Foreign direct investments : the role of corporate social responsibility

Marshall, Andrew and McColgan, Patrick and Liu, Mei (2021) Foreign direct investments : the role of corporate social responsibility. Journal of Multinational Financial Management, 59. 100663. ISSN 1042-444X (

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This paper investigates whether superior corporate social responsibility (CSR) performance leads to greater firm-level foreign direct investment (FDI). We argue that the decisions managers take on their CSR can have a positive influence in the external perception of the firm and act as an important intangible asset. Using a sample of 4,764 firms from 44 countries spanning 2003-2014, we find evidence of a positive relation between CSR performance and the propensity to engage in FDI. The positive relation between CSR performance and FDI propensity is strongest for firms without prior international experience in FDI. Our results suggest that that a strong CSR reputation can act as important intangible asset and help firms’ internationalization by increasing external legitimacy and reputation. The results are robust to controls for endogeneity, alternative measures of international experience, and alternative model specifications.