Gaining Legitimacy in Foreign Markets: Corporate Social Responsibility and the Degree of Internationalization of Emerging Market Firms

Drawing on international business and CSR literature, we examine how CSR activities influence the level of internationalization of emerging market firms. This study covers listed industrial Chinese firms from 2009 to 2014. Data sources include archival data from the GTA-China Stock Market and Accounting Research (GTA-CSMAR), OSIRIS, and RKS (Rankings CSR Ratings). The dependent variable is the level of internationalization measured as the ratio of oversea export sales to total sales. The independent variables include ownership type, firm size, debt ratio, intangible assets, and firm age. We estimated models with panel and ordinary least square (OLS) regressions. Using a large sample size of 3,834 firm-year observations representing 639 unique firms, we found that CSR is positively related to the level of internationalization of Chinese firms. Firms with higher levels of CSR activities are more likely to be internationalized. However, the coefficient of the interaction term between CSR activity and ownership type was negative and insignificant. This study contributes to institutional theory and CSR research in the business strategy field, and has important implications for CSR practitioners.