Institutional based view and CSR strategies: An institutional explanation on trends in CSR strategies pursued by MNEs

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Institutional based view and CSR strategies:

An institutional explanation on trends in CSR strategies

pursued by MNEs

Master Thesis

By

Arend Loran Seuters

S 2194147

a.l.seuters@student.rug.nl

Rijksuniveristeit Groningen - Faculty of Economics and Business

MSc International Business & Management

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ABSTRACT

This exploratory study explains the influences of the home region institutional

environment on MNEs choices to pursue a global or local CSR strategies. The study analysed the CSR reports of ten MNEs from the automotive industry. The study shows that high levels of interconnectedness and community isomorphism influence a MNE to copy others which are located in close proximity, which creates global separation. Furthermore, global CSR MNEs focus on product development and innovation due to a more favourable institutional environment regarding R&D, and local CSR MNEs emphasise more on stakeholder

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1. INTRODUCTION

Since the 90’s of the last century, strategies of MNEs have become increasingly important (Pauly & Reich, 1997) and a well-researched topic in the literature (Bartlett & Ghoshal, 1989; Galbreath, 2006; Frynas & Mellahi, 2015). Since the last decade, one strategic field in particular has gained popularity among academics, the field of Corporate Social Responsibility (CSR) strategies. While it is still questioned whether MNEs have social

responsibilities (Friedman, 1962; Henderson, 2001), CSR strategies undertaken by firms have been thoroughly investigated in the literature (Perrini, Russo, Tencati, 2007; Arthaud-day, 2005; Galbreath, 2006). Many academics focus on one aspect of CSR in particular: whether firms pursue a global or local CSR strategy (Muller, 2006; Husted & Allen, 2006; Jamali, 2010). The ‘Global versus Local’ debate is characterized by the trade-off MNEs make

between local responsiveness and global integration of their CSR strategies. In other words, do they implement a global strategy which could be a cost efficient worldwide CSR program that doesn’t take into account local preferences and culture, or do they adapt their CSR program to local preferences and culture and miss out on cost efficiencies? These pressures, introduced by Bartlett & Ghoshal (1989), are the key constructs which form the international CSR strategies of MNEs.

Although literature on explaining CSR strategies exist, scholars have mostly neglected to integrate the importance of institutions into their research as a possible explanation for CSR strategies (Brammer, Jackson, Matten, 2012). The influence of institutions has

increasingly been highlighted and used as an explaining factor in many debates (Peng and Pleggenkuhle-Miles, 2009), but has not yet been introduced in the ‘Global versus Local’ CSR debate. While the literature does recognize the importance of institutions on strategies (Mahoney & Chi, 2001), it has failed to develop a link with the global/local CSR strategies. Keeping in mind the growth in popularity of as well the importance of institutions as the CSR topic over the last decade (Brammer et al., 2012), some researchers have found evidence of the institutions providing explanations for the level of adoption of CSR (Marano & Kostova, 2016), and for implicit versus explicit CSR disclosure (Jackson & Apostolakou, 2009).

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Using the influence of institutions to explain the ‘Global or Local’ CSR choice by MNEs is a research void which this research aims to fill. The purpose is to provide additional

insights for this ongoing debate. In other words, the aim is to establish a relationship between the influences of institutions and the ‘Global or Local’ CSR decisions of MNEs. The emphasis will be on the home region institutional environment, as MNEs are influenced and shaped by these environments throughout their existence. The research question therefore will be:

‘How do institutions in the home region of a MNE influence a MNE’s decision to pursue global or local CSR strategy?'

The research will be conducted using an exploratory multiple-case study analysis (Eisenhardt, 1989). In order to find possible explanations, ten MNEs are investigated. These MNEs are active in the automotive industry, an industry in which CSR is a highly important topic (Muller, 2006). More specific, the CSR report of each MNE is analysed using thematic coding in order to find specific trends and patterns (Braun & Clarke, 2006; Guest, 2013). The trends and patterns which became clear after the analysis are explained through an

institutional perspective. As a result, this paper provides multiple new insights into this ongoing debate.

This paper present four contributions. First, a clear geographical separation is found between MNEs with a global and local CSR approach due to community isomorphism and high levels of interconnectedness. Secondly, MNEs with a global CSR strategy have a strong focus on products development and innovation, initiated by a favourable institutional environment regarding R&D expenditure. Thirdly, local CSR MNEs emphasis more on the social aspects of business. In Europe, this possibly has its origin in the consensus-based institutional environment, whereas in the USA the liberal institutional environment eventually leads to a higher emphasis on stakeholder relationships and customer satisfaction. The last finding is a more theoretical addition to the literature, which is the movement of all MNEs in the sample towards a transnational CSR strategy. This shift is due to the increasing isomorphic pressures which are at stake in the highly globalized and competitive automotive industry and could imply that global and local strategies are two ends on a continuum instead of two separate categories.

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There will be continued with a review on this existing literature on CSR and more specific on the ‘Global versus Local’ debate. The institutional based view will subsequently be discussed in more detail. Afterwards, methodology of this research will be discussed. Next, the most important findings will be explained and discussed. The last section will conclude the paper. This exploratory research provides interesting opportunities for future research into global – local CSR research with an institutional perspective. Some possibilities will be presented at the very end of this paper.

2.

CSR: GLOBAL VERSUS LOCAL

2.1 DIFFERENT VIEWS ON CORPORATE SOCIAL RESPONSIBLE BEHAVIOUR

The concept of corporate social responsibility is one which became a high interest topic among academics when Friedman (1970) stated that CSR is the result of self-serving behaviour of managers which leads to destroying shareholder value. Although this agency theory perspective on CSR is not widely supported in the literature, it was the beginning of an ongoing debate. The stakeholder perspective placed CSR in a wider view stating that the decisions of managers not only had to be focussed on fulfilling the needs of shareholders, but as well different stakeholders as employees, customers, suppliers, etc. (Freeman, 1984). In the following years, the stakeholder theory view on CSR became a well-supported

perspective (Donaldson & Preston, 1995; Jones, 1995). Academics which held a different theoretical perspectives started to present their opposing in the literature as well: The institutional view found that institutions play a vital role in shaping the firm regarding the establishment of an ecological and sustainable firm (Jennings & Zandbergen, 1995). According to the resource-based view, CSR could become a resource or capability which could in turn lead to a sustained competitive advantage for the company (Hart, 1995;

McWilliams et al., 2002). The last perspective which is widely supported by academics is that MNEs use CSR to stimulate future profits. This perspectives states that attracting socially responsible customers is a strategic move, which could be combined with the firm’s

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Gilligan, 2001). After mostly neglecting the role of institutions over the past couple of decades, it’s only recently that the institutional based view emerged in the literature as the leading perspective for CSR strategies of MNEs (Aguilera et al., 2007; Matten & Moon, 2008). Continuing on this recent development, this paper will build on the institutional based view with regard to the CSR strategies of MNEs subsidiaries in the host countries.

