International diversification and corporate social responsibility: A moderating effect of product strategy

We primarily investigate whether product strategy affects the relationship between international diversification and corporate social responsibility (CSR). Further, we examine whether the relationship between international diversification and CSR exists. We perform empirical analysis using a sample of 606 firm-year observations of Korean-listed manufacturing MNCs (Multinational Companies) from 2005 to 2010. The result shows that there is negative, but insignificant relationship between international diversification and CSR when a firm’s product strategy is not considered. However, we find that the moderating role of product strategy exists in the relationship between international diversification and CSR. In addition, we find that there is no significant relationship between international diversification and CSR in the differentiation or mixed strategy group, whereas there is a significant negative relationship in the cost leadership strategy group. This paper mainly contributes to the literature on CSR and international diversification in that we document the moderating role of product strategy based on the ratio of R&D and advertisement intensity in the relationship between MNCs’ international diversification and CSR activities. Further, this paper is also important to expand the prior sample scope regarding CSR studies, which mainly focuses on the western MNCs, by using the data of Korean MNCs