national culture and csr: the influence of national
TRANSCRIPT
Master Thesis
National Culture and CSR: The Influence of National Culture on CSR Performance and the Moderating Effects of Headquartersâ Home Country Sustainable Development and CEO Foreignness
Nina Onkenhout S2888335
Supervisor: Dr. O. Lindahl Co-assessor: Prof. Dr. H.J. Drogendijk
MSc International Business & Management
University of Groningen, Faculty of Economics and Business Date of Submission: June 15th, 2020
Word count: 15990
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ABSTRACT
During the past decades the relationship between national culture and CSR performance has
gained increased attention worldwide. However, the CSR performance of companies deviates
between firms from different countries. Furthermore, to date, the outcomes of research on this
relationship are contradicting and further research is needed. Therefore, the key objective of
this thesis is to fill the research gap by examining the four cultural dimensions of Hofstede â
power distance, uncertainty avoidance, individualism, and masculinity â and including two
non-accounted moderating effects which could potentially explain why research still finds
inconclusive results. Based on the institutional, stakeholder, and Upper Echelonsâ theory, the
country-level moderator, headquartersâ home country sustainable development, and the
individual-level moderator, the CEO Foreignness are explained as moderators on this examined
relationship. Using multiple regression analysis, national culture on CSR performance of the
worldâs largest 165 multinationals located in 23 countries and operating in 8 different industries
are investigated, this leads to surprising results. It is found that power distance seems to be an
important predictor of a firmâs CSR performance, however, the other cultural dimensions do
not seem to have a meaningful impact in this thesis. Additionally, the interaction term of power
distance shows a negative significant relation and uncertainty avoidance a positive significant
relation on headquartersâ home country sustainable development. Furthermore, only the
interaction-term of individualism of CEO foreignness is tested to be significant and create a
stronger negative relationship between individualism and CSR performance. These findings
thereby add to the body of knowledge on national culture, CSR performance, headquartersâ
home country sustainable development and, the CEO foreignness and hence provide important
theoretical and managerial implications.
Keywords: National Culture, Hofstede, Corporate Social Responsibility, CSR performance,
Headquartersâ Home Country Sustainable Development, CEO Foreignness, CSRHub
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TABLE OF CONTENTS
ABSTRACT ....................................................................................................................................................... II
List of Figures ................................................................................................................................................. V
List of Tables .................................................................................................................................................. V
List of Abbreviations ...................................................................................................................................... V
1. INTRODUCTION ..................................................................................................................................... 1
2. LITERATURE REVIEW .............................................................................................................................. 4 2.1 Corporate Social Responsibility ..................................................................................................................... 4 2.2 CSR Performance .......................................................................................................................................... 5 2.3 National Culture ............................................................................................................................................ 6
2.3.1 Hofstedeâs Cultural Dimensions ............................................................................................................ 7 2.4 Headquartersâ Home Countryâs Sustainable Development ........................................................................... 8 2.5 CEO Foreignness ........................................................................................................................................... 9 2.6 National Culture and CSR Performance ...................................................................................................... 10
2.6.1 Power distance and CSR performance ................................................................................................ 10 2.6.2 Uncertainty avoidance and CSR performance .................................................................................... 11 2.6.3 Individualism and CSR performance ................................................................................................... 12 2.6.4 Masculinity and CSR performance ...................................................................................................... 13
2.7 Moderating Effects on the Relationship Between National Culture and CSR Performance ........................ 15 2.7.1 The Moderating Role of The Headquartersâ Home Countryâs Sustainable Development ................. 15 2.7.2 The Moderating Role of The CEO Foreignness ................................................................................... 18
2.8 Conceptual Model ....................................................................................................................................... 20
3. RESEARCH METHODOLOGY .................................................................................................................. 20 3.1 Data Collection ........................................................................................................................................... 20 3.2 Data Sample ............................................................................................................................................... 21 3.3 Measurement of Variables ......................................................................................................................... 21
3.3.1 Dependent Variable ............................................................................................................................ 21 3.3.2 Independent Variables ........................................................................................................................ 23 3.3.3 Moderating Variables ......................................................................................................................... 23 3.3.4 Control Variables ................................................................................................................................ 24
3.4 Data Analysis .............................................................................................................................................. 26 3.5 Robustness Test .......................................................................................................................................... 26
4. EMPIRICAL RESULTS ............................................................................................................................. 27 4.1 Preliminary Requirement Tests for the Moderated Multiple Regression Analysis ...................................... 27
4.1.1 Outliers ............................................................................................................................................... 27 4.1.2 Normality ............................................................................................................................................ 27 4.1.3 Homoskedasticity ................................................................................................................................ 27 4.1.4 Linearity .............................................................................................................................................. 27 4.1.5 Multicollinearity .................................................................................................................................. 28 4.1.6 Independence of residual values ........................................................................................................ 28
4.2 Descriptive Statistics ................................................................................................................................... 28
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4.3 Correlation .................................................................................................................................................. 29 4.4 Multiple Regression Analysis ...................................................................................................................... 31 4.5 Robustness Tests ......................................................................................................................................... 35
4.5.1 Bootstrapping ..................................................................................................................................... 35 4.5.2 Country Representation ...................................................................................................................... 36
5. DISCUSSION ......................................................................................................................................... 37
6. CONCLUSION ....................................................................................................................................... 42 6.1 Theoretical Implications .............................................................................................................................. 42 6.2 Practical Implications .................................................................................................................................. 43 6.3 Limitations and Future Research ................................................................................................................ 43
REFERENCES .................................................................................................................................................. 46
APPENDICES .................................................................................................................................................... i Appendix A: Overview of Previous Results of National Culture on CSR ................................................................ i Appendix B: Research Methodology Overview .................................................................................................... i Appendix C: Descriptive of Countries, Industries and Cultural Scores ................................................................. ii Appendix D: Outliers ........................................................................................................................................... v Appendix E: Assumption of Normality ............................................................................................................... vi Appendix F: Assumption of Heteroskedasticity ................................................................................................ viii Appendix G: Assumption of Multicollinearity .................................................................................................... ix Appendix H: Assumption of Independence of Residuals Values ......................................................................... ix Appendix I: Robustness Tests .............................................................................................................................. x
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List of Figures
Figure 1: Conceptual Model ................................................................................................. 20 Figure 2: Interaction term CEO foreignness with individualism ...................................... 32 Figure 3: Interaction term CEO foreignness with masculinity ......................................... 33
List of Tables
Table 1: Descriptive Statistics ............................................................................................... 29 Table 2: Correlation Matrix ................................................................................................. 30 Table 3: Summary of Results - Main Regression Analysis ................................................ 33 Table 4: Regression Analysis ................................................................................................ 34 Table 5: Summary of Results â All Analyses ....................................................................... 37
List of Abbreviations
CEO Chief Executive Officer CSP Corporate Social Performance CSR Corporate Social Responsibility e.g. exempli gratia EPI Environmental Performance Index HCSD Home Country Sustainable Development IDV Individualism IVR Indulgence LTO Long-Term Orientation MAS Masculinity MNE Multinational Enterprise OLS Ordinary Least Square PDI Power Distance ROA Return on Assets ROE Return on Equity ROW Rest of the World SDG Sustainable Development Goals UET Upper Echelons Theory UK United Kingdom UAI Uncertainty Avoidance USA United States VIF Variance Inflation Factor
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1. INTRODUCTION
Environmental disasters that are caused by organizationsâ unchallenged expansion and the
increasing global focus on environmental and economic sustainability have resulted in growing
public attention to corporate social responsibility (CSR) (Boulouta & Pitelis, 2014; Liu, 2019).
Some researchers have defined CSR as âactions that appear to further some social good, beyond
the interests of the firm and that which is required by lawâ (McWilliams & Siegel, 2001, p.
117). Therefore, CSR can be described as voluntary behaviour through which firms try to
contribute to social wellbeing and environmental conservation that goes beyond economic and
legal concerns (European Commission, 2001). Currently, firms need to not only pursue their
profit objectives; they are also responsible for their impact on society and the environment
(Boulouta & Pitelis, 2014). In this thesis, corporate environmental and social responsibility is
referred to as CSR, and CSR performance is the extent to which companies implement their
CSR activities (De Bakker, Groenewegen, & Den Hond, 2005). According to prior studies,
CSR performance could lead to good reputations (Melo & GarridoâMorgado, 2012); offers
competitive advantage (Du, Bhattacharya, & Sen, 2011); increases the potential to motivate,
attract, and retain employees (Greening & Turban, 2000); and enhances firm legitimacy (Zheng,
Luo, & Maksimov, 2015). Such potential beneficial outcomes are valuable for firms and
society; therefore, it is important to understand what drives CSR.
In 2008, the Economist (Franklin, 2008, p. 22) stated, âcompany after company has been shaken
into adopting a CSR policy: it is almost unthinkable today for a big global corporation to be
without oneâ. Thus, CSR has become a necessary business function of principal importance to
firm-level success (Kiessling, Isaksson, & Yasar, 2016). However, firmsâ CSR activities and
CSR performance still differ between countries (Cahan, De Villiers, Jeter, Naiker, & Van
Staden, 2016; GjĂžlberg, 2009; Matten & Moon, 2008). One factor that might cause these
variations is national culture. Hofstede (1991, p. 6) has defined culture as âthe collective
programming of the mind that distinguishes the member of one group or category of people
from othersâ. Therefore, national culture is defined as the culture of one specific country
(Masouras & Papademetriou, 2014). National culture is deeply rooted in the human mind,
whereby people from the same nation share the same values, behaviours, and beliefs (Hofstede,
2011). Dorfman and Howell (1988) have concluded that leadership styles differ across cultures.
Furthermore, Kagono, Nonaka, Sakakibara, and Okumura (1989) found national differences
between American, European, and Japanese firms in terms of approach to strategy formulation.
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According to Ringov and Zollo (2007), national culture influences how people expect
businesses to behave. Therefore, national culture seems to play an important role and could
sometimes cause differences in an organizationâs CSR performance since national culture could
influence expectations regarding CSR in both positive and negative ways. In this thesis, the
national culture of the firm is defined as the country where the firmâs headquarters is located.
Since a multinational corporationâs headquarters plays a significant role in the formulation and
implementation of the corporate strategy, it is assumed that national culture is taken into
consideration when determining the corporate strategy (Petruzzella, Salvi, & Giakoumelou,
2017). Therefore, the national culture of the headquartersâ country has a particularly strong
influence on the firm.
In cross-cultural research, most scholars have applied the Hofstede model of national culture,
because it is the most widely accepted representation of national cultural dimensions that
characterize societies (AlAnezi & Alansari, 2016). However, in the literature there are
contradicting findings regarding the relationship between national culture and CSR
performance. For example, power distance (PDI) and masculinity (MAS) have conflicting
outcomes in different studies. According to Peng, Dashdeleg, and Chih (2012) and Petruzzella
et al. (2017), both dimensions have a negative influence on firmsâ CSR engagement and
environmental performance; however, prior study results from Ho, Wang, and Vitell (2012)
show a positive effect of PDI on corporate social performance (CSP), and Naeem and Khurram
(2019) found a positive effect of MAS on CSR. Additionally, Halkos and Skouloudis
(2017) have concluded that these factors and individualism (IDV) are insignificant.
Furthermore, Ioannou and Serafeim (2012) found that IDV has a positive relationship with CSR
performance. According to Peng et al. (2012), uncertainty avoidance (UAI) is also a predictor
of CSR performance. However, according to Petruzzella et al. (2017), UAI and IDV are both
insignificant, although their study suggests that UAI negatively influenced CSR. The fact that
these studies all have different outcomes indicates that further research on the relationship
between national culture and CSR performance is needed to close the literature gap.
Moreover, the aforementioned conflicting findings could be caused by non-accounted for
moderating effects. Therefore, this thesis also considers whether the headquartersâ home
countryâs sustainable development (HCSD) and the chief executive officerâs (CEO) foreignness
influence the relationship between national culture and CSR. For decades, the world has
undergone significant economic and social development; however, today the effects of the
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economic and social development on the environment and human societies are unsustainable
(Tan, Shuai, Jiao, & Shen, 2017). Therefore, country institutions are including principles and
rules of sustainable development in their policies (Banerjee, Gupta, & McIver, 2019). National
institutions set the ârules of the gameâ and therefore influence a firmâs decision making;
however, institutions vary significantly across countries. Since companies are embedded in
institutions, external and internal pressures on firms concerning CSR may differ around the
world (Ioannou & Serafeim, 2012). For example, in countries with poorly developed
institutions, standards for social and environmental indicators may be low and affect the
company. Thus, it is interesting to examine the influence of headquartersâ HCSD since the
headquarters has a pivotal role within the firm and represents the companyâs legal domicile
(Ciabuschi, Dellestrand, & Holm, 2012).
It is also interesting to consider CEO foreignness since the CEO is the leader of the organization
and thus plays an important role in making decisions about CSR (Slater & Dixon-Fowler,
2009). In recent decades, increasing globalization and borderless global careers have resulted
in multinational enterprises (MNEs) acquiring more foreign CEOs, because MNEs believe that
this will benefit them (Hymowitz & White, 2004) since these CEOs have cosmopolitan views,
multilingual skills, and global visions (Arp, Hutchings, & Smith, 2013). Today, it is necessary
for firms to develop into multicultural MNEs due to competition. Foreign CEOs have different
values, behaviours, and beliefs than their colleagues. Consequently, it is interesting for
organizations to get a better understanding of foreign CEOs in terms of whether they affect the
relationship between national culture and CSR performance. Accordingly, these two factors
might explain the differences in the aforementioned conflicting findings.
Therefore, the purpose of this thesis is to fill the research gap by proposing the following
research question:
Does national culture influence firmsâ CSR performance, and do the headquartersâ home
countryâs sustainable development and the CEOâs foreignness moderate this relationship?
