The impact of foreign ownership on corporate social responsibility

Abstract

Firms around the world are paying great attention to enhancing their corporate social responsibility (CSR) practices and international stakeholders are believed to have the potential to offer significant insight and knowledge to help firms expand their CSR efforts (Tokas & Yadav, 2023). This study is among the few to identify the impact of offshore owners on the CSR activities of publicly traded companies in Vietnam. With 309 firms included in the study during the period of 2015 and 2019, using ordinary least squares (OLS) estimation and robustness tests, the empirical result indicates that greater engagement of foreign owners improves the CSR practices of publicly listed firms in Vietnam. This finding aligns entirely with existing theories on the relationship between foreign ownership (FO) and CSR, such as superior knowledge transfer theory, capital-based linkage theory, legitimacy theory, and stakeholders’ theory. Another interesting finding of this research is a significantly positive relationship between FO and CSR of nonenvironmentally sensitive firms while no significant impact is found in environmentally sensitive firms. The implication drawn from this outcome suggests that Vietnamese companies should use the robust backing provided by international stakeholders to effectively implement CSR initiatives, with the ultimate goal of achieving sustainable development.