Social responsibility of multinational companies: Effects of stakeholder pressures on affiliated firms' social behavior

This study examines the influence of increasing pressure, from stakeholders in multinational enterprises, on the corporate social responsibility of non-subsidiary companies in which they have stake holdings. In addition, we address the impact of these affiliated firms' social and environmental behavior on the financial performance of the MNC as a whole. We posit that when stakeholder pressure to improve an MNC's social responsibility is high, the multinational can then use its influence to outsource some irresponsible practices to affiliate firms. By adopting this strategy, the MNC appears responsible and, at the same time, ensures its financial performance. We demonstrate our theoretical contention by using a database comprising 109 MNCs, from 18 countries.