home countries and spanning the 12-year period: 2002–2013.     

Firm-level indicators of instrumental and political CSR processes – A multiple case study

Recent studies have been increasingly distinguishing between instrumental and political approaches to corporate social responsibility (CSR). However, few studies have explored the firm-level processes generating these types of CSR engagements. Using Basu and Palazzo’s (2008) proposition to model CSR as a process of sensemaking, we suggest that multinational enterprises use different processes in developing capabilities around instrumental and political CSR. Our qualitative multiple case–study analysis is based on data from 42 in-depth, semi-structured interviews with 27 senior managers from British American Tobacco, Nestlé, and Hewlett Packard. Our findings from the three cases indicate that instrumental and political CSR are characterised by different sensemaking processes. We also find evidence for overlapping of processes between instrumental and political CSR.