To test this research question, Hofstedeâs four cultural dimensions were used to gather the
cultural score of the headquartersâ country. Second, CSR performance was measured by
examining the CSRHub since it is the worldâs largest and most comprehensive sustainability
intelligence database (CSRHub, 2020a). To test whether the headquartersâ HCSD influences
the relationship between national culture and CSR performance, the Environmental
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Performance Index (EPI) was used. Finally, data from BoardEx was gathered to discover the
CEOâs foreignness. To answer the research question, a multiple regression analysis was run.
This thesis makes a theoretical contribution to existing research by studying the relationship
between national culture and CSR performance to better understand why CSR performance is
still different across firms. To explain why prior research has indicated conflicting findings in
the direct relationship, two moderators â headquartersâ HCSD and CEO foreignness â were
added which further expand the current results.
This thesis is structured as follows: first, the literature is reviewed, and based on the relevant
concepts, the relations between the concepts are presented. The hypotheses are then listed, and
the conceptual model is shown. Next, the research methodology is explained and described,
including data collection and measurements of constructs. Statistical analyses are then analyzed
in-depth and discussed, followed by a conclusion. Finally, the limitations, contributions, and
recommendations for future research are examined.
2. LITERATURE REVIEW
This section reviews the literature on CSR, CSR performance, national culture, the
headquartersâ HCSD, and CEO foreignness followed by the interrelationship between these
constructs. Subsequently, hypotheses are formulated and the conceptual model is shown.
2.1 Corporate Social Responsibility
CSR has attracted worldwide attention from every type of stakeholder and gained increased
resonance in the global economy due to the emergence of international trade and globalization
(Halkos & Skouloudis, 2017; Jamali & Mishak, 2007). Therefore, including CSR activities in
organizations has become mainstream. In the past decades, various definitions of CSR have
been proposed, and scholars have disaggregated CSR into multifaceted dimensions (Inoue &
Lee, 2011; McWilliams, Siegel, & Wright, 2006). The common concept of CSR refers to a
business model or action that is in line with ethical standards and social norms regarding
corporate decision-making and behaviour (Branco & Rodrigues, 2006; Carroll, 1979).
Additionally, CSR refers to companies voluntarily contributing to society and the environment
beyond what is required by law (McWilliams & Siegel, 2001). Therefore, CSR goes beyond
economic and legal concerns to focus on social and environmental concerns.
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The concept of CSR is not new; in 1946, Fortune magazine asked business leaders how they
were acting regarding their social responsibilities. In the 1950s, the evolution of the CSR
construct began (Carroll, 1999). Since then, the field of CSR has grown significantly, and this
has resulted in a great proliferation of approaches, terminologies, and theories (Garriga & Melé,
2004). According to Carroll (1999, p. 270), Howard Bowen is considered the âFather of
Corporate Social Responsibilityâ. According to Bowen, CSR ârefers to the obligation of
businessmen to pursue those policies, to make those decisions, or to follow those lines of action
which are desirable in terms of objectives and values of our societyâ (Bowen, 1953, p. 6). In
the beginning, CSR was more referred to as the social responsibility of individuals engaging in
businesses but later became âCSRâ as we know today since corporation prominence in the
business sector was still in its early stages (Carroll, 1999). In the 1950s through the 1970s,
several scholars conceptualized different and new definitions focusing more on the role and
perspective of a corporation (Kang, Lee, & Yoo, 2016). Carroll (1979, p. 500) has defined CSR
as follows: âThe social responsibility of business encompasses the economic, legal, ethical and
discretionary expectations that society has of organizations at a given point in timeâ. Therefore,
businesses should strive to âmake a profit, obey the law, be ethical, and be a good corporate
citizenâ (Carroll, 1991, p. 283). These four categories can be depicted as a pyramid with
economic responsibilities as the foundation, because without these responsibilities, the other
goals cannot be achieved (Carroll, 1991). Carrollâs four categories have been applied by various
theorists and remain a dominant paradigm of CSR (Schwartz & Carroll, 2003). In contrast,
Milton Friedman was against the view that social matters should be a concern of firms; he
argued that companies have one objective: âto make as much money as possible while
conforming to the basic rules of society, both those embodied in the law and those embodied in
ethical customâ (Friedman, 1970, p. 1). This only rejects Carrollâs philanthropic category. Due
to increasing stakeholder pressures, business people are unlikely to exclude the philanthropic
category in their programs (Carroll, 1991).
2.2 CSR Performance
It is important to measure firmsâ CSR activities to understand their performance. According
to Wood (1991, p. 693), CSR performance is âa business organizationâs configuration of
principles of social responsibility, the process of social responsiveness, and policies, programs,
and observable outcomes as they relate to the firmâs societal relationshipsâ. The increased
significance of CSR evaluation is indicated by the numerous proposed methodologies.
According to Harrington (1987, p. 103), âif you canât measure something, you canât understand
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it; if you canât understand it, you canât control it; if you canât control it, you canât improve itâ.
However, there is no single method to measure CSR performance (Wolfe & Aupperle,
1991). The broad concept of CSR and its dimensions make the creation of a performance
framework a complex but necessary process (Carroll, 2000). Subjective measurement of
performance remains a key point of the measurement process (Carroll, 2000). Several rating
agencies measure CSR performance in different ways, and these scores are reliable sources of
CSR performance (Cho, Lee, & Park, 2012; Cho, Lee, & Pfeiffer Jr, 2013). Since firms can
define opportunities for improvement, identify their strengths and weaknesses, and adapt their
strategies by measuring their CSR activities into performance (Giannarakis & Theotokas,
2011), thus measuring the CSR performance of firms is relevant. In this thesis, the definition
of CSR performance is congruent with CSRHubsâ definition, which examines how a company
performs in relation to its employees, environment, community, and governance (CSRHub,
2020a). Firm scores from this database are used to measure CSR performance.
2.3 National Culture
In the field of international business, a countryâs culture is seen as a fundamental determinant
underlying systematic differences in peopleâs behaviour (Hofstede, 2001; Steenkamp, 2001).
Over the years, several scholars have tried to identify an appropriate definition of national
culture. One of the most well-known sociologists of culture is Hofstede (1991, p. 6), who
defines national culture as âthe collective programming of the mind that distinguishes the
member of one group or category of people from othersâ. These patterns of feeling, thinking,
and acting are acquired in oneâs childhood and remain relatively stable over time.
Moreover, Schwartz (2006) emphasizes that values are the principle features of culture. People
within a given culture share sets of values that sequentially translate into commonly shared
identities, attitudes, and beliefs rooted in societal practices and norms (Halkos & Skouloudis,
2017). It provides the basis for interactions among group members (Beugelsdijk, Kostova, &
Roth, 2017). Moreover, cultural values emphasize shared perceptions and behaviour about what
is right and desirable in society. They justify and shape individual and organizational behaviour
(Schwartz, 2006). Moreover, national culture, including its norms, values, beliefs, practices,
and meanings, implies that one way of doing is preferable to another (Newman & Nollen, 1996).
There are several cultural frameworks used to measure culture, such as those of Hofstede, the
GLOBE, and Schwartz (Magnusson, Wilson, Zdravkovic, Zhou, & Westjohn, 2008). Hofstede
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was the first to establish a national cultural framework including six cultural dimensions and
providing country scores on these dimensions (Beugelsdijk et al., 2017). Inspired by Hofstede,
GLOBE developed nine independent dimensions of culture based on the relationship between
leadership effectiveness and culture (Magnusson et al., 2008). Not only do these dimensions
capture cultural values, but they also capture present practices in a society. Furthermore, both
Schwartz and Trompenaars have indicated that culture has a shared set of core norms and values
which guide the behaviour of their members (Magnusson et al., 2008). The difference lies in
the values that they both indicate as capturing national differences (Magnusson et al., 2008).
Schwartz (2006) has indicated seven cultural value orientations summarized into three cultural
dimensions. Trompenaarsâ work originates from Parsonsâ five dimensions (universalism,
individualism, neutral-emotional, specific-diffuse, and achievement-ascription), to which
Trompenaars added âattitude toward the environmentâ and âattitude toward timeâ
(Trompenaars, 1996).
Hofstedeâs cultural framework still dominates cross-cultural research (Beugelsdijk, Maseland,
& Van Hoorn, 2015; Tang & Koveos, 2008). According to previous studies, Hofstedeâs cultural
dimensions are still the most prominent variables to operationalize national culture (Kang et
al., 2016). However, Hofstedeâs framework also received criticism concerning the applicability
of his framework (Jones, 2007; Magnusson et al., 2008), since, according to the modernization
theory, countries will develop economically and this will result in a shift in cultural values
(Inglehart & Baker, 2000), and the change of culture over time is not captured in the indices
(Kirkman, Lowe, & Gibson, 2006). However, research done by Beugelsdijk et al. (2015) has
determined that countriesâ cultural scores have not changed much relative to the scores of other
countries. Thus, Hofstedeâs cultural dimensions can still be used for cross-cultural research.
2.3.1 Hofstedeâs Cultural Dimensions
Hofstede (1980a) cultural framework is based on the assumption that human beings around the
world are guided by different beliefs, attitudes, and ethical standards. He derived his framework
from an employee survey about job satisfaction and attitude towards work done at IBM.
According to Hofstede, the definitions of the first four cultural dimensions are as follows:
âą Power distance refers to âthe degree of inequality among people which the population of a
country considers as normalâ (Hofstede, 1994, p. 5)
âą Uncertainty avoidance refers to âthe degree to which people in a country prefer structured
over unstructured situationsâ (Hofstede, 1994, p. 5)
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âą Individualism versus collectivism refers to âthe degree to which people in a country prefer
to act as individuals rather than as members of groupsâ (Hofstede, 1994, p. 6)
âą Masculinity versus femininity (MAS) refers to âthe division of emotional roles between
women and menâ (Hofstede, 2011, p. 5)
Later, two new dimensions were added. To include these dimensions, Hofstede used the World
Values Survey (Hofstede, Hofstede, & Minkov, 2010).
âą Long-term (LTO) versus short-term orientation (STO) refers to âthe choice of focus for
peopleâs efforts: the future or the present and pastâ (Hofstede, 2011, p. 5)
âą Indulgence versus restraint (IVR) refers to âthe gratification versus control of basic
human desires related to enjoying lifeâ (Hofstede, 2011, p. 5)
In this thesis, the last two added cultural dimensions are neglected for the following reasons:
first, Hofstede (2011) has mentioned that the data for LTO and IVR is of limited availability
since it does not have the same numerous country cultural scores as the initial four dimensions.
Second, in line with prior studies that also neglected these two dimensions (e.g. Peng et al.,
2012; Ringov & Zollo, 2007; Thanetsunthorn, 2015), it gives this thesis enough reasons to
consider that these dimensions have less empirical importance than the initial four cultural
dimensions. Therefore, the scores of power distance, uncertainty avoidance, individualism, and
masculinity represent national culture in this thesis.
2.4 Headquartersâ Home Countryâs Sustainable Development
Today, after periods of economic and social development, the world faces significant
environmental problems such as global warming and resource depletion (Tan et al., 2017). The
realization of the impact of these problems caused by economic and social development has
resulted in an urgency to promote sustainable development (Zhou, Shen, Song, & Zhang, 2015).
The definition of sustainable development in this thesis is âto maintain the level of human-
wellbeing so that it might improve but at least never declines (or, not more than temporarily)â
(Beckerman, 1994, p. 195). By meeting the needs of the present generation, without
compromising the ability of generations in the future to meet their personal needs (Emas,
2015). In this context, the United Nations (UN) acts as an important player, because they help
countries overcome present and future sustainability challenges (Salvia, Leal Filho, Brandli, &
Griebeler, 2019). Therefore, in 2000, the UN Millennium Development Goals were adopted
and quickly gained ground because of the increasing importance of sustainable development
for the whole world (Sachs, 2012). In these goals, countries were encouraged to include the
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principles of sustainable development in their national programs and policies (Moran,
Wackernagel, Kitzes, Goldfinger, & Boutaud, 2008). However, even though the goals have a
global approach, the extent to which the goals are achieved depends on the level of priority
each country gives them. Consequently, in 2015, the Sustainable Development Goals (SDG)
were designed, because the Development Goals are always set for 15 years (Sachs, 2012).
Therefore, today these policies and national programs are included in countriesâ institutions,
which set âthe rules of the gameâ to which firms must adapt to survive (Rodriguez & Perez,
2016).
2.5 CEO Foreignness
In 1984, Hambrick and Mason developed the upper echelons theory (UET). This theory refers
to senior management persons such as CEOs. According to the main premise of this theory,
each top manager has his or her own values, perspectives, and cognitive biases which influence
managerial perceptions, and these likewise lead to strategic decisions (Hambrick, 2007).
In most firms, the CEO is the captain of the ship, making him or her the symbolic and
substantive leader of the company. Moreover, the CEO also has the final responsibility and
authority for setting and maintaining the companyâs strategy, making decisions, distributing
information, and allocating resources (Papadakis & Barwise, 2002; Roth, 1995; Thomas &
Simerly, 1994). The CEO also sets the standards, ethics, and values of a firm (GodosâDĂez,
CabezaâGarcĂa, FernĂĄndezâGago, & NietoâAntolĂn, 2019). The CEO therefore influences
organizational outcomes, because he or she views business situations through his or her
personalized lens (Lee, Sun, & Moon, 2018). Frequently, top executivesâ observable
characteristics and demographics can be used as an indicator of their value-based and cognitive
lens (Hambrick & Mason, 1984). One such characteristic is the CEOâs national culture, which
is determined by his or her nationality. In a firm, the CEO may share the same or a different
nationality than the headquarters location. In line with Thams (2013), a foreign CEO is an
individual who was born and has spent (most of) his or her formative1 years in a country other
than that in which the firm is headquartered. Since the CEO is in a unique position to influence
the firmâs strategic decisions, the CEOâs nationality is important to consider. Thus, CEO
foreignness is examined as a moderator.