2.2 DEFINING CSR

There are four factors which makes defining corporate social responsibility a though task to do. Firstly, there are several factors that might be used to select the critical criteria which define CSR. Possible criteria could be how the firms treats its employees regarding workplace safety, secondary conditions (e.g. overtime, maternity leave, etc.) and learning possibilities; how it treats its customers regarding product quality, advertisement; how it treats its suppliers regarding the contracts, and so on (Campbell, 2007). Secondly, following the reasoning of Moon et al. (2005) the concept of CSR is constantly contested because it is ‘appraisive’ (seen as valued), ‘internally complex’ and how to apply the rules is relatively open (p 433-434). Thirdly, CSR is a concept which has similarities with, and is

interchangeably used with other concept regarding the link between businesses and

societies (Campbell, 2007). Lastly, CSR is a concept which constantly has undergone changes throughout the years (Carroll, 1999). Because of the before mentioned reasons, the

literature has over time produced numerous definitions of what CSR entails.

In order to define what is meant with CSR in this research paper, recent literature was analysed for an overview of recent definitions1_{. Due to the challenges presented, the}

literature has over time produced numerous definitions of what CSR entails. However, up until now, the proposed definitions have been vague and unclear, making theoretical development and measurement more difficult (McWilliams et al., 2006) Therefore, this research will fall rely on a bit broader definition which is more commonly used in the

1_._{Campbell (2007) defined CSR behaviour in twofold. In his view, corporations acted socially responsible if}

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literature. A broader accepted definition is for example used by McWilliams and Siegel (2001), which defines CSR as: ‘initiatives undertaken by firms that are meant for additional social welfare, which lay beyond the immediate interest of the firm’. The used definition is legitimate for two reasons: First, the broader definition is used to increase the

generalizability of the results outside of the context in which they are investigated. Secondly, as this paper focussed on a rather new and under-investigated topic, a broad definition with generalizable results could serve as a stepping stone for researchers interested in this topic.

2.3 GLOBAL VERSUS LOCAL: INSTITUTIONAL SETTING

Within the CSR literature there exist different debates, e.g. implicit versus explicit CSR (Matten & Moon, 2008), domestic versus overseas CSR (Peng and Pleggenkuhle-Miles, 2009) and the global versus local CSR

strategies (Muller, 2006; Jamali, 2010), on which this paper will focus. The global versus local discussion evolves around the question whether foreign subsidiaries should follow a global strategy, formed by the headquarters and spread throughout its subsidiaries over the world, or provide each subsidiary with a budget for CSR

activities, which then can be adapted to the local environment. This is closely related to the Global integration – Local Responsiveness grid (GI-LR grid) which Bartlett and Ghoshal (1989) identified (Figure 1). The GI-LR grid shows the trade-off companies face when choosing an international strategy with their foreign subsidiaries. MNEs face opposing pressures with on the one hand pressures for global integration (cost pressures) which are related to creating economies of scale (a worldwide CSR program with big volume, impact and high media attention2_{), responding to global competitors, providing a uniform service/products}

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http://www.independent.co.uk/news/world/americas/pornhub-promises-to-plant-tree-for-every-100-videos-watched-9300748.html. Pornhub promises to plant a tree for every 100 videos watched.

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worldwide, etc.; and on the other hand pressures to adjust to local needs, to cultural differences and meet local regulations and requirements. According to Bartlett and Ghoshal’s grid (1989), MNEs have four options. When both cost and local responsiveness pressures are low, companies can adopt an international strategy, which is copying the activities from the home market to the host market. If local responsiveness pressures increase but cost pressures stay low, MNEs should pursue a multidomestic strategy. A multidomestic strategy entails that each country has its own strategic plan, so that it can adjust to local needs and preferences. When cost pressures are high but local

responsiveness pressures aren’t, a MNEs preferred approach will be a global strategy. This is the opposite of the multidomestic strategy: one strategy for the entire company with

centralized decision making. When both cost and local responsiveness pressures are high, companies should adopt a transnational strategy. This entails a global strategy which is adapted to local preferences per region. Although this is the preferred strategy for many MNEs, it is very difficult to achieve. Combining both a global strategy which adapt

successfully per region is a challenge requires high levels of planning, coordination and control (Bartlett and Ghoshal, 1989). Many MNEs have used this strategy and failed when entering new markets (London & Hart, 2006) The global – local CSR research mainly focusses on the multidomestic (local) and global strategy.

Although the GI-LR grid originally was used as a typology for the overall strategy pursued by a firm with host country subsidiaries, the opposing pressures are very applicable to CSR strategies and therefore of interest to many scholars (e.g.; Husted & Allen, 2006; Jamali, 2010). In their paper, Husted and Allen (2006) stated that local CSR strategies deal with the firms’ obligations regarding the values and norms of the local community and global strategies deal with firm’s obligations regarding the norms and values which are held by any society. They found support for the fact that firms with a strategy of high level of local responsiveness (multidomestic and Transnational) for the foreign subsidiaries will choose local over global CSR programs. Their study has proven that the GI-LR grid indeed is

applicable to CSR strategies. Another study which focused on Global – Local CSR research is that of Muller (2006). He found that subsidiaries themselves are more interested

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10 Table 1: Global and Local CSR in MNEs. Jamali (2010)

page 10) of the advantages and disadvantages of global and local CSR strategies which were found during an extensive literature review. Although some are common knowledge, it provides useful insights in which pro’s and con’s MNEs weigh in their strategic CSR decisions. He concludes that MNEs will invest easier in local CSR activities of their subsidiaries abroad if these subsidiaries have strong upstream competences.

3. THEORETICAL FOUNDATION: THE INSTITUTIONAL BASED VIEW

Over the last decade, the Institutional Based View (IBV) has increasingly been used by academics as the theoretical foundation or explaining factor for a certain phenomenon (Brammer et al., 2012). However, within the IBV there exist different streams of scholars explaining the role of institutions: The New Institutional economics (NIE),

Neo-Institutionalism and the Varieties of Capitalism (VoC). Due to their significant different views on the influence institutions have on shaping companies, strategies and societies, each will be explained in more detail. In the following sections of this paper, these streams will provide the theoretical foundation for the analysis of the data. Each stream will be used to provide explanations on the trends and patterns found in the data, which can be found in section 6: Findings.

