Multilatinas’ reputation at a crossroads: Accounting for their social irresponsibility across different institutional environments

Emerging markets have generally gone through a process of liberalization and rapid economic growth that has allowed their leading companies to acquire increasing importance in the global marketplace. Their share in the world stock of outward foreign direct investments (OFDI) has rapidly soared, with Europe attracting more than a third of OFDI from BRICS countries (UNCTAD, 2014). This new economic order, with emerging market multinational enterprises (EMNEs) playing an increasingly prominent role in shaping production practices globally, has produced a wealth of research aimed at understanding how these investments impact on the innovative and economic performance of host countries firms (e.g. Buckely et al., 2010; Giuliani et al., 2014). However, so far almost no research has systematically investigated the social and environmental repercussions that EMNEs can produce in Europe as well as elsewhere. This is of utmost importance considering that one of the current global challenges is boosting the competitiveness of firms without downgrading their social and environmental standards, which refer to respecting and enhancing workers’ rights (and work-related regulations), to the right to health and to live in a safe environment, among other rights. Also, while most of research OFDI has tended to focus on Asian Multinational Enterprises (MNEs), far less attention has been devoted to Latin American MNEs (Multilatinas) (exceptions include: Casanova, 2009; Cuervo-Cazurra, 2008,; Fleury and Fleury, 2010; Santiso, 2013).

In this paper we address these gaps in the literature by focusing on Multilatinas from Mexico and Brazil, and analyzing the extent to which their internationalization affects their social and environmental conduct (measured as their direct or indirect involvement in a set of human rights abuses concerning workers’ rights, local/indigenous communities health, following classification by Giuliani et al., 2013). In doing so, we also analyze the mediating role played by these MNEs adoption of different Corporate Social Responsibility (CSR) policies, as well as that of the institutional quality of both home and host countries.

We carry out an econometric analysis based on a panel of data (period: 2000-2013) of a sample of Mexican and Brazilian MNEs. Our original dataset includes firm-level information on foreign direct investments, financial data (and other demographic characteristics), Corporate Social Responsibility policies, and human rights abuses (on social and environmental aspects).

Our work contributes to different strands of scholarly research: international business research and critical perspectives in international business; CSR literature and business ethics, socio-economic development and globalization.