1 Formative years refer to the first eighteen years of an individual (birth year to year reaches 17)
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2.6 National Culture and CSR Performance
National culture has been recognized as a fundamental determinant of differences among not
only individuals but also firms from other cultural backgrounds (Hofstede, 2001). Thus,
national culture also affects the behaviour of people within the company and consequently has
a recognizable impact on the strategic behaviour firms display (Kreiser, Marino, Dickson, &
Weaver, 2010). Considering that CSR activities are seen as a type of strategic choice, they
influence CSR implementations (Lee et al., 2018). The behaviour and values of the
headquartersâ firm are likely to correspond with national cultural values (Drogendijk & Holm,
2010). In this thesis, it is assumed that the national culture of the country where the headquarters
is located is a reasonable indicator of the national culture displayed within the firm since the
headquarters plays a pivotal role in the company by formulating its strategy and being
responsible for the success of the firm (Ciabuschi et al., 2012; Petruzzella et al., 2017).
2.6.1 Power distance and CSR performance
Hofstede (1980b, p. 45) has referred to power distance as âthe extent to which a society accepts
the fact that power in institutions and organizations is distributed unequallyâ. High PDI
cultures could be described as countries where subordinates wait to be told what to do,
corruption is common, scandals are covered up, and âpower is a basic fact of society antedating
good or evil: its legitimacy is irrelevantâ (Hofstede, 2011, p. 6).
Prior research concerning the relationship between the cultural dimension of PDI and CSR has
provided mixed results. Most studies have found a negative relationship between PDI and social
and environmental performance (Ringov & Zollo, 2007); CSR engagement (Peng et al., 2012);
employee-, community-, and environment-related CSR performance (Thanetsunthorn, 2015).
Even though Ho et al. (2012) and Ioannou and Serafeim (2012) both hypothesized the
relationship in a negative direction, the results show interesting findings since the relationship
demonstrates an opposite effect, namely a significant positive relationship with CSP. An
overview of the results of previous scholars on national culture and CSR is given in Table 6,
Appendix A.
Regarding organizations, it would be represented by the relationship between the superior and
the subordinate (Bochner & Hesketh, 1994). In societies with a high PDI, individuals tend to
accept inequality and a hierarchical order without further justification (Rinne, Steel, &
Fairweather, 2012). They are afraid or reluctant to disagree with their superiors and accept the
11
autocratic management style (Bochner & Hesketh, 1994) since this autocratic management
style is rooted in the mental programming of its members in society (Krokosz-Krynke, 1998).
In contrast, low-PDI societies value equality between their group members and stimulate
democratic forms of participation (Rinne et al., 2012).
From this perspective, prior research has concluded that individuals from high-PDI cultures are
more likely to view a questionable business practice as ethical compared to individuals from
low-PDI cultures (Cohen, Pant, & Sharp, 1996). Similarly, high-PDI countries are more likely
to behave unethically since superiors do not have to defend or justify their decisions to the
larger organization and stakeholders (Khatri, 2009). This also leaves room for corruption,
because subordinates remain loyal to their superiors. Scandals are covered up as long as these
individuals are in power, which could result in unethical and negative environmental actions
(Takyi-Asiedu, 1993). Thus, this supports the argument that high-PDI countries are less likely
to participate in CSR activities that influence CSR performance. Based on this, the first
hypothesis is as follows:
H1. The higher the power distance of the country in which the company is
headquartered, the lower the CSR performance.
2.6.2 Uncertainty avoidance and CSR performance
Hofstede (1980b, p. 45) has referred to uncertainty avoidance as âthe extent to which a society
feels threatened by uncertain and ambiguous situationsâ. It is important to mention that UAI
should not be confused with risk avoidance. Societies characterized by strong UAI could be
described as countries where individuals need clarity and structure, people do not tolerate what
is different because it is dangerous, and people believe in the achievement of expertise and
absolute truths (Hofstede, 1980b; Hofstede, 2011). Moreover, UAI also concerns how cultures
handle an unpredictable future (Rinne et al., 2012).
Contradicting findings in prior studies also concern the cultural dimension of UAI. Ho et al.
(2012), Peng et al. (2012), and Thanetsunthorn (2015) utilized the dimension of UAI in cross-
cultural research on CSR engagement and corporate non-financial performance. These scholars
found that UAI positively influences aspects of CSR. However, not all researchers agree.
Halkos and Skouloudis (2017) found a significant negative relationship between UAI and CSR.
Moreover, Ringov and Zollo (2007) hypothesized a negative relationship, but the results
indicate an insignificant positive relationship.
12
Individuals in high-UAI cultures prefer clear structures in their organizations, take fewer risks,
and place high importance on keeping everything certain and accountable (Gray, 1988;
Hofstede, 1983; Williams & Zinkin, 2008). In these countries, individuals are socialized with
the belief that everyone should behave according to the accepted guidelines (Kim, Lee, & Kang,
2018). The behaviour of individuals in organizations in these countries must be perceived as
loyal, desirable, and positive to remain part of the organizational âmembershipâ (Blodgett, Lu,
Rose, & Vitell, 2001). Thus, individuals in the organization follow the norms and guidelines,
because that is assumed to be desirable to the organizationâs members. Given the current
unknown environmental and social challenges, organizations in high-UAI countries want to
structure their operating framework to keep everything certain and accountable (Disli, Ng, &
Askari, 2016). To do so, firms in high-UAI countries are more likely to implement a business
strategy that could help them to develop a long-term sustainable relationship with their
stakeholders (Flammer & Bansal, 2017; Kim et al., 2018). Since CSR is considered a long-term
investment (Falck & Heblich, 2007; Yuan, Tian, Lu, & Yu, 2019), CSR could be a way to
reduce these unknown environmental and social challenges. This supports the argument that
the organizations in countries displaying more UAI engage more in CSR activities than low-
UAI countries do. Therefore, the second hypothesis is as follows:
H2. The higher the uncertainty avoidance of the country in which the company is
headquartered, the higher the CSR performance.
2.6.3 Individualism and CSR performance
Hofstede (2009, p. 2) refers to individualism versus collectivism as âthe degree to which
individuals are integrated into groupsâ. Individualistic countries could be described as âIâ
consciousness, others are classified as individuals, and tasks prevail over relationships.
Collectivistic countries could be described as âweâ consciousness, others are classified as in-
group or out-group, and relationships prevail over tasks (Hofstede, 1980b; Hofstede, 2011).
The results of prior studies on the individualism dimension indicate mixed findings. Support
for both a positive significant relationship (Ioannou & Serafeim, 2012; Naeem & Khurram,
2019; Peng et al., 2012) and a negative significant relationship (Ho et al., 2012; Thanetsunthorn,
2015) between individualistic countries and CSR has been found. Ringov and Zollo (2007)
demonstrated an insignificant relationship between individualistic countries and lower levels of
CSP. In individualistic cultures, individuals are likely to only take responsibility for their
13
immediate family and personal interests rather than group interests (Hofstede, 1980a). In
contrast, individuals in collectivistic countries place greater importance on group welfare and
their interests rather than themselves, and relationships with stakeholders are more valued in
collectivistic countries than in individualistic countries (Waldman, De Luque, et al., 2006).
The rationale of CSR is to âfurther some social goodâ by voluntarily contributing to social
wellbeing and community (McWilliams & Siegel, 2001, p. 117) since in collectivistic countries
(i.e., low-IDV countries) individuals see themselves more as part of a broader community than
individualistic countries do. This implies that the positive effect of CSR creates more impact
among firms based in collectivistic countries since they are more likely to incorporate the
societyâs well-being into their strategies and decision-making (Eisingerich & Rubera, 2010)
since individuals in these organizations recognize the importance of having responsibility for
the community and its welfare (Waldman, De Luque, et al., 2006). Furthermore, Hampden-
Turner and Trompenaars (2011) have concluded that in highly individualistic countries,
organizations put shareholders ahead of other stakeholders. Organizations do this by focusing
on the core value that their primary responsibility is the interest of their shareholders. Therefore,
most CSR activities are perceived as the exceeding expenses of the organization, making CSR
not a priority. Moreover, research done by Wang and Young (2014) indicates that business
managers in collectivistic countries are more concerned about environmental ethics than those
in individualistic countries are. In line with this study and the arguments given, it is expected
that unless it is in their own personal recognized self-interest, individuals from individualistic
countries are likely to be less concerned about the broader impact of their decisions on the
community; they are more focused on their personal goals. This results in less interest in CSR
activities and therefore negatively influences CSR performance. Following this argument, the
third hypothesis is as follows:
H3. The higher the individualism of the country in which the company is headquartered,
the lower the CSR performance.
2.6.4 Masculinity and CSR performance
Hofstede (2009, p. 2) has referred to masculinity versus femininity as âthe distribution of roles
between the gendersâ. Dominant values in masculine societies are personal achievements and
success and not caring for others and the quality of life. Individuals in feminine societies put
more value on caring relationships and are more social in their support of other people
(Hofstede, 1980a; Hofstede, 1994).
14
Previous research done concerning the relationship between masculinity and CSR has also led
to contradictory findings. Most of the prior studies found a negative relationship between MAS
and CSR engagement (Peng et al., 2012), social and environmental performance (Ringov &
Zollo, 2007), and employee-, community-, and environment-related CSR performance
(Thanetsunthorn, 2015). On the other hand, Naeem and Khurram (2019) and Ho et al. (2012)
have concluded that masculinity has a positive influence on CSR and CSP; however, Ho et al.
(2012) hypothesized the relationship in the opposite direction.
According to Burritt and Orij (2010) masculine societies have a lower stakeholder orientation
because they are less socially oriented. Similarly, Blodgett et al. (2001) concluded that
individuals in masculine societies value their self-interest more compared to those of various
stakeholders. Since the values of personal achievement and success are dominant in a masculine
society and these individuals care more about these values, they focus less on benefit to their
community and stakeholders. Therefore, it is assumed to be unlikely that firms from masculine
cultures will engage in CSR. To be more specific, the strive to attain their own objectives will
sometimes come at any means and by any costs what might be necessary, only to obtain what
they want (Vitell & Festervand, 1987). In addition, individuals in masculine societies tend to
focus more on economic responsibilities instead of non-economic responsibilities, such as
environmental conservation (Husted, 2005). Therefore, this is assumed to lead to reduced
responsiveness to societal and environmental problems, which also indicates that these societies
engage less in CSR activities. In contrast, Burritt and Orij (2010) concluded that feminine
societies have a high stakeholder orientation, because caring for others such as stakeholders
(e.g., employees, the community, etc.) is a prevalent value in these societies. Because they care
about the wellbeing of others, organizations from these countries tend to care more about the
society and the environment and are thus expected to be more engaged in CSR activities than
organisations from masculine societies. Firms in masculine countries are expected to be less
likely to engage in practices that encourage the wellbeing of others, such as CSR, which
negatively influences companiesâ CSR performance. Thus, masculinity is assumed to
negatively affect CSR performance. Based on this, the fourth hypothesis is as follows:
H4. The higher the masculinity of the country in which the company is headquartered,
the lower the CSR performance.
15
2.7 Moderating Effects on the Relationship Between National Culture and CSR
Performance
As previously mentioned, the opposing findings of prior research on national culture and CSR
performance indicate that national culture can have varying outcomes in relation to CSR
performance. As a result, scholars have begun to explore potential contingencies that could
influence the relationship, such as industry type, the degree of globalization (Hawn & Burbano,
2018), and top management commitment (Jian, Jaaffar, Ooi, & Amran, 2017). In this thesis,
the headquartersâ HCSD and the CEOâs foreignness are analyzed to determine whether these
contingencies influence the relationship between national culture and CSR performance.
2.7.1 The Moderating Role of The Headquartersâ Home Countryâs Sustainable
Development
In the last decades, sustainable development has gained increasing urgency in the institutional
environment in both rich and poor countries across the world, because of significant
environmental problems that are caused by rapid economic and social development. In this
thesis, the definition of sustainable development is âto maintain the level of human-wellbeing
so that it might improve but at least never declines (or, not more than temporarily)â
(Beckerman, 1994, p. 195). By meeting the needs of the present generation, without
compromising the ability of generations in the future to meet their personal needs (Emas,
2015).
Since firms are embedded in the institutional context of countries, they are influenced by local
institutions; as the institutional theory states, that, âa firmâs external environment is governed
by institutions manifested by a wide range of social structures, including schemas, rules, norms,
and routinesâ (Roxas & Coetzer, 2012, p. 462). These social structures are well accepted and
have a significant degree of reliance in society; therefore, they can provide authoritative
guidelines for social behaviour (Scott, 1995). In this case, firms need to conform to these local
social structures, because the ârules of the gameâ mandate that organizations adopt
environmentally and socially sustainable practices to maintain at least the current level of
human well-being in society (Roxas & Coetzer, 2012). Since the main existence of firms is to
remain legitimate, firms should conform to these rules and meet stakeholdersâ expectations,
because they can influence strategic choices (Campbell, 2007). Since institutions vary
significantly across countries (Marano & Kostova, 2016), priorities and actions in socio-
economic actors vary significantly and should be taken into account (Jackson & Apostolakou,
16
2010). As result of the varying institutions, there are differences in the degree of stakeholder
pressures on organizations around the world to engage in CSR initiatives (Banerjee et al., 2019).
Brinkerhoff and Goldsmith (1992) have concluded that sustainable development depends on
the quality of national institutions. As a result, laws, rules, and regulations deriving from
institutions differ in companies with high compared to low levels of sustainable development.