3.1 NEW INSTITUTIONAL ECONOMICS

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‘negative’ view on institutions states that people have imperfect knowledge and therefore imperfect contract, which leads rooms for opportunistic behaviour. Risks for opportunistic behaviour leads to transactions costs (North, 1987). The institutions are in place to reduce uncertainty and increase familiarity. ‘Good’ institutions succeed in lowering transactions costs and therefore foster exchange. These ‘good’ institutions often meet three

requirements: Stability, Impersonality and Enforcement (North, 1987; Wallis, 2011). ‘Weak’ institutional environments often lack one or more of the requirements, leading to high uncertainty which in turn leads to rising transactions cost. If the institutions meet these three requirements, exchange between both parties is simplified and transactions are minimized, which increases trade. Trade leads to increase in income and welfare (Frankel & Romer, 1999). Therefore, ‘good’ institutional environments are succeeding in their purpose of bringing welfare to their particular state. On the opposite, often institutions aren’t able to meet the three requirements, e.g. institutions lack the ability to enforce contracts. In these ‘weak’ institutional environments risks for opportunistic behaviours will increase and

consequently transactions costs will rise along with it. High transactions costs will discourage firms to engage in trade (Williamson, 1989), leading to the contradictory effect as seen by the ‘good’ institutional environments. Less trade will be conducted, hence income will rise at a slower pace, creating less welfare within the state. Countries with ‘weaker’ institutional environments and thus lower levels of income and welfare are with more common descriptions often referred to as developing economies/emerging markets, where on the contrary ‘good’ institutional environments often are labelled as the developed countries (McMillan 2008; Meyer et al., 2009).

3.2 NEO-INSTITUTIONALISM

The Neo-Institutionalism is a more ‘positive’ view on institutions, best explained by Granovetter (1985) and DiMaggio and Powell (1983). Granovetter (1985) argued that market exchange is rarely anonymous and personal relations matter. He continued with the

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structures. Why (almost) everybody confirms to these structures is explained by DiMaggio and Powell (1983) as they introduced the role of Isomorphism and why it is costly to deviate. They differentiate between three forms of isomorphic pressures. First firms face coercive pressures:pressures from other organizations and by cultural expectations from society. Some are governmental mandates, some are derived from contract law, financial reporting requirements, etc. Secondly, normative pressures, which is brought about by professions. One mode is the legitimization inherent in the licensing and crediting of educational

achievement. The other is the inter-organizational networks that span organizations. Norms developed during education are entered into organizations. Inter-hiring between existing industrial firms also encourages isomorphism. These first two are external pressures. Lastly DiMaggio and Powell identified mimetic forces (Internal pressures), which could be

explained as: Uncertainty encourages imitation. Organizational models can be diffused through employee migration or by consulting firms. In short it could be stated that institutions are structures which enable meaningful interaction (Granovetter, 1985) and isomorphic pressures ensure uniformity within (DiMaggio and Powell, 1983). Each society will develop these systems and structures in a different way.

3.3 VARIETIES OF CAPITALISM

The last and newest stream of academics within the IBV is the Varieties of Capitalism (VoC). Introduced by Hall and Soskice (2001), the theory is based on two concepts:

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Germany does allow for human capital investments. Hiring and firing is more expensive and there is a social security net in place for people who get fired. Therefore, with more security, firms and people are willing to invest in job specific skills. People who have invested in job specific skills often stay at the same company for years. Hybrid forms, which are in between LME’s and CME’s, miss out on benefits of institutional complementarities from both the LME and the CME systems, which means no comparative institutional advantage can be created.

As seen, both the global – local CSR discussion and the institutional based view have gained lots of attention over the last decade (Brammer et al., 2012). The gap in the literature exist in the combination of those. Examining CSR strategies through the institutional based view, with a focus on the home region, is a research void which until now is neglected by academics. This paper aims at this new field within the global versus local CSR debate, exploring possible explanations provided by the institutional based view.

4. METHODOLOGY

4.1 RESEARCH METHOD

As the concept – investigation on the institutional influences which lead to a global or local CSR strategy – is relatively new and not yet thoroughly explored, this study will have an exploratory nature, conducting a multiple case study (Eisenhardt, 1989; Yin, 2013).

Qualitative forms of research are especially beneficial when new relationships have to be studied, when one is working with implicit assumptions or concepts are still abstract (Bettis, 1991). When research is focused on achieving goals which are similar as those mentioned, qualitative research is often preferred over more quantitative forms of research, due to the possibility of theory building instead of testing (Bettis, 1991). The goal of this research is to analyse the CSR strategies of MNEs worldwide and consequently support in building theory on why CSR strategies of MNEs across the globe are so different from each other.

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strategic alliances (Larson, 1992). Therefore, I will follow an exploratory research strategy making use of multiple case studies.

4.2 DATA SAMPLE AND COLLECTION

Data Sample. The research aim is to find multiple cases within one global and

relevant industry. As there are numerous industries which are global, the research wanted to focus on one industry specifically. Eventually, the automotive industry is chosen because it is highly relevant for a variety of reasons. First of all, some foundational work which is already conducted on this subject also focused on the automotive industry (Muller, 2006). By conducting the research in the same industry, insights found earlier can be used as stepping stones to further build on in this research. Following Muller’s (2006) reasoning, the second reason in that the automotive industry is a polluting industry and the industry as a whole is openly associated with the environmental changes (global warming) of the last decades (Levy & Rothenburg, 2002). Thirdly, the industry has become a highly global industry. Globalization of markets and firms has led to ethical issues receiving an increased level of attention by top management (Watson & Weaver, 2003). Fourth, there is chosen for one specific industry to ensure comparability of the results. MNEs from different industries can have different motivations and therefore engage in different activities. Choosing the automotive industry ensures that the sample is working within the same industry and

experience more or less the environment. Fifth and lastly, the automotive industry drew bad publicity several times over the last couple years concerning CSR issues. Most famous is the case of Volkswagen in 2015, when the news became public that they have cheated on emissions test by implementing a software which could detect whether it was tested or not and could adapt the performance accordingly3_.

Furthermore, multiple manufacturers had to go public for calling back cars due to safety issues. For example, Nissan called back 226.000 vehicles in 2014 due to faulty airbags4

3_{http://www.bbc.com/news/business-34324772}_{. Volkswagen: The scandal explained.}

4

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and Toyota in 2015 called back 6.5 million cars because the window switch was faulty and could catch fire5_{. These incidents are just two examples of a growing list of recalling over the}

last couple of years. As mentioned at the second reason, the automotive industry isn’t seen as a sustainable industry and these subsequent events haven’t improved their image for the good. Combining the above mentioned reasons leads to the conclusion that the automotive industry is highly relevant and interesting for conducting CSR research.

