Striving for sustainable development: The impact of corporate social responsibility on corporate performance of Chinese manufacturing multinationals in Africa

Abstract

AbstractThe Forum of China‐Africa Cooperation benefits both China and Africa in tackling development issues. Increased foreign direct investment from China can specifically help to reduce Africa's struggles to meet its 2030 sustainable development goals. Due to insufficient global investment experience and stigmatization, Chinese multinational companies (MNCs) often experience unsatisfactory corporate performance in host countries. A successful strategy to mitigate stigma and be perceived by stakeholders as “legitimate” is through corporate social responsibility (CSR) engagement. Exploring how Chinese MNCs in Africa can achieve desirable corporate performance through CSR engagement is important to promote mutual benefits for both Chinese MNCs and African societies. This study aimed to contribute to emerging market CSR literature by examining the relationship between CSR engagement and corporate performance of Chinese manufacturing MNCs operating in Africa, with emphasis on moral legitimacy as a mediating factor and institutional distance as a moderating factor. Survey data were collected between June 2019 and January 2020 from a sample of 203 Chinese manufacturing MNCs subsidiaries in Africa. By using hierarchical regression and bootstrapping, we find that the positive relationship between CSR engagement and corporate performance is fully mediated by moral legitimacy gaining. This mediation effect is moderated by institutional distance. The results enrich our understanding of how Chinese manufacturing MNCs' corporate performance can be enhanced by addressing social challenges and promoting sustainable investment cooperation with African countries. These results are important for Chinese MNCs and authorities, as well as African public authorities when designing policies to promote China‐Africa sustainable investment cooperation.