For instance, in poor institutional environments, countriesâ sustainable development is lower,
and this results in lower expectations of stakeholders because the countryâs agenda to include
stimuli towards sustainable development is lower compared to high-sustainable development
countries (Batty, Davoudi, & Layard, 2012; Haleem, Farooq, Boer, & Gimenez, 2015; Salvia
et al., 2019). In contrast, in high-quality institutional environments, the sustainable
development of countries is higher, and this results in higher stakeholder expectations since
sustainable development is higher on the countryâs agenda (Dutt, 2009; Salvia et al., 2019).
This means that, even though organizations are equally inclined to meet stakeholdersâ
expectations, the expectations of stakeholders differ per environment. In a certain environment,
stakeholdersâ expectations are higher, therefore firm needs to make more effort to remain
legitimate, whereas in other environments the firm also remains legitimate with less effort since
the legitimacy of companies refers to the ability of the firm to meet stakeholdersâ expectations
(Leyva-de la Hiz, Hurtado-Torres, & BermĂșdez-Edo, 2019). Thus, the sustainable development
in a country is assumed to differ based on the different national institutions and stakeholder
pressures, and since a countryâs sustainable development can be thought to affect how firms
make strategic decisions, this also differently impacts the relationship between national culture
and CSR performance.
Even though it has been proven that a countryâs sustainable development does not fully
influence the cultural values of firms employees, because cultural values are stable over time
(Hofstede, 2011), in certain situational contexts such as a countryâs sustainable development,
it can strengthen or weaken the influence of cultural values on CSR performance (Meglino &
Ravlin, 1998). Therefore, it is important to consider the headquartersâ HCSD.
In this thesis, uncertainty avoidance is the only the cultural dimension which is predicted to
positively influence CSR performance. The core argument for this positive relationship is that
these individuals in the organization implement a business strategy that helps to develop long-
term relationships with stakeholders, whereby CSR could be seen as a way to reduce the
17
unknown social and environmental challenges. In addition, this relationship could be
strengthened by the headquartersâ HCSD if it is high. In a headquartersâ home country with
high sustainable development, the institutions enforce stricter social and environmental laws
and regulations; therefore, since sustainable development is a priority on the countryâs agenda,
it is mainstream for stakeholders to expect firms to engage in CSR initiatives. In contrast, in
low-sustainable development headquartersâ home countries, institutions enforce less strict
environmental and social laws and regulations; thus, stakeholder pressure to engage in CSR
initiatives is less mainstream. Consequently, in a highly sustainably developed country,
organizational members want to meet stakeholder expectations; therefore, the way these
members can follow their cultural values is strengthened, because the positive cultural effect
on CSR results in the fact that they can act out. However, in a low-sustainable development
country, members of organizations feel less of an urge to meet stakeholdersâ expectations,
because the stakeholdersâ pressures to engage in CSR is less mainstream and thus they can
afford to hold back; therefore, the way these members can follow their cultural values is
weakened. Overall, the positive relationship between uncertainty avoidance and CSR
performance is strengthened by a high-sustainable development context. This results in the
following hypothesis:
H5a. The higher the sustainable development of the country in which a company is
headquartered, the stronger the positive relationship between uncertainty avoidance
and CSR performance will be.
In contrast, as previously mentioned, the national cultural values of power distance,
individualism, and masculinity are assumed to negatively influence CSR performance. These
negative relationships are weakened when the headquarters is situated in a highly sustainably
developed country, because organizational members feel a greater urge to meet stakeholders to
remain legitimate than in a low-sustainable development country. Therefore, despite the fact
that power distance, individualism, and masculinity have a negative influence on CSR
performance, organizational members feel more of an urge to meet stakeholdersâ expectations,
which weakens the way that organizational membersâ can pursuit of their negative cultural
values. However, in low situations, members of organizations do not feel the need to engage in
CSR, because there is no institutional arrangement that mandates that firms must engage in pro-
social and pro-environmental practices, and therefore organizational membersâ ability to follow
their cultural values is strengthened. This results in the following hypotheses:
18
H5b. The higher the sustainable development of the country in which a company is
headquartered, the weaker the negative relationship between power distance and CSR
performance will be.
H5c. The higher the sustainable development of the country in which a company is
headquartered, the weaker the negative relationship between masculinity and CSR
performance will be.
H5d. The higher the sustainable development of the country in which a company is
headquartered, the weaker the negative relationship between individualism and CSR
performance will be.
2.7.2 The Moderating Role of The CEO Foreignness
Already mentioned in section 2.5, is according to the UET, the behavior of firms are a reflection
of the experiences and choices that CEOs will make (Wang, Holmes Jr, Oh, & Zhu, 2016).
Nowadays, more CEOs do not share the same nationality as the headquartersâ country (Thams,
2013). Companies who want to become more international, seek to hire a non-native CEO
(Blonigen & Wooster, 2003). This results in CEOs having a different culture than the
headquarter.
Considering that firms differ in their CSR performance, which is assumed to be influenced by
the cultural values of employees in the headquarters, the impact of the nationality of the CEO
on this relationship is also expected to differ. According to Arp (2013), a person is influenced
in his/her formative years by the cultural values of the country situated, such that a countryâs
national culture is reflected in a personâs nationality. Therefore, it can be said that a CEO is
influenced by and reflects his or her native countryâs cultural values. Consequently, foreign
CEOs do not share the same national culture as most employees in their firm, thus there will be
a difference for firms between having a foreign or native CEO. This implies that any foreign
CEOs may have a strong national cultural imprint of a nation that is not the headquartersâ home
country. Hence, they are likely to have a word view or mindset that is less concerned about
organizationsâ domestic settings compared to native-born CEOs (Thams, 2013).
Because foreign CEOs have cosmopolitan mindsets and global visions they are less inclined to
care about âlocalâ visions (Froese, Kim, & Eng, 2016). Moreover, the global visions make any
foreigner to be more attuned to global opportunities (Thams, 2013). Therefore, the local cultural
importance of the headquartersâ home country are less influential on any foreign-born CEOâs
19
compared to their national counterparts. On the other hand, native CEOs have the same local
vision as the headquartersâ home country, thus it is assumed that this CEO will more likely to
comprehend the local cultural importance than the foreign-born CEO. Since the CEO is in a
position to influence strategic decisions in the organization, and as CSR is seen as a strategic
decision (Lee et al., 2018), it is therefore expected that a native CEO influence the firm in such
a direction that the way organization membersâ are able to follow their cultural values is
strengthened. Since the native CEO is more likely to share the same local cultural visions with
their organizational members within the headquartersâ office.
In contrast to a native CEO, a foreign CEO will lead the organization in such a direction that
the company focus more on global visions than on local visions. This less inclined local cultural
importance of foreign CEOs, no matter which countries the CEO is from, can influence the
behavior of organizational members (Huang, Cheng, & Chou, 2005). In this regard, a foreign
CEO could influence the firm, so that the way organization membersâ are able to follow their
cultural values is weakened for all the cultural dimensions. This weakening effect will result in
the fact that the negative relationships of power distance, individualism and masculinity will be
weakened, as the negative relationship will become more negative and the positive relationship
of uncertainty avoidance will be weakened, as the positive relationship will become less
positive. Thus, the CEOâs foreignness is expected to influence the relationship between national
culture and CSR performance. More specifically, it is assumed that the impact any foreign CEO
can make, will affect the way the firm can perform on their cultural values. The foreign
influence results in a weaker effect, therefore the negative relationships and positive
relationship are weakened. This results in the following hypotheses:
H6a. Having a foreign CEO will create a weaker negative relationship between power
distance and CSR performance compared to a local CEO.
H6b. Having a foreign CEO will create a weaker negative relationship between
individualism and CSR performance compared to a local CEO.
H6c. Having a foreign CEO will create a weaker negative relationship between
masculinity and CSR performance compared to a local CEO.
H6d. Having a foreign CEO will create a weaker positive relationship between
uncertainty avoidance and CSR performance compared to a local CEO.
20
2.8 Conceptual Model
The conceptual model in Figure 1 is derived from the literature review and hypotheses.
3. RESEARCH METHODOLOGY
In this section, the data collection method and sample are explained. Moreover, the
measurement of constructs is discussed. Finally, a statistical analysis is explained.
3.1 Data Collection
To test the presented hypotheses, a quantitative approach was used. Secondary data collected
from several databases made available to students from the University of Groningen was used
in addition to the publicly available information. Data for the dependent variable CSR
performance was retrieved from CSRHubâs website. The data for the independent variable of
national culture was collected from the Hofstede Insights website. Moreover, the moderator,
the headquartersâ HCSD, was determined by the 2016 EPI. Finally, the CEOâs foreignness was
collected from the BoardEx database. Data for the control variables firm size, firm profitability,
and firm industry were collected from the Fortune Global 500, CompStat, or Orbis (Table 7,
Appendix B).
Figure 1: Conceptual Model
21
3.2 Data Sample
The sample of this thesis focuses on the 2017 Fortune Global 500. This sample was chosen
since according to Carroll (2010), CSR applies to all firms regardless of their size. However,
the focus is likely to be more on large firms, because they have more clout and are more often
in the public eye. This dataset covers the worldâs largest public MNEs based on their revenue.
The firms are from different countries and industries around the world, which makes the
outcomes more generalizable to large firms. Moreover, since these companies are publicly
listed, a large amount of information is available.
For such a sample size, Hansen, Andersen, and Parner (2014) have proposed using 10
observations per independent variable. Therefore, the ideal number of observations should at
least be more than 90. However, to minimize the risk of ending up with less than 90
observations due to missing data, more firms were added. Thus, the sample size is 165 firms
from 23 countries (Table 8, Appendix C) and eight major categorized industry groups (Table
9-10, Appendix C). These 165 observations are randomly sampled firms that were not
excluded2 from the initial sample. Only 66 observations were already in the sample since they
have a foreign CEO. The random sampling was done in Excel using the formula (=RAND).
This formula provides an evenly distributed random real number between 0 and 1 (Microsoft,
2020). Subsequently, these values were sorted by ârandomâ, resulting in a random dataset where
the first 99 observations were chosen, on top of the fixed 66 observations.
3.3 Measurement of Variables
3.3.1 Dependent Variable
The dependent variable is the firmâs CSR performance. Over the years, many methodological
tools have been used to measure CSR performance. The KLD database, GRI index, Fortune
reputation index, and CSRHub index are broadly recognized and used CSR indexes and
databases. However, most of these measurement tools have some disadvantages. The KLD
database is one of the most widely accepted and used measurements of CSR performance
(McGuire, Dow, & Ibrahim, 2012) and includes the social records of more than 3,000 US
companies including seven indicators (Manner, 2010). One major weakness is that the
information is mainly from American organizations. Since this thesis compares countries, this
database is not suitable (Costantini & Mazzanti, 2012). Furthermore, the GRI index
2 Excluded observations are firms headquartered in Hong Kong (no EPI data)
22
recommends guidelines for organizationsâ corporate sustainability reporting (Charitoudi,
Giannarakis, & Lazarides, 2011). Nevertheless, criticism of this index indicates that companies
could manipulate their performances to appear more transparent by overemphasizing their real
performance (Moneva, Archel, & Correa, 2006). Fortune reputation index is based on a survey
of approximately 5,000 CEOs, senior executives, and financial analysts. It is also this
questionnaire survey element that is a major disadvantage. According to Wood (2010, p. 74),
the Fortune rating is âitself a fatal blow to using the measure in any objective sense. It seems
the same as asking the foxes how well they take care of things down at the henhouseâ. Besides
the disadvantages mentioned above, these measurement tools also have specific advantages.
However, Wolfe and Aupperle (1991) have argued that there is no single best way to measure
CSR performance; therefore, this thesis uses the CSRHub index. This index provides
advantages to address some of the disadvantages mentioned above.
First, the CSRHub index covers more than 17,268 organizations from 143 countries in 134
industries (CSRHub, 2020a). Second, it covers information from more than 618 data sources,
including ESG, ASSET4, and KLD, and this database also covers information from NGOs. The
CSRHub propriety system aims to remove inconsistency and bias by mapping onto a central
schema. Thus, regarding a large number of data sources and observations as well as the way
the data is adjusted and processed, this index is a representative measurement tool and contains
the best accessible information that fits into the main goal of this thesis (Thanetsunthorn, 2015).
CSRHubâs schema contains four key categories:
âą Community (e.g., community development and human rights, etc.)
âą Employees (e.g., compensation and benefits, diversity and labour rights, etc.)
âą Environment (energy and climate change, resource management, etc.)
âą Governance (board, transparency, reporting, etc.)
The CSRHub score is based on a rating scale from 0 (extremely negative) to 100 (extremely
positive In this thesis, no category has been given greater priority than the others.
Time lags
This thesis must consider time lags. According to CSRHub (2020b), it takes as much as two
years to reflect a change in the scores of a firmâs CSR performance. Since this company CSR
performance score comes from strategies and decisions made in the past, it is important to take
the data from two years back to be consistent with CSRHub reasoning. 2017 is used as the basic
23
year; therefore, 2019 CSR performance scores of firms are used. Furthermore, according to this
logic, the moderator headquartersâ HCSD is assumed to influence the organization at the time
when the management makes CSR decisions. Thus, the 2016 EPI is used. The 2017 ranking
reported in 2018 cannot be used since, for example, in February firms do not know what their
sustainable development will be in December 2017; however, they know the sustainable
development from 2016. For the control variables, the same logic holds for firm profitability,
meaning that data from December 2016 was used. For firm size, the 2017 data from Fortune
Global 500 was used, because managers know at the moment of making decisions what the
number of employees is. If this data was not available, the latest accessible data was included.