Within the automotive industry a sample of ten car manufactures is chosen, but they are not randomly selected. First, only manufacturers from ‘strong’ institutional

environments, so developed countries will be taken into account. There is chosen for ‘strong’ institutional environments because MNEs from developed countries are more

involved in CSR activities (McWilliams, 2000; Jamali, 2010), although one has to acknowledge the increasing CSR activities of MNEs from ‘weak’ institutional environments, so developing countries (Jamali, 2010). Secondly, in order to ensure geographical and cultural diversity within the sample, five car manufacturers with their origin in the USA and Western-Europe and five car manufacturers from Eastern-Asia are chosen. Lastly, the list of companies was organized on basis of unit of sales (most recent numbers available). Unit of sales is used as a proxy for size. There is chosen for the largest car manufacturers because of their significant impact on the industry, and consequently their elaborate CSR program. The ten car

manufacturers which were selected following these three steps are presented in table 2, shown on the next page.

Data Collection. When the sampling was finalized the collection of the data was the next stage. The basis for this research are the CSR reports which can be found on the global websites of the companies. CSR reports became common under MNEs around ten years ago. Comparable with annual reports, most MNEs release CSR reports each year, although some companies release them every other year. CSR reports are lengthy documents, often having a minimum of 100 pages and a maximum which can exceed 400 pages. Reporting on CSR is as flexible as the concept itself, companies themselves are able to decide what to report and not, thus a huge variety exist between reports of different companies. The Global Reporting

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Initiative (GRI) is an independent organisation which strives for one global standard for reporting on sustainability reporting6_{. Recently, with the rise of CSR reporting, the GRI is}

increasingly being adopted by MNEs from all over the world, growing towards the global standard of CSR reports. All ten selected car manufacturers report their CSR activities according to the GRI standards, which creates uniformity within the sample. All CSR reports used for this research are from the year 2015, with two exceptions, which are reports

6_{https://www.globalreporting.org/information/about-gri/Pages/default.aspx}

Car manufacturer Country of origin Unit sales Number of employees

Volkswagen Group Germany 9.97 million 592,586

General Motors Corporation USA 9.15 million 216,000 Toyota Motor Corporation Japan 8.97 million 344,109 Hyundai Motor Company

South Korea 7.71 million 249,336

Ford Motor Company USA 6.32 million 224,000

Nissan Motor Corporation

Japan 5.32 million 301,227

Fiat Chrysler Automobiles

Italy, USA 4.75 million 228,690

Honda Motor Corporation

PSA Group France 2.94 million 184,804

Suzuki Motor Corporation

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released in 2014 by Fiat Chrysler Automobiles and Volkswagen group. As strategy is a long term vision, it is unlikely that the strategy of these two companies would have changed in this particular year. Furthermore, no mentioned are present in the 2014 reports which could indicate a revise of strategy, neither do press/news releases on their websites. Therefore I’ve concluded that the 2014 CSR reports will provide the needed information

Next to the CSR reports, additional materials have been retrieved from the company website to foster understanding. All MNEs make use of (interactive) sustainability websites on which they regularly update about ongoing projects, decisions and improvements. As this data is more recent than the CSR reports, I elaborately made use of these functions,

especially for the three MNEs which reports were released in 2014. Furthermore, Annual reports were also consulted for the verification of the numbers presented in table 1 and for additional information about the companies.

4.3 ANALYSIS

Analysis of data has been done through thematic coding. In their article, Braun & Clarke (2006) state the following about thematic coding: ‘Thematic analysis is a method for identifying, analysing and reporting patterns (themes) within data. It minimally organizes and describes your data set in (rich) detail. However, frequently if goes further than this, and interprets various aspects of the research topic’ (page 79). More recently, Guest (2013) acknowledged that thematic coding has been one of the most useful qualitative tools for finding patterns among larger sets of data, which is the aim of this paper. In her influential paper, Eisenhardt (1989) argues that the analysing of data had to be done through a way which allowed for in-case as well as cross-case analysis. Thematic coding does both of these things through multiple steps. With the use of the four steps of thematic coding presented by Braun & Clarke (2006), all ten CSR report and additional material was coded. The first step of all was to summarize the data and establish initial codes. Secondly, the codes were double checked to ensure the validity. The fourth step was to group the codes within similar

themes. The last step was to double check these for validity as well. Codes and themes that emerged from in-case analysis could then be compared with the other cases. This

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The analysis of the data has been a structured process that has led to some interesting insights, which will be presented in the next section. First step op the process was identifying the strategies pursued by the MNEs. As there isn’t a well-established measurement for global or local CSR strategies and MNEs hardly specific mention which strategy they pursue, an interpretation of the CSR reports and additional information was needed, an option which has proven it effectiveness in recent literature before (Muller & Whiteman, 2015). For global strategies, I’ve mainly looked at hints of central strategy which is spread all over the world, companies focussing on global trends, low levels of adaptation of the strategy to the different regions in which they are active, number of mentions of words as global and world and centralized decision making (strong hierarchical governance structure).

For local strategies, opposite indicators are used as for global strategies. In

determining if the company pursued a local strategy I have mainly focused at high levels of adaptation to local preferences/values, presence of a subsection for local communities, number of mentions of words like local, region and community, decentralized decision making and focussing of CSR strategies to local/regional needs. These indicators are the most important factors I’ve used to determine if the MNE made use of a global or local CSR strategy, as they are supported by recent literature (Marano & Kostova, 2016).

In most of the cases, companies showed characteristics of both strategies. In

determining which of the two strategies was more dominant, I’ve investigated which of the options was most central to the company. For example, if the company had a global CSR strategy which they presented upfront in their report and later showed examples of adaptations to regional needs when it was needed, I’ve categorized the company under global. The starting point of the MNE then is a global strategy. When it was the contrary and the company showed local initiatives which when proven successful could be transferred to other regions, I’ve categorized the company under local. In this case, the local strategy was the starting point for the MNE, and only expanded this to other regions when the

opportunity occurred.

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19 Table 3: Categorization of global and local CSR MNEs.

5. CSR STRATEGIES

In this section, the categorization of each car manufacturer under the Global or Local CSR strategy (see table 2 on the next page) will be presented, followed by a justification why. Afterwards, the next section will focus on the major findings of this paper.

Global CSR MNEs. The first codes highlighted in the data were indications for

companies pursuing a global CSR strategy. The methodology section explained the steps and indicators used to categorize the data. Table 3 provides an overview of this section.

