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21 September 2022 - 21 September 2022

9:30AM - 12:45PM

Durham Business School Durham University Mill Hill Lane Durham DH1 3LB UK

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Professor Ajai Gaur will be giving a talk on Multinational Companies (MNCs) and Socially Irresponsible Behavior.

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Professor Ajai Gaur, Editor-in-Chief, Journal of World Business.

Abstract: There has been a growing interest in understanding the antecedents and consequences of socially irresponsible behavior by large organization. Recent developments, such as a focus on the role of MNEs in fulfilling United Nations Sustainable Development Goals (UNSDG) and the Business Roundtable, have encouraged organizations to move beyond mere shareholder value creation towards taking more responsibility towards a broader range of stakeholders. In this vein, the actions or inactions of MNEs and large organizations when it comes to responsible behavior have consequences for all stakeholders, including foreign affiliates. In a series of working papers, I examine the governance specific antecedents of socially irresponsible behavior and the consequences of these behaviors for the foreign affiliates of MNEs.

The first study examines the contextual nature of ownership concentration as a key governance mechanism in mitigating corporate environmental irresponsibility (CEI). Using a sample of 16,286 observations for 3,275 firms across 43 countries between 2008-2017 and dynamic panel regressions, we find robust evidence to suggest that the positive effect of ownership concentration on CEI is mitigated by strong regulatory institutions and board independence. This study contributes to the open system logic of corporate governance and highlights the crucial role of policymakers in corporate governance and environmental sustainability.

The second study examines cross-border reputational effects by analyzing how news about parent MNC’s corporate social irresponsibility (CSI) influences the performance of foreign subsidiaries. Building on the stakeholder theory, we propose that MNC’s socially irresponsible acts transcend geographic boundaries and serve as a signal to hold subsidiaries accountable, which in turn negatively affects subsidiary performance. Our analyses based on a sample of foreign subsidiaries of 42 multinational grocery retailers over the period of nine years (2012-2020) provide strong support to our main hypothesis that parent MNC’s CSI negatively influences the sales growth of foreign subsidiaries. This negative effect is mitigated when the subsidiary is engaged in product and service innovations if the CSI news reporting has a low reach through local media outlets and by marketing campaigns if the CSI news reporting has a high reach through global media outlets.

Bio: Ajai S. Gaur is a Dean’s Eminent Research Professor and Chair of the Department of Management and Global Business at Rutgers Business School – Newark and New Brunswick, Rutgers University. He is also an affiliate faculty member with the Division of Global Affairs at Rutgers University and a Dunning fellow at the University of Reading, UK. Ajai holds a Ph.D. from the National University of Singapore. In his research, Ajai studies the distinct institutional influences on firms’ international expansion strategies in different institutional contexts. A related focus of his research is to study institutional influences on various firm-level governance mechanisms and their strategic and performance consequences. Ajai has been serving as Editor-in-Chief of the Journal of World Business since 2019 and a consulting editor at the Journal of International Business Studies since 2017. Previously, he served as a senior editor of the Asia Pacific Journal of Management (2014-2018) and a senior editor of the Journal of World Business (2014-2018). He was elected as the President of the Asia Academy of Management for two terms from 2015 to 2019. In 2021, Ajai was elected as a fellow of the Academy of International Business.