Finally, the cultural values and the control variable â the firm industry â do not change over
time.
3.3.2 Independent Variables
To measure the independent variable â the national culture of the headquarters â the country of
the firmâs headquarters first had to be identified. This data was retrieved from BoardEx and
double-checked with the information available on the Fortune Global 500 website. Afterwards,
the four cultural dimensions were collected from Hofstede Insights to match the national culture
score with the headquartersâ location to create four variables that represent the cultural
dimensions of Hofstede. The cultural scores range from 1 to 100, and the higher the score is,
the more the cultural dimension is presented in that country.
3.3.3 Moderating Variables
3.3.3.1 Headquartersâ home countryâs sustainable development
For the headquartersâ HCSD, the EPI was used (Strezov, Evans, & Evans, 2017; ZidanĆĄek,
2007). An appropriate measurement tool for sustainable development must have a rigorous
connection to the definition of sustainability (Böhringer & Jochem, 2007). This index has a
proximity-to-target approach, meaning that the sustainability performance of a country is
measured against an absolute target, which is established by national standards and international
agreements, including the SDG (Esty et al., 2008). The EPI âaddresses the need for a gauge of
policy performance in reducing environmental stresses on human health and promotion
ecosystem vitality and sound natural resource managementâ (Böhringer & Jochem, 2007, p. 5).
Yale University developed the EPI, and it contains the scores of 180 countries on protection of
human health from environmental harm (e.g., air quality protection) and protection of the
24
ecosystem (e.g., climate, energy, and forests) (Environmental Performance Index, 2016).
Moreover, air quality is an example of a threat to public health. In 2016, the Institute for Health
Metrics and Evaluation estimated âthat diseases related to airborne pollutants contributed to
two-thirds of all life-years lost to environmentally related deaths and disabilitiesâ
(Environmental Performance Index, 2016, p. 2). This index reflects the priorities that countries
have concerning these human and natural environmental issues. The EPI scale ranges from 0
(lowest sustainable development) to 100 (highest sustainable development).
3.3.3.2 CEO foreignness
For CEO foreignness, each CEOâs nationality was collected from director profile reports on the
BoardEx website. The data concerning the nationality of CEOs was only available from April
2017 for the UK, Europe, and North America and from October 2016 for the rest of the world
(ROW). Since these two datasets have a difference of six months, the researcher manually
examined each firmâs website and annual reports to determine whether the same CEO as in
2016 was still in place for the ROW. A categorical variable was created: 0 for a local CEO and
1 for a foreign CEO. To obtain a representative sample to test a potential moderating effect, 66
firms have a foreign CEO and 99 firms have a local CEO. Even though a 50-50 distribution
creates the most generalizability (Dodd & Epstein, 2012), it should also be considered that the
larger the sample size, the more statistical power the dataset has (Suresh & Chandrashekara,
2012). Therefore, 60% foreign CEOs and 40% non-foreign CEOs was chosen as the
distribution, because the number of foreign CEOs in the Fortune Global 500 will not change.
3.3.4 Control Variables
Three control variables were included to ensure that some factors previously found to affect
CSR performance did not influence the proposed hypotheses.
Firm size
In this thesis, firm size is included as a control variable since prior studies have concluded that
this is related to a firmâs environmental behaviour and CSR (AragĂłn-Correa, 1998; Aras,
Aybars, & Kutlu, 2010; Cordeiro & Tewari, 2015). According to Udayasankar (2008), larger
firms face more public examination due to their visibility, and since they have a larger scale of
activities, their social impact is greater. By engaging in CSR, they may improve their
reputations and image (Melo & GarridoâMorgado, 2012). Therefore, these firms are more likely
25
to engage in CSR activities. In this thesis, firm size is measured in numbers of employees
gathered from the 2017 Fortune Global 500 (e.g. Baumann-Pauly, Wickert, Spence, & Scherer,
2013; Ioana-Maria & Adriana, 2012). The number of employees is either the yearly average
number or the number published by the company at the end of a fiscal year (Fortune, 2017).
Firm profitability
The economic profitability of a firm could be considered an indicator of the organizationâs
financial performance (GodosâDĂez et al., 2019). In the past, both return on assets (ROA) and
return on equity (ROE) have been commonly used financial performance measures (Griffin &
Mahon, 1997; Waddock & Graves, 1997). In this study, the ROE of companies is used because
it is expected that firms make CSR investments based on how profitable the firm is, and this
ratio is frequently used by shareholders to measure a firmâs success (Hidayat, 2017). ROE is
calculated as a ratio by dividing net income by the amount of shareholder equity. According to
Campbell (2007), firms with greater profitability are more likely to implement their CSR
activities and strategies more aggressively since the organization has greater slack resources
available. Furthermore, Muttakin, Khan, and Subramaniam (2015) found that more profitable
firms disclose more environmental information since they have larger resources available to
engage in CSR and are more motivated to disclose CSR, because they want to favourably
distinguish themselves. Regarding the time-lag, this control variable was taken from the end of
the 2016 fiscal year since companies incorporate prior firm profitability while making strategic
decisions, including CSR decisions (McGuire, Sundgren, & Schneeweis, 1988).
Firm industry
Several scholars have examined the effect of industries on CSR performance. Garcia, Mendes-
Da-Silva, and Orsato (2017) have concluded that organizations in sensitive industries present a
better environmental performance than non-sensitive industries. Moreover, Cormier and
Magnan (2003) and Kilian and Hennigs (2014) have concluded that sensitive industries are
more inclined to engage in CSR communication. In particular, these firms want to remain
legitimate by communicating their CSR engagements to their society since these organizations
face higher stakeholder pressures to act legitimately. Therefore, it was important to exclude this
effect in this thesis. This was done by creating a dummy variable of 0 for non-sensitive
industries and 1 for sensitive industries since previous research indicates that these two industry
sectors differ in their CSR performance. De Villiers, Naiker, and Van Staden (2011) and Cahan
26
et al. (2016) have categorized sensitive industries by the following SIC codes: 800â899
(forestry), 1000â1099 (metal mining), 1200â1399 (coal mining and oil and gas extraction),
2600â2699 (paper and allied products), 2800â3099 (chemicals and allied products, etc.), 3300â
3399 (primary metal industries), and 4900â4999 (electric, gas, and sanitary services) (Tables 8
& 9, Appendix B).
3.4 Data Analysis
To test the proposed hypotheses, IBM SPSS Statistics version 24 was used. Since this thesis
examines multiple independent variables to explain the continuous dependent variable CSR
performance, a multiple linear regression analysis based on the ordinary least square (OLS)
method was appropriate to use (Slinker & Glantz, 2008), because this method is usually used
in national culture and CSR studies (Giannarakis, 2014; Ringov & Zollo, 2007; Thanetsunthorn,
2015). Moreover, considering the moderators in this study, a moderated multiple regression
analysis was used (Dawson & Richter, 2006). Therefore, the independent variables and the
continuous moderator are mean-centred for this analysis, as well as the computing of interaction
terms to test the moderating effect. This thesis uses a hierarchical regression. Before running
the multiple regression analysis, the preliminary requirements for the analysis were examined
to guarantee an adequate interpretation of the results since problems in the dataset could be
corrected before the main analysis (Fidell & Tabachnick, 2003).
3.5 Robustness Test
To ensure the overall validity of the model in this thesis, robustness tests were performed (Lu
& White, 2014). The results after a robustness test should be the same even though a variable
is removed or changed. Examples of robustness tests are a different measurement for the
dependent variable or replacement with random sampling. In this thesis, changing the
measurement for CSR performance would not be very useful since more than 618 data sources,
such as ESG and KLD, were used to generate the aggregated company CSR performance score.
Therefore, the likelihood of choosing another CSR performance measurement that is not
already included in this aggregated score is low. This ultimately would not result in an
appropriate robustness test. Thus, a robustness method of resampling was used, namely
bootstrapping, which is a procedure that suitably resamples the data for estimating standard
errors (Harden, 2011). This method is conducted by ârandomly resampling (with replacement)
n-centred case vectors from the original n-centred case vectorsâ (Berkovits, Hancock, & Nevitt,
27
2000, p. 881). In the past years, this method has been represented as a promising new data
method, especially since traditional statistical methods have been violated. Furthermore, a
second robustness test was performed to test if the overrepresentation of the USA, the UK, and
Japan, which account for 48.2% of the companies in this sample, biases the results.
4. EMPIRICAL RESULTS
In this section, the outcomes of the preliminary tests are outlined, followed by the empirical
results of the moderated multiple regression analysis.
4.1 Preliminary Requirement Tests for the Moderated Multiple Regression Analysis
4.1.1 Outliers
To test for potential outliers, Cookâs distance was used. The precondition is that the created
corresponding variable is > 1 (Dhakal, 2017). This test is illustrated in a scatter plot. Two
potential outliers were identified and excluded from the dataset (Figure 4, Appendix D).
4.1.2 Normality
To test for normality, a P-P plot and histogram were made (Figure E.1-E.6, Appendix E). The
data in the P-P plot is close to the normality line, assuming that the data is normally distributed.
Moreover, the histogram confirms a relatively normal distribution. Concerning the skewness
and kurtosis, the histogram is a bit negatively skewed, and distributions are a bit peaked.
4.1.3 Homoskedasticity
For this assumption, a scatter plot was made. Models 8 and 10 include the interaction terms
(KEAN University, 2004). Figure F.1-3 in Appendix F shows that the distributions of the scatter
plots are equal. To confirm this, the Breusch-Pagan test was conducted, because this is the most
common statistical test of homoskedasticity (Table 11, Appendix F)(Shukur, 2002). These
results also indicate homoskedasticity, because no value is significant (p †0.05).
4.1.4 Linearity
According to SchĂŒtzenmeister, Jensen, and Piepho (2012), a separate test for linearity is not
needed, because the aforementioned assumptions of normality and homoskedasticity are met.
Moreover, Osborne and Waters (2002) have indicated that a scatter plot of standardized
28
residuals and the standardized predicted value is also a method for detecting linearity.
Additionally, this residual plot shows no sign of non-linearity (Figure F.1-3, Appendix F).
4.1.5 Multicollinearity
For this assumption, the variance inflation factor (VIF) was tested for all the main variables
since it tests the degree of multicollinearity of the independent variable with other independent
variables (Oâbrien, 2007). Since all the VIF values are below the threshold of 10 and above the
tolerance level of 0.1, there is no multicollinearity (Table 12, Appendix G) (Oâbrien, 2007).
4.1.6 Independence of residual values
This assumption is tested with the Durbin-Watson tests and checks for autocorrelations. Since
these results are close to a value of 2, they are between the accepted range of 1.5 and 2.5
(StatisticsSolutions, 2020). Therefore, this assumption is met (Table 13, Appendix H).
4.2 Descriptive Statistics
Table 1 presents the descriptive statistics. The outliers were removed from the 165 observations
included in the sample (Section 4.1.1). CSR performance ranges from 35 to 69, which shows
that the CSR scores of MNEs are widespread with a mean of 56.1. Individualism has the highest
mean (68.99) and standard deviation (24.253), indicating that the values are spread out in a
wider range. Masculinity has the greatest spread in maximum and minimum values; however,
the mean (60.83) and standard deviation (17.555) are lower, indicating that some scores are
spread out but are around the average. Power distance has the lowest mean (48.19) and standard
deviation (15.878); thus, most of the companies are located in countries with neither low nor
high scores. The fact that the dependent and independent variables differ widely is useful to be
able to ascertain a relevant relationship. Moreover, the headquartersâ HCSD indicates that more
companies in this sample are from high-EPI countries (mean = 82.577), where the range is from
53.58 (India) to 90.68 (Finland). In this sample, 40% of the companies have a foreign CEO.
The firm size, measured in the number of employees, has an average of 121.519, where the
smallest firm has 4,107 employees and the largest firm 527,180. Considering that the data
sample is based on MNEsâ highest revenue, their profitability differs significantly. It ranges
from -58% to 140.6% with an average of 14%. Moreover, 24% of MNEs belong to the sensitive
industry categorization.
29
4.3 Correlation
The correlation matrix is presented in Table 2. In this table, power distance, individualism,
headquartersâ HCSD, CEO foreignness, and the control variables firm size and firm industry
correlate significantly with CSR performance. This indicates that an increase in one variable
results in a similar increase in the other variable. Only for power distance due to the negative
correlation is an increase accompanied by a decrease in CSR performance. A strong correlation
can be observed between power distance and individualism. However, this is consistent with
Hofstedeâs own remark that âlower power distance are more often individualist and countries
with higher power distance are more often collectivistâ (Hofstede, 2014 min. 10:00). Since this
is the effect of wealth, taking that effect out means that it almost disappears (Husted, 2005).
Because Hofstede treats PDI and IDV as separate dimensions, this thesis does so as well.
Moreover, headquartersâ HCSD correlates strongly with individualism and power distance.
Some scholars have argued that a correlation with a value > 0.5 could be problematic (Cohen
et al., 1996), while others have argued that a correlation higher than 0.9 is problematic
(Tabachnick, Fidell, & Ullman, 2007). Even though these three correlations might be
interpreted as high, the multicollinearity test confirms that these factors do not cause any
violation (Table 11, Appendix F). Furthermore, headquartersâ HCSD correlates significantly
with CSR performance and power distance and individualism, potentially affecting these
variables. Moreover, the same dimensions (PDI and IDV) plus uncertainty avoidance also
correlate significantly with the second moderator: CEO foreignness. Thus, this variable could
also indicate an influencing effect on these dimensions.