Toyota Motor Corporation is the first and best example of this category. Toyota’s 2015 sustainability report reveals that the CSR policy of the company is named their ‘Global Vision’. The subsection strategy clearly states one global strategy which is managed by the global corporate sustainability direction. Furthermore, their report contains 306 indications global indicators, compared to 164 times mentions of the local indicators, which strongly suggests a global oriented strategy. Lastly, their global vision is incorporated in their philosophy: ‘contribute to the world and to people by enriching society as a whole through monozukuri (manufacturing). (Toyota: Sustainability Report, 2015)

Secondly, Hyundai Motor Company is categorized under the companies which have adopted a global CSR strategy. Hyundai clearly states having a global vision concerning their attitude towards CSR issues. They have adopted four global campaigns which are running worldwide, with the ultimate goal being globally respected for their way of doing business. Although Hyundai does in some cases locally tailor these 4 campaigns, the fundamental values of these campaigns have a global focus. Moreover, the reports contain 222 references

Global CSR strategy Local CSR strategy

Toyota Motor Corporation Volkswagen Group

Hyundai Motor Company General Motors Corporation Nissan Motor Corporation PSA Group

Honda Motor Corporation FCA Group

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to the global indicators, where it only 88 highlights local indicators. A last indicator for a global strategy is Hyundai’s dream is to move the entire world towards a sustainable place with their core values. (Hyundai: Sustainability report, 2015)

The third MNE of the sample with a global CSR strategy is Nissan Motor Corporation. Similar to Hyundai, Nissan has adopted two CSR visions that are leading in their way of conducting business all over the world. The policy is built on the belief of a future with “zero emission” and “zero fatalities”, with the goal of creating a worldwide sustainable society. These two pillars are central in everything what Nissan is doing, and therefore also the CSR activities are hereon focused. The report highlights 424 references to global indicators, where it highlights 70 references to local indicators. (Nissan: Sustainability report, 2015) Fourth, Honda Motor Corporation follows a strategy which displays strong similarities with Nissan’s CSR strategy, and is therefore categorized under global. Alike Nissan, Honda has incorporated two main pillars in their CSR policy: Green and Safety. The CSR report states that initiatives are undertaken and measured globally, but all are connected to these two pillars and to fulfil the objectives which are set for both. An example is the worldwide safety training program for all drivers of motorized vehicles and bikes they provide. Training programs are adapted to local circumstances, e.g. in the Netherlands the provide safer cycling training compared to other countries. However, the global pillars are more central to the philosophy. Honda’s sustainability report shows 229 global indicators to respectively 101 indications of local. (Honda: Sustainability report, 2015)

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Local CSR MNEs. Secondly, codes that highlighted local CSR strategies were analysed. As mentioned before, I’m referring to the methodology section which explained the steps and indicators used to categorize the data.

Through their CSR activities, Volkswagen Group clearly showed having adopted a local oriented CSR strategy. Volkswagen pays high attention to the diversification within the group, which has led to a diversification of their CSR strategy. Per brand and per region, they address different local and regional issues. Volkswagen supports more than 200 different initiatives in all kinds of different fields, e.g. social development, arts and culture, education, regional development, health and sport, as well as nature conservation. Successful initiatives can be transferred per region or brand, but are very rarely globally carried out. Each

plant/subsidiary is responsible for activities within their specific region and community. The CSR reports contains 130 references to global indicators, compared to 164 indications of a local CSR strategy. (Volkswagen: Sustainability report, 2014)

Secondly, General Motors Corporation pursues a CSR strategy with a strong local focus. General motors are driven by the ambition to increase quality of life within the local communities they live and work. An example are the environment teams which are in place. Each plant has its own environmental manager, which is part of a regional environmental team. The regional environmental teams are responsible for equalizing the plant’s

environmental footprint by initiatives which add to the regional environment. Furthermore, General Motors has different sustainability goals per region, addressing the highest needs of each region. The report clearly shows headings per region, with detailed information on goals, initiatives and measurement of the current and post project. In the report, 255

mentions of local indicators can be found, where global indicators are mentioned 187 times. (General Motors Corporation: Sustainability report, 2015)

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communication, etc. However, One ford is not a global CSR policy that prescribes local regions what to do. Therefore, despite the fact that there are slightly more mentions of global (216) compared to local (201) indicators, Ford is categorized under local CSR. (Ford Motor Company: Sustainability report, 2014/2015)

Fourth, PSA Group (Peugeot, Citroën, DS automobiles) is categorized under local CSR. PSA group states that is feels a strong commitment towards the local societies in which they are present. Next to their ambition to always work together with local suppliers and employees, they have established different centres in each region in which they are active to coordinate the local initiatives. They ultimate goals of the PSA group is to create strong ties with the local communities around its plants in order to minimize the ecological footprint of that region. To reach this goal, they have established the PSA foundation, which invests globally in local initiatives which for example promote social integration, culture and education. The CSR report displays 385 references to local indicators, compared to 264 references to global indicators. (PSA group: Corporate Social Responsibility report, 2015) The fifth company following a local CSR strategy is FCA Group (Fiat Chrysler

Automobiles). In the FCA group, working together with local communities is incorporated in their mission statement. Similar to what is seen at other companies with a local CSR

strategy, FCA group is working with sustainability teams which are active various regions across the world. These teams speak with individuals from the local community to

collaborate on sustainability issues. The sustainability teams are always looking for aspects where there help is most needed, in order to create sustainable, self-reliant communities in the future. Moreover, their reports show a long list of agreements from all over the world with local suppliers, companies, etc. in order to improve sustainability within FCA Group as well as within the local community. FCA’s report contains 412 mentions of local indicators, whereas it only displays 265 references of global indicators. (FCA Group: Sustainability report, 2014).

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6. FINDINGS

6.1 GEOGRAPHICAL SEPERATION

Table 3 present an overview of the categorization of the MNEs in their respective CSR strategy. The geographical separation within the chosen strategies immediately stand out: all firms that have adopted a global CSR strategy have their origin in East-Asia, whereas all firms having adopted a local CSR strategy find their origin in ‘Western’ countries; Western-Europe and the USA. A possible explanation for this separation can be found in the

institutional theory literature. As explained under the heading the institutional based view, DiMaggio and Powell (1983) introduced the concept of isomorphism to the institutional theory. As isomorphic pressures create uniformity among MNEs, could these pressures have been present at a more local level leading to uniformity in case of CSR strategies?

Increasing interconnectedness is at the origin of the isomorphic pressures which firms are dealing with (DiMaggio & Powell, 1983). The more interconnectedness exists between firms, the higher the level of isomorphic pressures will be, leading to more uniformity between them. One of pressures introduced in their article are the Mimetic forces: managers who experience a high level of uncertainty are more likely to adopt a strategy of their competitors. However, not only in cases of high uncertainty, but also in cases of interconnected firms are managers more likely to adopt a strategy which is similar to that of a firm with which they are interconnected (Galaskiewicz & Wasserman, 1989). Higher levels of interconnectedness are often found when companies have their origin in similar regions, and literature has shown that MNEs build similar capabilities when they interact with other MNEs that are located closely to them (Cortright, 2006). Firms are even using the higher levels of connectedness within their region to work together and create competitive advantages to tackle region specific issues (Pereira & Fernandes, 2006).

Secondly, companies from the same region experience community isomorphism which leads to the adaptation of similar focus areas for their CSR activities (Marquis et al., 2007).

