International diversification and corporate social responsibility : an empirical study of Chinese contractors

Abstract

Purpose: The purpose of this paper is to explore the relationship between international diversification strategy and corporate social responsibility (CSR) for firms from emerging economies. Design/methodology/approach: This paper is based on an empirical study of a sample of Chinese firms listed in Engineering News Record top contractors from 2010 to 2014. A moderated analysis is employed in order to test the hypotheses and examine how the scale and scope of international diversification affect CSR. Findings: The empirical results show that degree of internationalization (DOI), as the scale, is positively related to firms’ CSR scores. Furthermore, two scopes, geographic diversification (GD) and project diversification (PD), have different effects on CSR scores. GD negatively moderates the relationship between DOI and CSR scores, while PD has a positive direct impact on CSR scores. Research limitations/implications: This paper focusses on firms from emerging economies; therefore, the findings may not hold for firms from developed markets. Practical implications: The results of this paper provide strategical advice regarding international business, for firms from emerging economies to meet the managerial challenges regarding CSR in global markets. Originality/value: As the relationship between international diversification and financial performance has been thoroughly discussed in previous studies, this paper extends the literature on international diversification’s effects on CSR.