Table 1: Descriptive Statistics
30
Table 2: Correlation Matrix
31
4.4 Multiple Regression Analysis
After testing the six assumptions of the preliminary analysis, which were all met, and explaining
the descriptive statistics and correlations, the main analysis was conducted, the results of which
are presented in Table 3. As this table illustrates, 10 different models were used for this
regression analysis, whereby a hierarchical regression was used by adding each predictor one
by one in steps. This was done because hierarchical regression is an appropriate tool to use for
analysis when the study has correlated variables, as shown in Table 2 (Lewis, 2007).
In the first model, the effects of the control variables on the dependent variable were
tested, and firm size (p = .009) and firm industry (p = .005) both had significant explanatory
power regarding CSR performance. These three control variables have an RÂČ of 10.7%. This
indicates how much variance in CSR performance is explained by the independent variables â
in this case, the three control variables (Miles, 2014).
To test Hypothesis 1, the independent variable power distance was added to the control
variables separately. The results in Model 2 indicate that it has a negative effect (B = -0.138).
This means that one unit change in this independent variable results in a negative change of -
0.138 in CSR performance. Moreover, Model 6 (B = -0.140) also shows a significant level of
p †0.01. Therefore, both models support Hypothesis 1 and can be accepted.
In Model 3, the independent variable uncertainty avoidance was tested separately from
the control variables to test Hypothesis 2. The results show no significance (B = 0.028; p =
0.240); however, the results in the general regression on Model 6 display a positive significant
effect (B = 0.058; p = 0.013). While the dimension is significant in the general regression, it is
not significant on its own; therefore, the effect is unstable and Hypothesis 2 is not supported.
Model 4 assesses the impact of individualism on CSR performance. Contrary to the
hypothesized effect, individualism seems to have a positive significant effect on the dependent
variable (B = 0.071; p = 0.000). However, Model 6 did not confirm the same result; it produced
a positive insignificant outcome (B = 0.014; p = 0.644). Even though this variable has strong
statistical significance, it lost its effect in Model 6 when the other predictors were added. Thus,
this variable is also unstable, resulting in no support for Hypothesis 3.
Furthermore, the last independent variable, masculinity, was added separately to the
control variables to test Hypothesis 4. Nonetheless, the positive influence of masculinity on
CSR performance is not significant, and this positive influence stands in contrast with the
negative hypothesized effect (B = 0.002; p = 0.957); nonetheless, in Model 6, the predictor has
an insignificant negative effect (B = -0.012; p = 0.663). Consequently, Hypothesis 4 is rejected.
32
Moreover, the RÂČ in Model 6 compared to Model 1 increased to 24.4%. Therefore, the
four independent variables add significant influence to the explanation in the variation.
Next, Model 8 showed that the moderating variable headquartersâ HCSD has a positive
significant effect on CSR performance (B = 0.339, p = 0.002), and this was also confirmed in
Model 10 when the interaction terms were added (B = 0.993, p = 0.000). The negative
relationships between this moderator and power distance and individualism are clear; however,
only power distance is significant (B = -0.023; p = 0.004). Further, the interaction with
masculinity (B = 0.013, p = 0.084) is positive and very small but significant. Nonetheless, the
relationship was hypothesized to be negative. Moreover, the interaction term uncertainty
avoidance (B = 0.009, p = 0.034) also influences CSR performance. Thus, Hypotheses 5c and
d are rejected and a and b supported. Since this moderator is continuous, no graphs are made to
plot the interaction terms. Because according to Grace-Martin (2020) the graphs would be a
mess, therefore it would be difficult to see any pattern.
In Model 9, the moderator CEO foreignness was tested, and the results indicate that the
effect is positive but not significant (B = 1.297; p = 0.208). In contrast, in Model 10, CEO
foreignness seems to be significant (B = 1.900; p = 0.084). The last model, including the
interaction terms, confirms this since only two cultural dimensions â individualism (B = -0.157;
p = 0.020) and masculinity (B = 0.131; p = 0.026) â are significant when interacting with CEO
foreignness. Furthermore, looking at figure 2 and 3, the direction of the significant predicted
interacting effect of individualism could be observed, however the direction of the significant
predicted interacting effect of masculinity cannot be observed, surprisingly the interaction
effect shows the opposite direction. Thus, 6a, c, d are rejected and only 6b is supported.
Figure 2: Interaction term CEO foreignness with individualism
33
Figure 3: Interaction term CEO foreignness with masculinity
Table 3: Summary of Results - Main Regression Analysis
34
Table 4: Regression Analysis
35
4.5 Robustness Tests
4.5.1 Bootstrapping
Bootstrapping was performed in SPSS, resulting in an automatic robustness test. The preference
for bootstrapping has been explained (Section 3.5). A âdifferentâ sample was created since
simulating the initial dataset results in some observations appearing once, some twice, etc., and
some not at all (Pardoe, 2000). This thesis has a bootstrap sample of 2,000, because according
to Gignac (2019, min 1:20), this is necessary for multiple regression analysis. The bootstrap
has a confidence interval of 95% and bias-corrected accelerated was applied, leading compared
to percentile interval to a more general bootstrap confidence interval (Stine, 1989). The typical
âstandard errorâ is studied in this method; if it becomes smaller, this indicates that the mean in
the sample is a better reflection of the actual population mean (Lee, In, & Lee, 2015).
The results are quite similar compared to the main regression analysis, which indicates that the
results are reliable (Table 14, Appendix H). The significance levels and ÎČ indicate the same
outcomes for the first four hypotheses. Nevertheless, for most variables the standard error
became smaller, though for uncertainty avoidance (Models 3 and 6) and individualism (Model
6) the standard error became larger. A difference in this bootstrapping test is that the
significance level of headquartersâ HCSD became slightly weaker; this is also evident in the
standard errors, which became larger from 0.109 to 0.155. Moreover, power distance is no
longer significant in Model 7 (B = -0.084, p = 0.107). Furthermore, in Model 8 of the main
regression analysis, power distance and individualism remained slightly significant; however,
this direct effect disappeared in this analysis. Additionally, the direct effect of uncertainty
avoidance became weaker but is still significant (B = 0.086, p = 0.041). Moreover, the
interaction term of power distance with headquartersâ HCSD is significant (B = -0.023, p =
0.014); however, the p-value became larger, so it lost some significance. Furthermore, the
interaction term with masculinity remained the same with no support for Hypothesis h5c,
because the effect was hypothesized in the other direction. Therefore, in line with the main
regression analysis, only 5a and b are supported. Finally, CEO foreignness in Model 9 remained
insignificant. Moreover, a decrease in the significance level of uncertainty avoidance, its direct
effect, occurred, and the standard error also dropped (B = 0.062, p = 0.019). In Model 10, even
though the direct effect of CEO foreignness demonstrated a weak significance (B = 1.900, p =
0.083), the relationship remained positive. The rest of the results remained the same as in the
main analysis; therefore, only 6b is supported.
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4.5.2 Country Representation
To make sure that the overrepresentation of three countries did not result in any potential bias,
a second robustness test was done; however, countries have a limit of 12 companies per country
to have no violations of the recommended number of 90 observations in the dataset. This
resulted in 121 companies in the sample after randomly dropping observations using the
formula =RAND. Therefore, no country accounts for more than 9.9% of the dataset (Table 16,
Appendix H).
These results are presented in Table 15 in Appendix H. The relationships between national
culture and CSR performance remain robust. First, this robustness test does not show any
changes in significance level or ÎČ for the first four models; however, it should be considered
that in Model 6, power distance ((2) B = -0.160, p = 0.000; (6) B = -0.113, p = 0.021) and
uncertainty avoidance ((3) B = 0.027, p = 0.316; (6) B = 0.044, p = 0.070) lost some
significance. Still, Hypothesis 1 is confirmed, while other hypotheses are not significant or their
effect is unstable. While the direct effect of power distance in Model 7 from the main regression
analysis was still significant (B = -0.084, p = 0.089), this effect disappeared, but the negative
relationship remained (B = -0.068, p = 0.176). Surprisingly, individualism became positive in
Model 7 (B = -0.001), which is not in line with the previous findings, but this effect disappeared
in Model 8 (B = -0.050). Nevertheless, headquartersâ HCSD is still positive and significant (B
= 0.298, p = 0.008). When including the interaction terms, the moderator remained significant
and positive (B = 1.001, p = 0.000), and the significance and direction of the interaction terms
did not change. However, the direct effect of power distance (B = -0.089, p = 0.106) and
individualism (B = -0.050, p = 0.217) became insignificant. Uncertainty avoidance remains
significant, though a bit less (B = 0.081, p = 0.014) compared to (B = 0.086, p = 0.006), which
provides evidence to support h5a and b since h5c is hypothesized in the other direction.
Furthermore, there is no significance of the direct effect of CEO foreignness in Model 9;
however, in this robustness test, the significance disappeared in Model 10. Moreover, in Model
10, the interaction terms of individualism lost some significance. Still, the interaction term with
individualism supports Hypothesis h6b (B = -0.136, p = 0.076). The other interaction terms are
not significant, or the significant effect was hypothesized in the wrong direction.
In sum, comparing the main regression with the two robustness tests, the data is robust.
Therefore, Hypotheses 1, 5a, 5b, and 6b are supported (Table 5).
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5. DISCUSSION
The key objective of this thesis is to contribute to the study of the influence of national culture
on CSR performance by examining the direct effects of Hofstedeâs initial four dimensions. By
testing whether headquartersâ HCSD and CEO foreignness have a moderating role in this
relationship, this thesis expands the knowledge of cross-cultural research within the field of
CSR. Generally, the findings are similar to previous research that found opposing results
concerning the effect of national culture on CSR performance. While power distance seems to
be an important predictor of a firmâs CSR performance, uncertainty avoidance, individualism,
and masculinity do not seem to have a meaningful impact. Additionally, the interaction with
power distance and uncertainty avoidance results in negative and positive influences of the
headquartersâ HCSD moderator. Furthermore, the interaction term of individualism with CEO
foreignness is the only interaction term which proved significant, and predicted in the right
direction.
Table 5: Summary of Results â All Analyses
38
As already explained in this thesis, the subject of the effect of national culture on CSR
performance remains a research topic with mixed results. However, the outcome regarding
power distance is in line with the majority of the outcomes of prior research (Peng et al., 2012;
Petruzzella et al., 2017; Ringov & Zollo, 2007; Thanetsunthorn, 2015). The relationship
between power distance and CSR performance is significant and negative in all regression
analyses, which was expected and therefore confirms Hypothesis 1. Thus, firms headquartered
in high-power distance cultures do not seem to intensively engage in CSR practices that
positively influence CSR performance. This outcome confirms Khatri (2009), who has
concluded that firmsâ stakeholders will not question questionable business activities, because
this is rooted in their mental programming. Therefore, firms do not have to justify what they
are doing, and this negatively influences CSR performance. However, this result contradicts the
finding of Waldman, Siegel, and Javidan (2006), who have concluded that it is urgent for
executives, since they have powerful positions, to act as societyâs nobility in following CSR
objectives in their practices. In contrast, this thesis underpins Carlâs (2004) research indicating
that managers are more inclined to use their power for the pursuit of their own benefit and thus
are less responsible for the broader welfare of their society.
Second, the predicted positive relationship between uncertainty avoidance and CSR
performance is non-significant. The relationship is positive in all models; however, the
significant effect is unstable. In all the separate models, the influence is non-significant, and
Ringov and Zollo (2007) also found non-significance, indicating that higher levels of
uncertainty avoidance do not seem to significantly influence CSR performance. One
explanation for this might be that according to Smith (2015), pro-social behaviour such as
donating is lower in uncertainty-avoiding countries. Perhaps in these countries pressures to
engage in CSR, which could be seen as a form of pro-social behaviour from firms to the society,
are lower compared to in other cultures and therefore could have a negative influence on pro-
social behaviour such as CSR activities. However, in the general regression, the model is
significant, which is in line with prior research (Halkos & Skouloudis, 2017; Ho et al., 2012;
Peng et al., 2012). This general regression model indicates that what was expected in this thesis,
implementing a business strategy whereby attempts are made to avoid environmental and social
unknown challenges as much as possible, whereby CSR could be a tool to reduce these
challenges. However, since this cultural dimension led to unstable significant results,
Hypothesis 2 cannot be supported.
39
Third, the relationship between individualism and CSR performance had mixed results. First,
the significant effect for this dimension is unstable; it is significant for the separate regression
(p = 0.000). However, this significance effect disappears with all the predictors included (p =
0.644). Furthermore, the relationship was predicted to be negative, indicating that individuals
in individualistic countries are more focused on their own goals and pay less attention to the
broader impact of firmsâ decisions, which has also been confirmed by Ho et al. (2012) and
Thanetsunthorn (2015). In contrast, the results indicate a positive relationship, meaning that
firms headquartered in highly individualistic countries exhibit higher levels of CSR
performance. Thus, since the significance effect is unstable and the predictions made in Section
2.6.3 outlined a different direction of the relationship, this hypothesis cannot be supported. One
explanation of the change in direction might be that according to Ioannou and Serafeim (2012),
individuals in cultures characterized by a high level of individualism are more likely to make
their mark and therefore explicitly engage in CSR decisions to respond to their stakeholdersâ
expectations. This is in line with Matten and Moon (2008), who concluded that individualistic
countries focus on explicit CSR and collectivistic countries on implicit CSR. However, implicit
CSR, such as health insurance, is not officially described as âCSRâ but more as codified rules
within the firm, making it less likely to be included in the CSR ratings, while explicit CSR
practices, such as voluntary programs, are more likely to be detected by rating agencies.
Moreover, Peng et al. (2012) concluded that in highly individualistic countries, individuals
place their primary responsibility for their own actions, while collectivistic people want to make
decisions together, which could result in long-term decision periods (Bochner & Hesketh,
1994). Therefore, individualistic people are more likely to make immediate and autonomous
decisions and hold responsibility for their decisions; consequently, they are more likely to
engage in CSR. Thus, even though the hypothesis cannot be supported, the aforementioned
arguments could explain the positive relationship.