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Evidence exists of regional connectedness between car manufacturers in the

research sample. Toyota, Nissan and Honda, all being founded in Japan are working together on a project which should lead to more fuel cell vehicles being sold. Together, they have started a lobby in 2015 for more fuel cell stations in Japan and eventually worldwide7_{. This}

should increase the attractiveness of these zero emission cars and therefore add to a more environmental friendly car industry, which is a common goal among these companies. Furthermore, General Motors and Ford, both car manufacturers from the USA in this

sample, are collaborating since 2013 on the production on an advanced technology for nine- and ten speed automatic transmissions. These new transmissions could become the new standard for all engines in both of the companies vehicles, leading to an tremendous fuel saving on all cars for both manufacturers8_.

To conclude, these regional collaborations are not stand alone events but are often occurring. General Motors even states that collaborations between them and Ford have proven themselves to be a guarantee for success. Firms from the same region are connected and often work together and share common goals, which leads to increasingly similar

strategies. Thereby, community isomorphic pressures are assumed to have a strong impact on the resemblance among firms’ strategic decisions, exemplified with the Japanese

collaboration. This is also leading to firms from the same region adopting similar strategies. I therefore state:

Proposition 1a: The higher the levels of interconnectedness, the higher the mimetic forces are in the home region institutional environment, making it more likely that MNEs from that region adopt similar CSR strategies

Proposition 1b: The more community isomorphism in the home region institutional environment, the more likely MNEs from that region adopt similar CSR strategies.

7

http://www.cbc.ca/news/technology/toyota-nissan-and-honda-push-for-more-fuel-cell-powering-stations-1.3134577. Toyota, Nissan and Honda push for more fuel cell powering stations.

8

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6.2 DIFFERENCES IN CSR APPROACH

Global CSR MNEs. Logically, MNEs with a global CSR approach are mostly focussing on global megatrends: global warming and safety are themes mentioned by all global CSR companies. The approach adopted among all companies that have a global CSR approach was their focus on product and innovation. The CSR themes central to these companies are mainly addressed via their products themselves. For example, Suzuki central theme in their CSR report is the environment. They choose to approach this issue through the cars: Low emissions, fuel-efficient, lightweight materials, etc. Nissan’s global CSR strategy is also focused on worldwide concerns: the environment and safety. Therefore, Nissan created their CSR strategy with two pillars: ‘Zero emissions’ and ‘Zero fatalities’. Again, Nissan wants to achieve these goals through the cars they produce. As they state, their R&D is focused on sustainable vehicles and as well on continuously looking for new safety features that could help the vehicle detect possible accidents on time and avoid them. This pattern emerges among all car manufacturers in this category: they all state their high focus on product development and innovation to tackle the global megatrends.

As four out of the five car manufacturers with a global CSR strategy in this sample have their origin in Japan, I have first looked at the Japanese institutional environment regarding R&D. Not surprisingly, the Japanese institutional environment regarding R&D is very favourable. Japan has a long history of collaboration, which has enabled a noteworthy system between businesses and universities (Yamamoto, 2005). Moreover, Japan has heavily promoted collaborations between firms as well in order to increase efficiency, something that is proven already (Vachon & Klassen, 2008). In her analysis, Yamamoto (2005) found several other factors which contributed to the favourable institutional environment, e.g. the announcement in 2003 of tax exemptions for R&D investments. 80% of the companies that did increase their R&D expenditure the year after stated that they were encouraged by this new legislation. Ever since, Japan has uphold a favourable taxation climate for R&D

expenditures9_{. Other factors contributing to the favourability of the institutional}

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environment are strong intellectual property rights protections laws, most researchers per 1.000 working people in the world and corporate disclosure of intellectual property

(Yamamoto, 2005).

Comparing Japan’s institutional environment regarding R&D with for example Germany shows that Germany doesn’t have tax incentives at all for R&D expenditure, whereas Japan even in extended and expanded most of their tax incentives10_{. Taking a look}

at the USA, it shows that they do have incentives. However, the Japanese incentives are stronger compared to those from the USA10_{. Moreover, the Japanese structure of}

collaboration between businesses and universities is seen as the closest way of working together and have led to the highest percentage of joint patent applications in comparison with the USA, UK and Canada (Kneller, 2014).

To summarize, the car manufacturers with a global CSR orientation tend to approach global megatrends through product development and innovation. As shown in the case of Japan, a favourable institutional environment regarding R&D expenditure could be the underlying reason to approach CSR issues mainly through the products themselves. The cars are sold all over the world, therefore putting the focus on global issues. I therefore state:

Proposition 2: The more favourable the home region institutional environment is regarding R&D expenditure, the more likely MNEs from that region are to focus on product development & innovation to address global CSR issues.

Local CSR MNEs. Compared to the global counterparts, companies favouring local CSR tend to focus less on global megatrend as environment and safety. The western MNEs tend to focus more on different aspects, namely customer satisfaction and stakeholder relationships. When analysing the core values of the local CSR MNEs, customer and stakeholder satisfaction are often reoccurring values. For example, Volkswagen Group has customer satisfaction as ultimate goals for everything what they do. Moreover, General Motors displays three core values from which two are customer satisfaction and

relationships. Also the FCA group (‘putting people preferences at the centre of what we do’),

10

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Ford (Customer and community satisfaction) and PSA Group (‘driven by the satisfaction of our customers’) have adopted a similar focus. When taking a short look back to the global CSR MNEs, there is a clear difference between the focus on delivering great and innovative products on the global side vis-à-vis the focus on customer satisfaction on the local side. A logical reasoning would be that customers around the world have different preferences and therefore MNEs adapt to the local environment to achieve customer satisfaction wherever they are present. But why is it that these companies all strive for customer satisfaction far more explicit then the other part of the sample?

First of all, taking a closer look at Western-Europe’s institutional environment could provide some critical insights. What really sets Western-Europe’s institutional environment apart from other regions is the consensus-based decision making structure, which is deeply incorporated within all European Union (EU) institutes (Rumford, 2009). He states that this consensus-based making model is mainly based on two features of the Western-European institutional environment: Insulation from national audiences and extensive forms of deliberation. The entire model which Western-Europe has created is seen as one of a kind. The way employees, customers, trade unions and other stake holder work together is not perfect and needs adjustments to maintain is. However, it is regarded as a unique and highly social way of working together (Hyman, 2005). The institutional environment is set to

conduct social forms of business and uphold good relationships through consensus. This affects the MNEs which are shaped by these institutions, putting a strong focus on good relationships with various stakeholders and customer satisfaction (Campbell, 2007). The social European model lead firms to have a stronger focus on people than on product. As stakeholders, including customers, differ hugely around the world, MNEs have to adapt their strategies locally. I therefore state:

Proposition 3a: The more favourable the home region institutional environment is regarding social business conduct and stakeholder relationships, the more likely MNEs from that region are to focus on customer satisfaction and stakeholder relationships to address local CSR issues.

