Global Footprint, Local Imprint: How Institutions and Distance Influence the Corporate Social Performance of Foreign Subsidiaries Across Service Industries

Abstract

Responding to the scarcity of research on the corporate social responsibility of multinational companies in service industries and the need to enhance our understanding of the dimensions affecting this, we contribute to this special issue in two ways. First, we indicate that the efficiency of host-country institutions positively influences the ESG performance of foreign subsidiaries. Secondly, we determine the CAGE dimensions that are relevant to services and examine the impact of CAGE distance between the home and host countries on the ESG performance of people-processing, possession-processing, and information-based services subsidiaries. By using a sample of 1331 subsidiaries in 54 different countries and applying the Bayesian Model Averaging methodology, we provide evidence and significant insights into the institutions influencing the ESG performance of foreign subsidiaries in service industries, the importance of resource commitment, and the home-host distance dimensions which create challenges for subsidiaries in enhancing their ESG performance.