Interestingly, uncertainty avoidance and individualism are correlated according to the
correlation matrix (Table 2). When performing the hierarchical multiple regression analysis, it
was observed that while uncertainty avoidance is not separately significant, individualism is
highly significant. However, this effect disappears when uncertainty avoidance is added to the
general regression model, and uncertainty becomes significant. This might be due to the
significant relationship noticed in the correlation matrix, whereby the correlation between the
variables can influence the significance levels of both predictors (Kraha, Turner, Nimon,
Zientek, & Henson, 2012). However, performing the multicollinearity test did not result in
40
values above 10. Therefore, without violating this assumption, the correlation could have
affected the results.
Fourth, the predicted negative relationship between masculinity and CSR performance tested
as non-significant, which does not support Hypothesis 4. Surprisingly, it can be observed that
in all regression models, masculinity had a positive relationship when tested separately, but this
effect changed when adding all the predictors in the direction that was also expected. This is
interesting and might be explained by the correlation between the variables included in Model
6. A correlation between variables might change the coefficients since ÎČ weights are context-
specific to a given model (Courville & Thompson, 2001), and ÎČ weights can change in sign
when variables are added (Darlington, 1968). Moreover, the non-significant effect on
masculinity is surprising. In contrast, other prior studies found negative significant outcomes
(Peng et al., 2012; Petruzzella et al., 2017; Ringov & Zollo, 2007; Thanetsunthorn, 2015). One
possible explanation of masculinity showing different results might be the sample group, which
differs among prior studies (Thanetsunthorn, 2015). Halkos and Skouloudis (2017) sample
included firms from 86 different countries, while Thanetsunthorn (2015) compared Eastern
Asia with Europe. This sample was partly determined by firms having a foreign CEO, whereby
it can be observed that 61% of foreign CEOs are from Europe and 24% from the United States.
This is in line with previous research indicating that Europe and the USA have relatively more
foreign CEOs (Hymowitz & White, 2004; Smeekes, 2016). Therefore, the sample might have
been biased upfront and could have caused differences in findings. Consequently, this provides
opportunities for future research. According to Bhalla and Overton (2019), another explanation
might be that the cultural emphasis on masculinity and femininity is not necessarily likely to be
aligned with behaviours that are supportive of CSR.
Fifth, this thesis tested the moderation effect of headquartersâ HCSD on the main relationship
of national culture on CSR performance. The data depicts a significant direct effect of this
moderator. Moreover, the findings show that the negative relationship between power distance
and CSR performance is negatively significantly moderated, which is also confirmed in the
different robustness tests. Therefore, a headquartersâ home countryâs higher sustainable
development influences the main relationship and consequently, the prediction made in
Hypothesis 5a is proven to be valid. Furthermore, a significant positive relationship between
the moderating role of headquartersâ HCSD can also be observed for the relationship between
uncertainty avoidance and CSR performance, indicating that there is support for Hypothesis 5b.
41
Furthermore, although the interaction with masculinity was tested to be significant, the
relationship was hypothesized in the other direction. Thus, Hypothesis 5c cannot be proven
valid. One explanation for this might be that the direct effect of masculinity is negative and
non-significant and can be explained by the likelihood that organizations characterized by
economic achievement have the intention to conduct unethical practices, which might be
partially offset by the decisiveness and aggressiveness of surveillance to seek reputation and
justice in a masculine-dominated culture; (Kang et al., 2016). however, only this interaction
term shows that a higher headquartersâ sustainable development results in a negative effect
instead of a positive effect overall; therefore, future research could investigate why this happens
to this dimension. Finally, the moderating role of individualism tested as non-significant.
Consequently, headquartersâ HCSD does not significantly affect the relationship between this
predictor and CSR performance; thus, there is no support for Hypothesis 5d. Therefore, these
results indicate that headquartersâ HCSD influences the outcomes of CSR in certain cultural
dimensions and thus could impact the relationship between the national culture and firmsâ CSR
performance. This is in line with prior research, because firms are bound to follow the ârules
of the gameâ of the location(s) where the firm conducts their operations (Mattsson, 2003;
Surroca, TribĂł, & Zahra, 2013).
Finally, the direct effect of the moderator CEO foreignness depicted a weak positive significant
result in most of the regressions, though not in the second robustness test. The relationship was
predicted to be negative; however, the results show a positive relationship. This could be
explained by previous research stating that foreign-born CEOs possess valuable knowledge
about the market, institutions, cultures, and behaviours of foreign countries (Nielsen &
Nielsen). Moreover, these foreign directors bring their cultural perspectives and values to
boardroom discussion, and this is positively related to CSP (Harjoto, Laksmana, & wen Yang,
2019). These studies might indicate that the disadvantages of a foreign-born CEO such as
foreign CEOs possessing different values are overshadowed by the positive advantages of
having a foreign CEO. Moreover, examining the interaction term with individualism is the only
predictor that is proven to be valid according to the predictions made in Section 2.7.2. Even
though the main effect of individualism on CSR performance tested as non-significant, it is
possible that the interaction term is significant (Frost, 2017). The interaction term masculinity
also tested as significant; however, the relationship was hypothesized in the other direction.
One potential reason for this, might be the fact that foreign-born CEOs have more difficulties
with assimilation, to compensate this, they care about their business success (Julfayan-
42
Gregorian, 2017). Since success is a value which is dominated in a high-masculine cultures, it
could be therefore expected that they care about their influence on CSR performance, in a way
that their personal success is related to the success of strategic decisions, such as CSR
performance.The fact that the other interaction terms â power distance and uncertainty
avoidance â are non-significant is also against the indication of the correlation results. One
reason for this and the disappearance of the significant level of the direct effect of CEO
foreignness might be a consequence of the unequal distribution (40â60%) of foreign and native
CEOs. Although it has been considered sufficient, Field (2013) has argued that an equal
representation to test a moderating effect is always better.
6. CONCLUSION
This thesis contributes to the research on CSR, headquartersâ HCSD, and CEO foreignness by
answering the research question: does national culture influence firmsâ CSR performance, and
do the headquartersâ home countryâs sustainable development and the CEOâs foreignness
moderate this relationship? Based on the literature and the discussed findings, there are some
relevant implications, which are presented in this section. Finally, the limitations of this study
and future research recommendations are given.
6.1 Theoretical Implications
This thesis provides theoretical contributions to the field of national culture and its connection
to CSR performance by finding interesting outcomes. First, the results indicate that the cultural
dimensions are indeed contradictory in nature, because findings in this thesis were mixed and
did not always correspond to what was expected based on previous literature. The main
theoretical contribution of this thesis is provided by the first hypothesis. The results indicate
that countries with high power distance have an assumed negative impact on CSR performance.
However, the expected negative relationships of individualism and masculinity as well as the
values of uncertainty avoidance that suggest a positive relationship to CSR performance were
not proven to be valid; these subjects require further and more thorough examinations in future
research, because these findings show that not all cultural values are necessarily related to
organizationsâ CSR activities. Furthermore, these findings are interesting since in previous
studies, power distance was not the sole cultural dimension that was significant (e.g. Peng et
al., 2012; Thanetsunthorn, 2015). Moreover, by including a country-level moderator â
headquartersâ HCSD â and the individual-level moderator CEO foreignness, several
43
contributions were made. This thesis confirms the moderating effect of headquartersâ HCSD
on several cultural dimensions, suggesting that home country institutional factors might also
influence the relationship between national culture and CSR performance. This provides
suggestions for future research to include more institutional moderators in the study design.
Additionally, by including CEO foreignness as a moderator, a first new step into the individual-
level effect on CSR has been examined since in contrast with what was expected, it was
concluded that a foreign-born CEO does not necessarily obtain lower CSR performance scores.
Furthermore, the interaction term of CEO foreignness with individualism was significant.
Therefore, it is suggested that the UET is important to consider in CSR research, and other CEO
dimensions might also affect the relationship between national culture and CSR performance.
Moreover, the board of directors might also be an interesting subject to consider since the CEO
is sometimes part of the board of directors (Pearce & Zahra, 1991).
6.2 Practical Implications
The results also have some practical implications for policymakers and corporate management.
Even though not all cultural dimensions in this thesis influence CSR performance, its influence
should still be kept in mind, and CSR policies should be consistent with the cultural
environment. CSR performance is influenced by the cultural context at certain levels but also
by institutional characteristics such as the sustainable development of the headquartersâ
country. Thus, the firm should adjust its CSR strategy to the context in which they are operating.
Furthermore, it indicates that the headquartersâ location is important, because the headquarters
plays a pivotal role in the organization and because countries have different institutions and
organizations, and their performance is influenced differently depending on the headquartersâ
country. There could be institutional advantages and disadvantages for companies regarding
the location of their headquarters, since for certain cultural dimensions a high level of
sustainable development results in better CSR performance. Finally, the positive advantages of
foreign CEOs which are already known (Arp, 2013; Arp et al., 2013), and the results of this
thesis show that foreign CEOs should be researched more, because organizations might benefit
from having a foreign CEO.
6.3 Limitations and Future Research
In this thesis, some limitations should be noted. First, the sample size was relatively small.
Although it was sufficient (Hansen et al., 2014), previous national culture studies used larger
44
sample sizes (e.g. Halkos & Skouloudis, 2017; Peng et al., 2012), and since the statistical power
increases in studies with larger sample sizes (Suresh & Chandrashekara, 2012), this would have
been better. Furthermore, corporations with the worldâs largest revenue were included;
therefore, the sample size should be considered rather homogeneous. Moreover, these firms
may be too visible to society and therefore feel pressure to engage in CSR, which can create a
distorted picture of these companies voluntarily engaging in CSR. Both the visibility and
sample size hinder the generalizability and reliability of the findings. Third, the representation
of countries in the sample could be considered as a limitation. Even though a robustness test
was performed to ensure that countries were not overrepresented and that the differences were
only minor statistical changes, in future research it would be better to focus on a more equal
national distribution, including in terms of the moderator headquartersâ home countries, where
only 23 of the 180 countries are included. Moreover, national culture is defined as the national
culture of the location of the headquarters; however, today firms are becoming more global,
which results in more nationalities being represented in firms (Van Veen & Marsman, 2008).
Therefore, this definition is not the best representation for firms with many different
nationalities since they can also influence strategies. In this line, headquarters are sometimes
also located where the tax regulations are to the advantage of the firm (Voget, 2011), indicating
that the definition of national culture in this regard does not at all represent what it wants to
measure. Furthermore, since the inconsistencies of prior findings are also observed in this
thesis, further examinations of the effect of national culture on CSR performance are needed,
and these contradictions are not explained by the two moderators added in this thesis.
Additionally, the correlation between uncertainty avoidance and individualism might have
potentially affected the results. Finally, the unequal distribution of foreign and native CEOs
could have influenced the significance levels of the interaction terms.
Moreover, several recommendations for future research can be provided. As indicated by the
limitations, the sample size should be larger, another database could be used, and a more equal
representation of countries would enhance the generalizability of outcomes. Moreover,
regarding the representation of the headquarters location as the definition of national culture, it
would be advisable for researchers to extend the quantitative approach and use in-depth
qualitative methods such as interviews to better capture the influence of different nationalities
within MNEs to exhibit whether or not this diversity in nationality matters. Furthermore, given
the surprising results concerning uncertainty avoidance, individualism, and masculinity,
scholars should identify antecedents and try to explain why some cultural dimensions seem to
45
impact CSR performance while others do not exhibit any effect. Underlying aspects of why
power distance is significant should therefore be examined. Moreover, sustainable development
suggests opportunities for future research, and a different measurement such as the ecological
footprint might be interesting to consider to see whether a different measurement method would
also generate significant outcomes since the ecological footprint provides a unique global
perspective on sustainable development (Brizga, 2010). Additionally, regarding the significant
effect of certain cultural dimensions on headquartersâ HCSD, other institutional factors should
be included, perhaps resulting in higher R-squared adjusted values. Furthermore, Ioannou and
Serafeim (2012) have concluded that 55% of variance concerning CSR engagement is
explained by firm levels. Therefore, a firm-level moderator such as board characteristics could
also be worth researching. Finally, CEO foreignness presents opportunities for future research.
For example, a different measurement approach could be used; instead of a categorical variable,
the cultural distance between the foreign CEO and the headquarters country could be analyzed.
Furthermore, more research could be done into CEO characteristics. The CEOâs level and
background of education might be interesting, because education is a crucial mechanism to
enhance not only economic but also social progress (Spiel et al., 2018). Moreover, to confirm
the UET in CSR research; CEO leadership styles could be interesting, because different
leadership styles might lead to the success or failure of companies (Ibua, Kâobonyo, & Ogutu,
2016).