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As the Western-European institutional environment only accounts for half of the Local CSR MNEs, the subsequent part of the analysis focused on the institutional

environment of the USA. What stands out for the USA is their liberal market structure, compared to Germany, which has a more coordinated structure (Hall & Soskice, 2001). This means that the national institutional setting of the USA has led to firms being more isolated actors, individualistic orientated and have a more liberal structure than their counterparts from coordinated market economies (CMEs) (Matten & Moon, 2008). Moreover, they argue that as firms in the USA are relatively isolated and operate more individually, they are more vulnerable to stakeholder pressure. Stakeholder pressure are at the core of what over time has developed as stakeholder theory, which analyses if and why firms incorporate the interest of stakeholders beside the immediate interest of the firm itself (Campbell, 2007). That stakeholder theory is related to CSR is explained by Driver & Thompson (2002), when they argue that scholars from the stakeholder theory describe appropriate and

inappropriate behaviour of firms in terms of how firms conduct business is regard to their stakeholders. Arguing from a stakeholder theory perspective, there are high pressures on the relatively isolated US firms to conduct appropriate business in regard to all their

stakeholders. Firms with their origin in a CME often have partnerships and interlocks, making them less vulnerable to stakeholder pressures (Matten & Moon, 2008). Stakeholder

pressures are forcing MNEs to focus on retaining good stakeholder relationships, including those with their customers. Stakeholders, including customers, differ hugely around the world. Therefore, pressures and preferences have to be handled with local attention. I therefore state:

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6.3 TRANSNATIONAL MOVEMENT

Although a clear distinction can be found between the firms with their origin in East-Asia adopting a global CSR strategy and firms with their origin in ‘the west’ adopting a local CSR strategy, an industry wide trend emerges from the data. When following Bartlett and Ghoshal’s (1989) typology, almost every firm from the sample is showing signs of a

movement towards a more transnational strategy. A transnational strategy is adopted when firms face both high cost pressures as well as high pressures for local responsiveness. As both forces are highly present, it is the most complex strategy for a firm to adopt. However, unless it difficulties, firms are increasingly adopting a transnational strategy (Frynas & Mellahi, 2015). Moreover, other research has also found that procurement is often done on a global basis with local focus (Yeniyurt et al., 2013) and that the hiring of employees, traditionally local, is increasingly centralized on a global basis (Vance & Paik, 2015). The sample showed a similar pattern, as the data present numerous indication of firms moving towards a transnational strategy. Acknowledging that spotting a movement is hard within case studies which cover one year only, the trend is visible. As most CSR reports start off with reflecting back on the previous year and also include a forward looking part for the upcoming year, the reports do show signs of a trend. First, two examples will be provided of global CSR MNEs moving towards a transnational approach. Afterwards, two examples from local CSR MNEs shifting towards a transnational strategy will be discussed.

Global CSR MNEs. As explained, Hyundai has four major CSR campaigns which are adopted worldwide with a small adoption to local preferences. However, Hyundai is

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Local CSR MNEs. PSA Group announced that their “Back in the Race” plan involved a shift from local procurement towards a more global procurement strategy. PSA Group always was heavily involved with their local suppliers and communities. They provided training sessions on different levels (technical, management, strategy) and set up different kind of events (networking, workshops) in order to let the local community benefit from their presence. However, they shifted it to a more global strategy in order to save costs. They further state that these local communities will still be supported through other CSR initiatives as safety and environmental training, which are more global CSR activities. Furthermore, Ford is increasingly organizing its activities under One Ford; a global code of conduct which gradually becomes more important to Ford. In their 2014/2015 CSR report, Ford states that it is evolving towards a global player which doesn’t lose sight of their local communities. Moreover, since 2014, the sustainability strategy of Ford is also incorporated in One Ford. Goals are stated on a global level, for Ford as a whole, but are still achieved through local initiatives, which combined have to ensure that the goals stated in One Ford are achieved.

A possible explanation for the movement towards a transnational strategy lies within the concept of isomorphism (DiMaggio & Powell, 1983). As we know, normative

isomorphism is encouraged by inter-firm hiring between firms from the same industry. Within the highly globalized, competitive automotive industry evidence of inter-firm labour mobility is found (Maliranta et al., 2009). Moreover, evidence of inter-organizational networks within the automotive industry were already presented under the section

Geographical separation, both increasing uniformity within the automotive industry.

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These isomorphic pressures are globally present, and therefore also in all MNEs home region. As previously discussed, community isomorphism has a stronger impact on firms than global trends do (Marquis et al., 2007; David & Greve, 1997). However, as community isomorphism leads all global CSR MNEs to become more local and all local CSR MNEs to become more global, global factors at play simultaneously push firms towards a more transnational strategy. As local and global institutional forces push MNEs towards a transnational model, uniformity increases.

In short, an industry wide movement towards a more transnational strategy emerged after analysing the data. Both global and local CSR MNEs are showing indications of moving towards a transnational model. This movement could possibly be explained by the global isomorphic pressures which firms in the highly competitive and globalized automotive industry are dealing with. I therefore state:

Proposition 4: The higher the global normative, coercive and mimetic isomorphic pressures are in a globalized and competitive industry, the more likely it is that MNEs from that industry move towards a transnational CSR strategy.

In short, there are two possible explanations for the global separation found within the sample. The first one is that high levels of interconnectedness increase mimetic forces among firms (Galaskiewicz & Wasserman, 1989). The second one is community isomorphism leading to uniformity among firms (Marquis et al., 2007). The second proposition states that a more favourable institutional environment regarding R&D leads companies to focus on product development and innovation as the mean to address global CSR issues. Propositions 3A and 3B provide explanations for why western MNEs pursue local CSR strategies.

Proposition 3A describes that the consensus-based institutional environment in Western-Europe leads to strong stakeholder positions, making MNEs doing business in a social way (Rumford, 2009). As they are used to adapt their strategy to the stakeholders per region, this is also seen at their local CSR strategy. 3B explains how the liberal institutional environment also leads to strong stakeholder positions, creating a similar effect. The last proposition states that, due to global isomorphism, there is a global movement towards the

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Findings are summarized instead of presented in a model because due to the differences in findings, I was unable to provide one neat model which would capture all propositions in the right way.

7. DISCUSSION & CONCLUSION

During the analysis of the data, four major findings emerged. The first one was the global separation between global and local CSR MNEs. Second, I explained how the

institutional environments in the home regions could have led to the adoption of the global/local strategy. Last, both global and local are adapting their strategy towards a transnational model. These will be discussed shortly, followed by the conclusions.

