Effects of International Exposure on Corporate Social Responsibility of the Chinese Corporate Sector: The Moderating Role of CEO Duality

Abstract

International exposure of a firm into new environments is one of the most important paths to firm growth. It provides growth opportunities and learning, and poses challenges of managing uncertainties of the new institutional environment, and demands of diverse domestic and international stakeholders. Despite the abundance of research on the effects of international exposure of a firm on its performance, the effects on corporate social responsibility (CSR) are not well understood. In addition to examining the direct effects of the international exposure of a firm on CSR activities in the home country, this study also examines the moderating role of Chief Executive Officer (CEO) duality in the association between international exposure of a firm and CSR activities in the home country.

Drawing from institutional theory and agency theory, this study argues that international exposure of a firm leads to a decrease in CSR activities in the home country. It further posits that CEO duality also negatively affects CSR activities in the home country. Further, the proposed moderation hypotheses argue that the negative effects of international exposure of a firm on CSR activities in the home country are stronger for firms with CEO duality as compared to non-duality. The proposed hypotheses are tested with data from 240 publicly listed Chinese firms between 2008 and 2016, consisting of 1920 firm-years. The panel data is analysed using Linear Mixed Modelling (LMM) with the SPSS software. The findings support all the proposed hypotheses.

This study makes three key contributions. Firstly, the study uses the institutional theory and agency theory to provide evidence for the negative effects of international exposure of a firm and CEO duality on CSR activities in the home country. Secondly, it enhances the understanding of how CEO duality acts as a boundary condition between international exposure of a firm and CSR relationships. Thirdly, it contributes to the emerging economy multinational enterprises literature by enhancing understanding of the proposed relationships in the context of the Chinese corporate sector.