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The grass is always greener: The impact of home and host country CSR reputation signaling on cross-country investments

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Abstract

This study introduces the novel concept of CSR reputation signaling and analyzes its impact on cross-country investments. We combine Diffuse Reciprocity from international relations literature and Institutional Theory to argue that having a home country with high CSR reputation signaling is an advantage that firms can exploit, as it makes these firms more attractive to potential host markets as policymakers contemplate inward foreign direct investment strategies. Moreover, we propose that there are increased cross-country investments between countries with dissimilar levels of CSR reputation signaling, and that firms can benefit from this normative institutional gap; additionally, this relationship is positively moderated by the economic distance between the countries. Analyses of 25,672 country-pair observations across 5,474 country pairs from 153 countries from 2004 to 2011 provide robust support. Overall, our analyses suggest that high country-level CSR reputation signaling imprints on firms as they invest abroad, helping to promote CSR on a global basis, thus supporting policymakers as they pursue sustainable development and the 2030 Agenda.

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Acknowledgements

We thank editors Rob van Tulder, Sarianna Lundan, Ari van Assche, and the anonymous reviewers for their supportive feedback on this article. We are also very grateful for the support of Bettina Alvarez Canelon, Alyssa Cecchetelli, Martha Durkee-Neuman, Karen Moore, Gary Moore, Ania Palka Dau, and conference participants and reviewers at the 2018 Academy of Management Annual Meeting, the 2018 Strategic Management Society Annual Meeting, the 2018 AIB Special Conference in Medellin, Colombia and the 2019 Oxford Reputation Symposium. The following sources supplied indispensable financial assistance for this research project: Northeastern University’s Global Resilience Institute and DiCenso Professorship, University of Reading Henley Business School’s Dunning Visiting Fellowship, and University of Leeds Business School’s Buckley Visiting Fellowship.

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  1. Northeastern University, 309 Hayden Hall, Boston, MA, 02115, USA

    Luis Alfonso Dau & Elizabeth M Moore

  2. Florida International University, 11200 SW 8th Street, MANGO 446, Miami, FL, 33199, USA

    William Newburry

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Dau, L.A., Moore, E.M. & Newburry, W. The grass is always greener: The impact of home and host country CSR reputation signaling on cross-country investments. J Int Bus Policy 3, 154–182 (2020). https://doi.org/10.1057/s42214-020-00049-7

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