46
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i
APPENDICES
Appendix A: Overview of Previous Results of National Culture on CSR Table 6: Results of previous studies
Ringov &
Zollo,
2007
Ho et
al., 2011
Peng et
al., 2012
Ioannou and
Serafeim,
2012
Thanetsunthorn,
2015 Halkos and
Skouloudis,
2017
Petruzzella et
al., 2017
Naeem et
al., 2019
Present
thesis
Cultural dimension Result Result Result Result Result Result Result Result Result
Power Distance (-) *** (+)** (-) *** (+)*** (-) *** (-) (-)*** (+) (-)***
Individualism (-) (-)** (+)** (+)*** (-)*** (-) (-) (+)* (+)
Masculinity (-)** (+)** (-)*** (-)*** (-) (-)*** (+)** (-)
Uncertainty
Avoidance
(+) (+)** (+)*** (+)** (-)*** (+) (-) (+)
Note: ***p â€0.01, **pâ€0.05, *pâ€0.1
i
Appendix B: Research Methodology Overview
Table 7: Summary of all variables, indicators and data sources
Variables Indicator Data source Data source year
Main variables
CSR performance CSRHub 2019
National culture Cultural score Hofstede Insights Time in-variant
Headquartersâ HCSD
CEO nationality
Environmental
Performance Index
Nationality
EPI report
BoardEx
2016
2016-2017
Control variables
Firm size Total number of
employees
Fortune Global 500 2017
Firm profitability Net income/shareholder's
equity
Compustat/Orbis/Annual
report
December 2016
Industry type SIC codes Compustat/Orbis Time in-variant
ii
Appendix C: Descriptive of Countries, Industries and Cultural Scores
Table 8: The country of the headquarter location of MNEs used in the sample and its relative
Hofstedeâs scores
Country PDI UAI IDV MAS Percent Frequency
Australia 38 51 90 61 3% 5
Belgium 65 94 75 54 0,6% 1
Brazil 69 76 38 49 1,2% 2
Canada 39 48 80 52 1,8% 3
China 80 30 20 66 7,3% 12
Finland 33 59 63 26 0,6% 1
France 68 86 71 43 6,1% 10
Germany 35 65 67 66 5,5% 9
India 77 40 48 56 1,2% 2
Italy 50 75 76 70 2,4% 4
Japan 54 92 46 95 9,8% 16
Korea, Republic of 60 85 18 39 3,0% 5
Luxembourg 40 70 60 50 0,6% 1
Netherlands 38 53 80 14 4,9% 8
Republic of Ireland 28 35 70 68 1,8% 3
Russian Federation 93 95 39 36 1,2% 2
Saudi Arabia 95 80 25 60 0,6% 1
Singapore 74 8 20 48 1,2% 2
Spain 57 86 51 42 1,8% 3
Sweden 31 29 71 5 0,6% 1
Switzerland 34 58 68 70 6,1% 10
United Kingdom 35 35 89 66 8,5% 14
United States 40 46 91 62 29,9% 48
163
iii
Table 9: MNEs divided by range of SIC Codes 3
3 Source: (Siccode.com, 2020)
Range of SIC Codes Division Frequencies
0100-0999 Agriculture, Forestry and Fishing 0
1000-1499 Mining 9
1500-1799 Construction 1
2000-3999 Manufacturing 69
4000-4999 Transportation, Communications, Electric,
Gas and Sanitary service
15
5000-5199 Wholesale Trade 7
5200-5999 Retail Trade 14
6000-6799 Finance, Insurance and Real Estate 42
7000-8999 Services 6
9100-9729 Public Administration 0
9900-9999 Nonclassifiable 0
163
iv
Table 10: MNE divided in (non) sensitive industries 4
Industry Coding
SIC Codes Sensitive industries Frequencies
Sensitive 800â899 Forestry 0
industry 1000â1099 Metal mining 1
Coding = 1 1200â1399 Coal mining and oil and gas extraction 7
2600â2699 Paper and allied products 0
2800â3099
Chemicals and allied products, Petroleum refining and related
industries and Rubber and miscellaneous plastics products
21
3300â 3399 Primary metal industries 5
4900â4999 Electric, gas and sanitary services 6
40
Non-
sensitive
1400- 1499 Mining and Quarrying of nonmetallic minerals, except fuels 1
industry 1500â 1799 Construction 1
Coding =0 2000â 2599 Food and kindred products, tobacco products, textile mill
products, apparel and other finished textile products, lumber
and wood products, furniture and fixtures
12
2700- 2799 Printing and publishing 1
3100- 3299 Leather and leather products 3
3400- 3999 Fabricated metal products, industrial machinery and
equipment, electronic & other electric equipment,
transportation equipment, instruments and related products
miscellaneous manufacturing industries
26
4000- 4899 Transportation & public utilities expect electric, gas and
sanitary services
10
5000- 5199 Wholesale Trade 7
5200- 5999 Retail Trade 14
6000- 6799 Finance, Insurance and Real Estate 42
7000- 8999 Services 6
9100- 9729 Public Administration 0
9900- 9999 Nonclassifiable 0
123
163
4 Source: (Siccode.com, 2020)
v
Appendix D: Outliers Figure 4: Visual graph of the identified outliers
vi
Appendix E: Assumption of Normality
Figure E.1-E-3: Normal P-P plot to test the assumption of normality
E.1: Model 6 E.2: Model 8 E.3: Model 10
vii
Figure E.4-E.6: Histogram to test the assumption of normality
E.4: Model 6 E.5: Model 8
E.6: Model 10
viii
Appendix F: Assumption of Heteroskedasticity
Figure F.1 â F.3: Scatterplot
F.1: Model 6 F.2: Model 8
F.3: Model 10
ix
Table 11: Breusch-Pagan test for homoskedasticity
Heteroskedasticity is present pâ€0.05
Appendix G: Assumption of Multicollinearity
Table 12: VIF test
Appendix H: Assumption of Independence of Residuals Values
Table 13: Durbin-Watson test
Model 6 Model 8 Model 10
Durbin-Watson test 2.273 2.172 2.165
Model 6 Model 8 Model 10
Breusch-Pagan Test 0.312 0.539 0.709
Main regression Bootstrapping analysis Equal representation Variables Tolerance VIF Tolerance VIF Tolerance VIF Power Distance 0.342 3.089 0.324 3.085 0.341 2.929 Uncertainty Avoidance 0.664 1.506 0.665 1.504 0.703 1.422 Individualism 0.296 3.374 0.295 3.385 0.296 3.378 Masculinity 0.897 1.115 0.897 1.115 0.914 1.094 Headquartersâ HCSD 0.338 2.961 0.336 2.976 0.334 2.992 CEO foreignness 0.801 1.249 0.804 1.244 0.688 1.453 Firm Size 0.870 1.149 0.856 1.168 0.839 1.191 Firm Profitability 0.963 1.038 0.948 1.055 0.887 1.127 Firm Industry 0.912 1.096 0.910 1.099 0.913 1.095
x
Appendix I: Robustness Tests
Table 14: Robustness test: Bootstrapping Analysis
Note: N=163 MNEs: standard errors in parentheses ***p â€0.01, **pâ€0.05, *pâ€0.1
CSR Performance
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10
Independent Variables
Power Distance -0.138
(0.029)***
-0.140 (0.047)*** -0.084 (0.052) -0.100 (0.078) -0.132 (0.051)*** -0.052 (0.061)
Uncertainty Avoidance 0.028 (0.025) 0.058 (0.025)** 0.020 (0.028) 0.086 (0.065)** 0.062 (0.025)** 0.093 (0.028)***
Individualism 0.071
(0.019)***
0.014 (0.032) -0.036 (0.039) -0.060 (0.049) 0.012 (0.033) 0.066 (0.038)*
Masculinity 0.002 (0.025) -0.012 (0.027) 0.000 (0.025) -0.011 (0.030) -0.007 (0.029) -0.045 (0.028)*
Moderating Variables
Headquarter HCSD 0.339 (0.155)** 0.993 (0.217)***
CEO foreignness 1.297 (1.042) 1.900 (1.159)*
Interactions
Power Distance X Headquartersâ HCSD -0.023 (0.012)**
Uncertainty Avoidance X Headquarters HCSD 0.009 (0.005)**
Individualism X Headquarters HCSD -0.001 (0.008)
Masculinity X Headquarters HCSD 0.013 (0.010)*
Power Distance X CEO foreignness -0.148 (0.098)
Uncertainty Avoidance X CEO foreignness -0.049 (0.058)
Individualism X CEO foreignness -0.157 (0.068)**
Masculinity X CEO foreignness 0.131 (0.068)**
Control Variables
Firm Size 1.267E-5
(4.991E-
6)***
1.663E-5
(4.536E-
6)***
1.231E-5
(4.987E-6)**
1.413E-5
(4.637E-
6)***
1.269E-5
(4.896E-6)***
1.607E-5 (4.51E-
6)***
1.318E-5
(4.886E-6)***
9.758E-6 (4.571E-
6)**
1.658E-5 (4.675E-
6)***
1.441E-5 (4.733e-
6)***
Firm Profitability 0.011
(0.026)
-8.216E-5
(0.024)
0.014 (0.027) -0.001 (0.026) 0.011 (0.026) 0.003 (0.025) 0.009 (0.025) 0.018 (0.027) 0.004 (0.027) 0.012 (0.025)
Firm Industry -3.268
(1.327)***
-2.541
(1.199)**
-3.457
(1.332)***
-3.016
(1.229)**
-3.270
(1.300)**
-2.855 (-9.593E-
6)**
-2.817 (1.249)** -3.005 (1.168)** -2.685 (1.202)** -3.172 (1.201)**
Constant 55.206
(0.914)***
54.708
(0.833)***
55.253
(0.902)***
55.150
(0.846)***
55.204
(0.885)***
54.806 (0.845)*** 55.058
(0.862)***
53.805 (1.480)*** 54.161 (0.955)*** 54.405 (0.957)***
R Square 0.107 0.213 0.115 0.174 0.107 0.244 0.289 0.365 0.252 0.313
Adjust. R Square 0.090 0.193 0.092 0.153 0.084 0.210 0.252 0.314 0.213 0.258
F-stat. 6.332 10.687 5.109 8.340 4.720 7.153 7.819 7.188 6.483 5.685
xi
Table 15: Robustness test: Country Representation
Note: N=121 MNEs: standard errors in parentheses ***p â€0.01, **pâ€0.05, *pâ€0.1
CSR Performance
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10
Independent Variables
Power Distance -0.160
(0.031)***
-0.113(0.048)** -0.068 (0.050) -0.089 (0.055) -0.107 (0.049)** -0.038 (0.063)
Uncertainty Avoidance 0.027 (0.027) 0.044 (0.024)* 0.014 (0.026) 0.081 (0.033)** 0.050 (0.025)** 0.082 (0.029)***
Individualism 0.111
(0.023)***
0.053 (0.034) 0.001 (0.039) -0.050 (0.040) 0.046 (0.035) 0.091 (0.043)**
Masculinity 0.001 (0.031) -0.003 (0.028) 0.006 (0.028) -0.014 (0.027) -0.001 (0.028) -0.044 (0.034)
Moderating Variables
Headquartersâ HCSD 0.298
(0.110)***
1.001 (0.237)***
CEO foreignness 1.266 (1.266) 1.644(1.264)
Interactions
Power Distance X Headquartersâ HCSD -0.024 (0.008)***
Uncertainty Avoidance X Headquartersâ HCSD 0.009 (0.004)**
Individualism X Headquartersâ HCSD -0.001 (0.005)
Masculinity X Headquartersâ HCSD 0.015 (0.008)*
Power Distance X CEO Foreignness -0.127 (0.098)
Uncertainty Avoidance X CEO Foreignness -0.055 (0.054)
Individualism X CEO Foreignness -0.136 (0.076)*
Masculinity X CEO Foreignness 0.132 (0.059)**
Control Variables
Firm Size 1.196E-5
(0.000)***
1.766E-5
(0.000)***
1.133E-5
(0.000)*
1.398E-5
(0.000)***
1.197E-5
(0.000)***
1.588E-5
(0.000)***
1.302E-5
(0.000)***
1.1014E-5
(0.000)**
1.645E-5
(0.000)***
1.386E-5
(0.000)**
Firm Profitability -0.009
(0.034)
-0.028
(0.031)
-0.004 (0.034) -0.039 (0.031) -0.009 (0.034) -0.029 (0.031) -0.017 (0.031) 0.000 (0.030) -0.032 (0.031) -0.016 (0.031)
Firm Industry -4.000
(1.374)***
-3.054
(1.261)**
-4.219
(1.391)***
-3.682
(1.259)***
-4.002
(1.382)***
-3.535 ( 1.264)*** -3.434
(1.230)***
-3.557 (1.186)*** -3.388 (1.272)*** -3.886 (1.257)***
Constant 55.914
(1.086)***
55.608
(0.988)***
55.918
(1.086)***
56.666
(0.846)***
55.914
(1.091)***
56.0069
(1.022)***
56.105
(0.994)***
54.142 (1.233)*** 55.365 (1.241)*** 55.503 1.230)***
R Square 0.113 0.276 0.121 0.263 0.113 0.313 0.355 0.436 0.319 0.386
Adjust. R Square 0.090 0.251 0.090 0.238 0.083 0.270 0.309 0.374 0.270 0.318
F-stat. 4.975 11.040 3.984 10.359 3.699 7.345 7.699 6.962 6.552 5.665
xii
Table 16: Robustness test 2, Country Representation
Country PDI UAI IDV MAS Percent Frequency
Australia 38 51 90 61 4.1% 5
Belgium 65 94 75 54 0,8% 1
Brazil 69 76 38 49 1,7% 2
Canada 39 48 80 52 2,5% 3
China 80 30 20 66 9,9% 12
Finland 33 59 63 26 0,8% 1
France 68 86 71 43 8,3% 10
Germany 35 65 67 66 7,4% 9
India 77 40 48 56 1,7% 2
Italy 50 75 76 70 3,3% 4
Japan 54 92 46 95 9,9% 12
Korea,
Republic of
60 85 18 39 4,1% 5
Luxembourg 40 70 60 50 0,8% 1
Netherlands 38 53 80 14 6,6% 8
Republic of
Ireland
28 35 70 68 2,5% 3
Russian
Federation
93 95 39 36 1,7% 2
Saudi Arabia 95 80 25 60 0,8% 1
Singapore 74 8 20 48 1,7% 2
Spain 57 86 51 42 2,5% 3
Sweden 31 29 71 5 0,8% 1
Switzerland 34 58 68 70 8,3% 10
United
Kingdom
35 35 89 66 9,9% 12
United States 40 46 91 62 9,9% 12
121