How internationalization leads to more CSR: The case of Japanese firms

Abstract

While CSR has become an integral part of most firms’ agendas, questions remain as to why some firms embrace CSR more than others. By drawing on legitimacy theory, we suggest that firms that are exposed to elevated levels of internationalization are more prone to engage in CSR. We differentiate between the internationalization of activities, the internationalization of ownership, and the internationalization of boards and propose that each dimension has a distinct effect on CSR. Our empirical analysis focuses on Japan, a country where CSR has previously been considered a “foreign” concept. With our study, we emphasize the role of legitimacy as a source of firms’ increasing engagement in CSR and underline the necessity for a more differentiated view of the internationalization-CSR relationship. We also provide practical implications as we suggest firms to use CSR as a solution to respond to legitimacy threats resulting from internationalization.