Afterwards there will be touched upon some limitations of this study and possibilities for future research on this subject.

7.1 DISCUSSION

The first major finding is the global separation of global and local CSR MNEs. For diversity reasons, the sample consisted of five car manufactures from the ‘West’ (Western-Europe and the USA) and five car manufactures with their origin in East-Asia (Japan and South-Korea). The five western MNEs all have adopted a local CSR strategy, whether all MNEs from East-Asia globally integrated their CSR activities. Community isomorphism (Marquis et al., 2007), and increased mimetic forces (Galaskiewicz & Wasserman, 1989) provided possible explanations for this ‘clusters’ of global and local CSR MNEs. Firms

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Second, the focus shifted to the global CSR MNEs. All global CSR MNEs focused on global megatrends, which is not surprising. However, they all focused on the cars itself to achieve their CSR goals: safer and greener goals. What in their institutional environment had led to a strong focus on product development & innovation to address global CSR issues? When taking a closer look at the Japanese institutional environment regarding R&D it shows clear benefits in comparison with other institutional environments from the sample.

Yamamoto (2005) found numerous factors which created a very favourable environment for R&D expenditure. This institutional environment provided the car manufactures a setting in which focussing on the product itself was very alluring. Through this focus on product and innovation it was a very logical step to address CSR issues which could be solved their innovative cars. Almost all global CSR MNEs focused on safety and environment, issues which could be solved through safer and cleaner cars. This focused was initiated by the favourable R&D institutional environment.

Afterwards the local CSR MNEs were analysed. What stood out in this part of the sample was the strong focus on stakeholder relationships and customer satisfaction, a completely different emphasis than product development and innovation. Because in this part of the sample half of the MNEs has their origin in the USA and the other half in

Western-Europe, I’ve looked at both institutional environments. The main reason for this is that although both are Western environments, both are significantly different (Doh & Guay, 2006). Western-Europe’s institutional environment is very consensus-based and regarded as a very social system (Rumford, 2009). The MNEs from this region are formed by this

environment and therefore emphasize social forms of business. As stakeholders and

customers are different around the world, each region needs its own approach. This is seen in their CSR approach, as they strongly focus on relationships with communities which they adapt all over the world. USA’s institutional environment is characterized by its liberal system (Matten & Moon, 2008). This leads to relatively isolated firms with high vulnerability for stakeholder pressure. Therefore, companies adopt strategies which satisfies their stakeholders, which again has to be adopted per region. As shown above, making use of the institutional complementarities that are present within the home region can provide

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2001). In the increasing globalizing automotive industry, this could become a more important issue in the future.

Taking one step back, the favourable institutional environment for R&D expenditure could be part of a bigger picture. As collaborations among firms (Yamamoto, 2005) and between firms and universities (Kneller, 2014) are proven to be heavily promoted in Japan, this collaborative environment could provide another explanation. As collaborations have been more efficient (Vachon & Klassen, 2008), this could have been a stimulus to focus on product development and innovation as well. Although there is no conclusive evidence, there are hints in this direction which may be interesting for future research to dive in to. On the other side, the consensus-based institutional environment (Rumford, 2009) could also be part of overarching phenomena. As MNEs from Western-Europe face strong stakeholders (e.g. trade-unions, employee representatives, etc.), there will always be

moments of confrontation before consensus is reached. As consensus-based decisions differ in each setting due to the different stakeholders, MNEs from these countries are more used to adapting strategies locally, which subsequently has led to a local CSR strategy. As before, conclusive evidence is missing, but a collaborative institutional environment and a

confrontational institutional environment could be the larger picture in these two cases. Fourth and last, a trend was spotted across the entire sample. Both the global CSR MNEs and the local CSR MNEs are adopting more and more features of each other, therefore moving towards a transnational model, as introduced by Bartlett & Ghoshal (1989). This transnational model has to be adopted when both cost pressures and local responsiveness pressures are high, which clearly is the case in the automotive industry. When taking a look back at table 1 (page 9) by Jamali (2010), global and local CSR strategies clearly both have their disadvantages. When combining these strategies, some disadvantages are overcome by the advantages of the opposite strategy, however successfully implementing a transnational model is hard and MNEs often fail doing so (London & Hart, 2006). Where a local CSR

strategy allows for full adaptation to local needs, a global CSR strategy advantage is the global integration. Combining these two aspects in one strategy may leave the MNE loosing advantages from both sides.

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MNEs (DiMaggio & Powell, 1983) are present within the automotive industry, leading to increasing uniformity in the entire sample. Due to the high levels of globalization and

competitiveness in the automotive industry these isomorphic pressures have a big impact on the organisations, leaving them with their strategies becoming more and more similar. If this movement is industry wide or even present in other industries, it could undermine the relevance of the global – local discussion.

As the literature mainly focusses on these two separate categories, the transnational model is often not included in global – local CSR research. However, one should wonder whether they are two separate categories but rather two end on a continuum, with the transnational model being at the centre. Instead of separate categories, MNEs are moving on this continuum towards the centre model, a mixture of both global and local. Regarding this concept on a continuum rather than separate categories where MNEs have to

categorized under would be a logical next step, as MNEs always possess characteristics of multiple strategies. A continuum would provide a more realistic picture of where companies stand regarding their CSR strategy, therefore brining the literature closer to reality. A

simplified example is shown in Appendix 2.

7.2 CONCLUSION

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next to the institutional one which this paper focused on, the paper has presented four contributions.

In short, there are found multiple explanations on how home region institutional environments have an influence on the strategic decision to pursue a global or local CSR strategy. It shows that high levels of interconnectedness and community isomorphism influence a MNE to copy others which are located in close proximity. Furthermore, it showed indications that a favourable institutional environment regarding R&D leads to a global CSR strategy with product development and innovation at the core. At the other side, an

institutional environment which aims at consensus-based decision making or is highly liberal will lead MNEs to adapt their CSR activities to local preferences with a strong emphasis on stakeholder relationships and customer satisfaction. Fourth, through isomorphic pressures there is a trend towards a transnational CSR strategy, which implies that the global and local strategies are two end on a continuum with the transnational model at the centre instead of two separate categories.

Although this study is exploratory and descriptive in nature, it does touch upon some important issues for managers. The rising interest of large MNEs into a more transnational CSR strategy should rise questions for managers which are persistently pursuing a global or local CSR strategy. This movement isn’t only happening with the sample of this study (Frynas & Mellahi, 2015) and therefore deserves the attention of managers. Secondly, enough attention should be payed to the specific institutional environment at the home region of the firm. The study shows that the CSR approach of MNEs can benefit from outstanding features of the home region institutional environment.

Institutional based view and CSR strategies: An institutional explanation on trends in CSR strategies pursued by MNEs